Online gambling is the fastest-growing business in the Indian market, and we can examine the legalities of online gambling in this edition.
India is one of the emerging markets for online casinos and sports betting. Every year, millions of Indians bet on casino games. My Betting India (2021) reported last year that more than 370 million locals bet during major sporting events such as the Indian Premier League.
Given that number, are they legal online betting in India? If you ask, we urge you to read this vulnerability. If you’re not sure what the legal situation is for betting while you’re in India, we’ve got the answers for you.
Table of Contents
Is gambling legal in India?
The legality of gambling varies by state in India. This means that each state has the right to come up with laws regarding local gambling activities. So far, only states like Goa, Sikkim and Daman have legalised gambling.
At the national level, gambling activities are regulated by the General Gaming Act 1867. As the Act was passed in that year, there was no mention of online gambling. The Information Technology Act of 2000 also has no provisions on online gambling.
That is why the locals are free to place their bets online as the gambling regulations are not in order, as it is neither legal nor illegal.
Why did the High Court strike down the ban on gambling?
Some states have moved towards banning online gaming activities within their borders, including Tamil Nadu. In February 2021, the government passed an amendment making online gambling illegal in the state. However, it did not run its course for long, as by the end of 2021, the Madras High Court struck down this Tamil Nadu Act amendment.
According to the High Court, this was unconstitutional as it violated Article 19(1)(g) of the Constitution. This section of the Act states that Kuriyadu people have the right to practise any profession or carry on any profession, trade or business.
The court also found that these bans, including bans on online poker , online sports betting and online rummy , were excessive and disproportionate to the state government’s desire to reduce gambling-related problems.
The bench added that since 1968, rummy has always been recognized as a game of skill and not a game of chance. This is why there should be no reason to ban online rummy and also, the court says that the game is a legitimate business.
Gambling status of other states other than Tamil Nadu
Last year, not only Tamil Nadu, but also the state of Karnataka took a similar step regarding local gambling activities. In September last year (2021), Karnataka enacted a law to ban gambling and betting on online games. However, like Tamil Nadu, Karnataka lifted the ban in February this year (2022).
The High Court also held the same and found the measure excessive. The bench held that the impugned legislative act imposed a complete ban on all skill games. They said it violated the principle of proportion and was certainly excessive. It was also held to be violative of Article 14 of the Constitution of the country as it was manifestly arbitrary.
Also, the amendment is generally weak and contrary to section 2(7), prohibits all sports regardless of skill. The provisions of the Principal Act were so vague that people of common sense could not guess its true meaning and purported application. That is why the court rejects that law.
More Tamil Nadu Online Gambling Ban Information
On November 16, 2022, the Madras High Court withdrew petitions challenging the Tamil Nadu government’s ordinance banning online gaming and online gambling, and the state government said the ordinance has not yet come into effect.
Subsequently, the High Court has recommended a new nationwide law to regulate online gaming and digital gambling by a central government-appointed task force.
Why is this ban being issued now?
The Tamil Nadu state government, on September 26 and October 19, passed ordinances and later a bill in the state assembly banning online gambling and gaming, including poker and rummy. This makes TamilNadu one of the few states in India to enact gambling laws. The Government of Tamil Nadu has framed the Gambling Act as per the provisions given below.
Important provisions of the Ordinance
Ban on Online Gambling: This Act reiterates the existing ban on online gambling, i.e., online betting or playing games that offer a chance for money/other stakes.
Games of Chance: These are defined as games where the element of chance dominates over skill. Specifically, the definition states that games involving cards, dice, wheels, or other devices that act as event generators are, without exception, games of chance.
Ban on Rummy and Poker: Prohibits playing any of the games of chance listed in the table for money or other stakes. Currently, only rummy and poker are listed in this table. Consequently, offering and playing rummy and poker for money/stakes is an offence under the Ordinance.
Prohibition of Advertisements: Advertisements which directly or indirectly promote or induce any person to engage in online gambling or play rummy and poker with money or other stakes are prohibited. Any default is punishable with imprisonment up to 1 year and/or fine up to INR 500,000.
Transfer of funds: Banks, financial institutions and payment gateway providers are prohibited from transferring funds for participation in online gambling or identified games of chance (rummy and poker).
Regulatory Framework: The Ordinance provides for the setting up of a regulatory body, the Tamil Nadu Online Gaming Authority, to oversee the operation of online gaming service providers and to identify potential games for inclusion in the catalogue. In this online game, operators are classified as local online game providers i.e. Tamil Nadu-based companies and non-local online game providers.
What is the reason for implementing this law?
The Tamil Nadu state government cited gambling-related suicides over the past few years and the findings of the Justice Chanduru Committee as the new major reason for the introduction of the Act.
Which law confirms this?
The General Gambling Act was passed in 1867. It is based on the penalties and rules for public gambling in the country. Section 12 of the Act states that these penalties shall not apply to any form of skilled play.
Therefore, gaming allowed under the law involves skill and reduces the chance of gambling. But the Act is not clear as to what sports are covered based on skill as per the definition under the Act. To complicate matters further, there is also no maintained list of banned games.
What is the Indian current law on online gambling and gaming?
Currently, India has only one central law governing all forms of gambling. It is called the General Gambling Act, 1867 and is an old law. This Act does not apply to deal with the challenges of digital casinos, online gambling and gaming.
In fact, on Monday, November 14, 2022, this is the reason for framing a new federal law and setting up a task force to govern gambling and online gaming in India.
Right now, the General Gambling Act only allows exceptions for games of skill where wagers are made.
As gambling in India plays a major role in almost every state, the general gambling laws remain unchanged. This means that states are expected to enact their own laws to regulate gambling in their jurisdictions. This is why some states have a specific law to govern online gaming while other states do not.
Where is online gambling legal in India?
Which States Have Online Gaming Laws? States like Delhi, Madhya Pradesh and Uttar Pradesh have adopted the General Gambling Act with some amendments. However, other states like Goa, Sikkim, Daman, Meghalaya and Nagaland have enacted specific laws to regulate public gambling in their jurisdictions. But, as this is a new and emerging technology, not all states yet have laws regulating online gaming.
Here is a list of states that have enacted specific laws to govern online gaming:
Sikkim: The Sikkim Online Gaming Regulation Act, 2008 regulates digital casinos that offer games like blackjack. Operators must be licensed under the Act and are only allowed to offer games on intranet terminals. Sikkim allows sports betting through intranet terminals.
Meghalaya: The government of Meghalaya allows land-based and digital casinos under the Meghalaya Gaming Control Act, 2021. Meghalaya also allows sports betting like licensed horse racing.
Nagaland: The Nagaland Gambling Prohibition and Promotion of Online Games of Skill Act, 2016 was passed. The state regulates poker as a game of skill.
Additionally, apart from Nagaland and Meghalaya, none of the states in India have separate specific laws to regulate skill sports.
★ However, Nagaland and Meghalaya have developed specific laws to regulate and licence fantasy league betting.
★ However, Andhra Pradesh, Telangana, Odisha and Assam have completely banned betting in fantasy sports leagues as well.
Telangana: In 2017, Telangana banned all forms of online gaming and gambling through an amendment to the Telangana Gaming Act.
Karnataka: The Government of Karnataka banned all online games both of skill and chance in 2021 by amending the Karnataka Police Act, 1963. However, it was struck down by the Karnataka High Court in February 2022.
★ Similar laws were passed in Kerala, Andhra Pradesh and Tamil Nadu to ban all online games, including games of skill. Kerala and Tamil Nadu’s laws to exempt skill games were filed in the courts and struck down.
Delay and question of Tamil Nadu Governor
Amid growing pressure to take action against at least 17 gambling suicides in Tamil Nadu, the Tamil Nadu government on October 3 issued an ordinance banning online gambling and online games of chance. On October 19, the state legislature passed the Tamil Nadu Online Gambling Prohibition and Regulation of Online Games Act, 2022.
While the restriction will come into effect on a date announced by the state government, currently, the ordinance seeks to ban only legal games like rummy and poker in India. Other games can be added to this list using their discretion, but nothing like that has been done. Violation of the ban will be punishable with imprisonment up to three months, fines of up to five thousand rupees or both.
According to this report, before the bill became a law, state governor R. N. Awaiting Ravi approval. Hence, the ordinance has not come into effect yet. Minister S said that the Governor raised three questions based on the Madras High Court order which struck down the earlier law banning online gambling. Regupathi said. According to the Minister, the Governor had said that the bill was not as per the High Court’s claim that the bill did not differentiate between games of chance and games of skill, which was against Rule 19 (1) (g).
The law minister said the government has clarified that the bill distinguishes between games of chance and games of skill and that the law seeks to ban only online gambling and not a total ban. The governor has also cited the High Court order that skill-based sports do not come under betting and gambling in the state list under the Seventh Schedule of the Constitution.
And Raghupathi
The Government argued that the Bill operates in accordance with the Constitution of India. The governor opined that the current bill does not take into account the difference in the Constitution of India. In response, the government has clarified that betting and gambling include online gambling as the person plays against computer code written by the game developer in online games and the person is more likely to be cheated and defrauded.
In its reply to the Governor, the government said that the purpose of this bill is to ban such online gambling only. The government has also clarified that the Bill is constitutional as it deals with betting and gambling, public order, public health and theatres and theatrical performances listed under the State List under the Seventh Schedule.
The minister said the state has jurisdictional limits in enforcing the ban and the central government should come up with a single law to regulate online games. The EGaming Federation (EGF) filed a petition in the Madras High Court to lift the ban on online gambling, but the petition was withdrawn after it said the order had not been notified.
Ban on Online Gambling Only: Tamil Nadu Government Explanation
No outright ban on online games has been proposed, but only online gambling has been banned in the state, the Tamil Nadu government has said, and has sought Governor RN Ravi’s assent to a bill to ban online gambling and regulate online games in the state.
State Law Minister S Raghupathi said no outright ban has been recommended so far. Games are not completely banned. They are differentiated as games of chance and games of skill, and only online gambling is prohibited.
This Act is not unconstitutional. Raghupathi asserted that the draft law to ban online gambling is constitutional.
In the current ordinance, the draft law has been drafted to ban only online gambling. However, the Act will be implemented only after the assent of the Governor.
Concluding remarks
One page of the Ordinance is ready and the Government’s responses to the questions asked by the Governor have also been given in due course. And it is up to the Governor to implement this.