Regulation on Online Gambling in India – The Grey Area

Introduction

Gambling, most pleasurable pastime involves risking of money against each other for some desired results through online monetary payment modes like internet banking, debit card or UPI. It is a game of win- lose situation.

In Hindu religion during Mahabharata, Yudhishthira lost his kingdom, wife, wealth and also his brothers to game of dice. In pre-independence era at the time of British lotteries were considered as legal which would be helpful in development of towns but other gambling activities were prohibited. In post independence era people are surrounded with technology and there is high-tech use of internet as source which is rapidly and vastly increasing. It is one of the cheapest and easiest ways to do gambling via internet. There are people who fulfil their social and financial needs through these online sites by playing day and night in lockdown during pandemic situation. There is also vast increase in user base for online gambling during IPL or in game of cards that can be played online. Online gambling is considered addictive due to low contribution and high return. It is also considered as one of the huge sources for black money and money laundering.

Technology has increased and with ease people can transfer money outside the boundary for gambling activities. In 1990’s the trend of e-gaming started which has now followed by many websites. This article mainly highlights for the need of uniform laws which creates lacunae for online regulation

Betting and gambling is part II of state list enumerated in seventh schedule of the constitution. This means that it is a state subject and states are entitled to formulate their own laws. The public gambling Act, 1867 is a central enactment at the time of British province which can be adopted by certain states.

Game of skill VS. Game of chance

In India games can be seen as two types of games separately as a Game of Skill and a Game of Chance. Game of chance is generally considered as illegal and prohibited.

Game of skill means a person should have prior knowledge and experience to a game the person should also have logical abilities, capabilities, analytic decision, training and experience of that particular game. The skill should be predominant factor. Therefore some of the states consider Game of Skill as legal whereas Game of Chance is normally considered as illegal in India these games are played randomly and it is played totally on luck without applying any human mind or knowledge. For example games played such as playing card, dice, picking a number etc.

The landmark case of R.M.D Chamarbaugwala vs. Union of India (1957) held that when certain level of skill is involved it cannot be considered as gambling.

Gambling- Legal position in India

In India horse racing and lotteries are allowed and legalised. In case K.R Lakshmanan vs. The state of Tamilnadu, the Supreme Court said the horse racing was a game of skill and not gambling.

The states which allow lotteries in India are Arunachal Pradesh, Assam, Goa, Kerala, Madhya Pradesh, Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Punjab, Sikkim and West Bengal.

The state which allow horse racing are Andhra Pradesh, Assam, Delhi, Haryana, Karnataka, Maharashtra, Meghalaya, Punjab, Tamil Nadu, Uttar Pradesh and West Bengal.

In states such as Goa, Sikkim, Daman and Nagaland have made online gambling legal in their states and also has legal authority for casinos for land based under public gambling Act, 1976 whereas Maharashtra has prohibited gambling and considered as an offence and illegal under the Bombay prevention of Gambling Act, 1887.

With the rise in digitalisation there are some states like Sikkim and Nagaland who made e-gaming a game of chance as legal with its licensing regime. There are some states like Telangana and Arunachal Pradesh consider skill of game as illegal. Under section 15 of Telangana State Gaming Act, 1974 prohibits even the game of skill and considered as illegal in that state.

All India gaming Federation, Federation of Indian fantasy sports and The Rummy federation have adopted self regulation code for their advertisements. These online games are generally called as skill games and are self regulated by these bodies which government needs to step in for uniform laws in India.

Issue and impact of online gambling

With the development of technology there is rise in internet user. The player’s plays important role in gambling practices through e-gaming. It is one of the fastest growing areas during IPL also it is one of the areas of concern in India. According to the survey, 40% of people gamble in India and further it will surpass United Kingdom in the number of gamblers per capita. According to researcher’s 80% Indian adult gamble at least once in a year.

Gambling is considered as one of the most addictive game which further gets converted into crime and suicide. Due to Pandemic situation there is a lot of unemployment in the market. People use gambling as an easy source of money which in turn attracts more people and makes this addictive. Once the money is lost on account of gambling there is shortage of money to fulfil personal and family needs. This leads to borrowing & increased debt. If the person by any chance is addicted and loses money further, he enters into cycle of debt trap. This eventually leads to a situation of depression or psychologically weak mindset forcing the person to adopt illegal means to fulfil current needs. Thus, he does crime to repay money and fulfil the current personal and family needs. If the person does not adopt illegal means, psychologically that person not being able to repay liability or fulfil family needs makes him mentally weak resulting into forced suicide.

Legal framework

There is need for uniform legal framework in India. It is necessary for government to step in for the regulation of online gambling.

> The Cable Television Network Rules, 1994 prohibit the advertisement of gambling activities.

> Foreign exchange management Act, 1999 (FEMA) prohibits remittances of income, lottery winnings, racing or riding etc. Collaborations with foreign technology in any form for the purpose of gambling are prohibited. Depositing money in any other form other than rupees can be considered as foreign currencies in a foreign site which is prohibited and illegal.

> The prize competition Act, 1955 of section 4 prohibits any prize competition where the prize offered exceed one thousand rupees a month. Also no person should promote prize competition or any types of competition which exceeds one thousand rupees.

> Telecom Commercial Communications customer preference Regulations, 2010 prohibits calls and SMS from unsolicited commercial communication for gambling and betting under this regulation.

> The Prevention of money laundering Act, 2002 under section 12 impose obligation on banking companies, financial institutions, and intermediaries to verify identity of clients, maintain records and furnish information in prescribed form to the competent authorities formed and appointed in that regard.

The information technology Act, 2000 there is no specific mention about the regulation of online gambling being illegal though this act covers many cyber activities. The words gambling and betting word were not mentioned under information technology act therefore left to interpret.

Punishment/Penalties

With the increase in use of internet and easy access, every citizen uses internet for some or other means for which there are some punishment and penalties for gambling.

Section 4 of The public gambling Act, 1867 is a central enactment that prohibits running or being in charge of public gambling house. The penalty for this is fine of rupees 200 or imprisonment of up to 3 months further this Act prohibits visiting gambling house and penalty is fine of rupees 100 and imprisonment up to one month.

Though gambling punishment is modest being old central enactment there is no such punishment which can govern punishment for online gambling.

Conclusion

Due to old central enactment at the time of British, there is need for revamping the laws and to make it uniform laws. It is huge market for investor, publisher and developers to invest in gambling activities due to lack of proper legal frame work making it a state subject. The pandemic situation has increased the user base for the gaming activities thus resulting into online gambling activities which is flourishing and engaging into entertaining options.

There is no specific law mentioned under information technology Act, 2000 thus there is need for government to step in to make proper laws and uniform law throughout the country for online gambling activities.

Author: I am Jainee Thakkar, have completed my B.com, LLB from The Maharaja Sayajirao University of Baroda and I am currently pursuing my LLM from The Maharaja Sayajirao University of Baroda, Gujarat.