Law dealing with Gambling in India

Gambling features in List II of the Constitution of India. This implies that the State Governments have the authority to enact laws in order to regulate gambling in the respective states. Thus, there is no single law governing gambling in the entire country. Different states have different laws governing gambling in addition to the laws that have an application across the country. While some states have banned lotteries, other states allow state government lotteries marketed and distributed in other lottery playing and promoting states through private entities.

The law relating to gambling in India are briefed below:-

(1) The Public Gaming Act, 1867:-

This Act provides punishment for public gambling and for keeping of a 'common gaming house'. This Act also authorizes the state governments to enact laws to regulate public gambling in their respective jurisdictions. The penal legislations in respective states have been amended in accordance with their policy on gambling. However, this legislation does not have any direct impact on online gambling unless a wide interpretation is given to the definition of common gaming house so as to include virtual forums as well.

Section 3 of the Public Gambling Act lays down penalties for owning, keeping or having charge of a gaming house. According to this section, if the owner, occupier or any other person with the use, charge, care or management of any house opens, keeps or uses the house as a 'common gaming house' and knowingly or willfully permits the house to be occupied, used or kept by any other person as a common 'gaming house’ shall be liable for a fine of up to Rs. 200 or imprisonment for up to three months.

This section further lays down that anyone who advances or furnishes money for the purpose of gambling with Persons frequenting such gaming house, or who in any manner assists in conducting the business of such common gaming house in keeping it open, occupied, used or kept for that purpose, shall be liable for a fine of up to Rs. 200 or imprisonment for up to three months.

According to the provisions of the Public 'Gambling Act, individuals can be held accountable if they are found playing in a gaming house. A 'gaming house' is defined as: "any house, walled enclosure, room or place in which cards, dice, tables -or- other instruments of gaming are kept or used for the profit or gain of the person owning, occupying, using or keeping such house, enclosure, room or place, whether by way of charge for the use of the instruments of gaming or of the house, enclosure, room or place, or otherwise." The owner of the house as well as the person indulging in gambling in a gaming house are liable to arrest.

Section 12 of the Act specifically omits certain activities from its purview. According to this section, the provisions of the act shall not apply to any game of "mere skill, wherever played".

The term 'gambling' is not defined in the Public Gambling Act. However, according to Entry 34 of List II under the Seventh Schedule to the Indian Constitution:

'gambling' includes any activity or undertaking whose determination is controlled or influenced by chance or accident and any activity or undertaking which is entered into or undertaken with consciousness of the risk of winning or losing (eg, prize competitions, a wagering contract) ... where there is no actual transfer of goods but only payment or receipt of the difference according to the market price, which varies from the contract price.

The test for determining whether a game should be classed as 'gambling' is whether the dominant element is chance or skill. The law in India does not define the meaning of 'skill' with reference to gambling. However, on the basis of the courts' interpretation, it can be concluded that "a game that does not involve skill or is a mixed game of chance and skill will be treated as unlawful in India".

In MJ Sivani vs State of Karnataka (1995 6 SCC 289), the Supreme Court held that where the element of chance is predominant in a game, it cannot be classed as a game of mere skill.

In Dr KR Lakshmanan vs State of Tamil Nadu (1996 2 SCC 226), the Supreme Court further held that gambling is an act or practice of gambling on a game of chance. It is placing a stake on chance where chance is the controlling factor. According to the court, the test for determining whether a game is considered 'gambling' is whether the dominant element is chance or skill.

(2) The Indian Contract Act, 1872:-

The Indian Contract Act is a codified umbrella legislation that governs all commercial contracts in India. Under the Indian Contract Act, a wagering contract is the one which cannot be enforced. The Act lays down; 'Agreements by way of wager are void, and no suit shall be brought for recovering anything alleged to be won on any wager or entrusted to any person to abide by the result of any game or other uncertain event on which any wager is made'. Gambling, lottery and prize games have been held to be wagering contracts and, thus, void and unenforceable. While a wagering contract is not illegal, it cannot be enforced in a court of law. Thus, the courts will not entertain any cause of action that arises out of a wagering contract.

(3) Lotteries (Regulation) Act, 1995:-

This Act provides a framework for organizing lotteries in the country. Under this Act, the State Governments have been authorized to promote as well as prohibit lotteries within their territorial jurisdiction. This Act also provides for the manner in which the lotteries are to be conducted and prescribes punishment in case of breach of its provision. Lotteries not authorized by the state have been made an offence under the Indian Penal Code. Several non-lottery playing states, like Gujarat and Uttar Pradesh, have prohibited the sale of other State Government lotteries under this Act.

(4) Indian Penal Code, 1860:-

Section 294A deals with keeping lottery office. It says that whoever keeps any office or place for the purpose of drawing any lottery not being a State lottery or a lottery authorized by the State Government, shall be punished with imprisonment of either description for a term which may extend to six months, or with fine, or with both. And whoever publishes any proposal to pay any sum, or to deliver any goods, or to do or forbear doing anything for the benefit of any person, on any event or contingency relative or applicable to the drawing of any ticket, lot, number or figure in any such lottery, shall be punished with fine which may extend to one thousand rupees.

(5)The Information Technology Act, 2000:-

The Government of India has published some new gambling related rules in the Gazette of India in April, 2011 under the Information Technology Act, 2000. These guidelines make it compulsory for Internet Service Providers (ISPs) to ban the illegal gambling and online betting websites specially those being operated from foreign countries. But it is going to be a tough task for the ISPs because people running such websites are quite artful, and as soon as the ISPs ban their website, they simply change the domain name and start operating in India again. Indians who bet money on offshore website by using online transactions end up violating Forex Laws (presently Foreign Exchange Management Act) as well. [Niketa Anand in MightyLaws.in]

The Information Technology Act 2000 regulates cyber activities in India and prohibits publication or transmission of information that can corrupt people. This includes online gambling and the punishment for such activities is much more severe than for offline gambling operations - the fine is Rs 100,000 or imprisonment up to 5 years.

Enforcement over foreign jurisdictions:-

If the websites are hosted and operated from outside India, it may be difficult for the authorities in India to issue any directive to close them down or prohibit their access without using its blocking powers under the ITA. The authorities have little to worry about, as Indian foreign exchange laws do not permit remittances outside India for gambling related activity, such as the purchase of lottery tickets, football pools and sweepstakes. As a result, a gambling website hosted outside India aiming at receiving money from within India cannot do so through legal channels.

Courtesy:- Legal Point Foundation