Author: Mahi Jha, a student at Chanakya Law College.
ABSTRACT
This legal article investigates the intricate landscape of fraudulent activities within the realm of fantasy and betting apps. Delving into specific cases, the analysis exposes deceptive practices, examines the legal implications, and provides insights into the broader consequences for users and industry. By navigating the legal intricacies, this article aims to contribute to a comprehensive understanding of the challenges posed by scams in the rapidly evolving landscape of online gaming and betting platforms. The article navigates the complex interplay of regulations and loopholes, exploring the gray areas that scammers exploit. The analysis by citing real-world examples and drawing parallels with established case laws, provides a holistic view of the multifaceted battle against fraudulent practices in the digital gaming arena.
INTRODUCTION
It’s well known that in India police always come and arrest the gamblers including those who bet in cricket. Similarly, somewhere lottery is illegal, at the same time there are shops where government itself is selling or funding lottery. Gambling and betting is illegal, but anyone can easily bet in Casino in Goa. Putting money and betting in horse races is legal in India. If people are playing cards then police can arrest them, but at the same time can police arrest them if they are playing ludo. Playing gambling online is illegal, whereas people easily make teams online and bet money. If something is illegal then on the other hand similar concept is legal. This article delves into finding the answer of these questions and examine the actual legal status of gambling in India.
MEANING OF GAMBLING
Gambling is the act of betting or wagering on an event with an uncertain outcome, often with primary intent of winning money. Common forms include casino, slot machines, betting and lotteries. It involves risk and outcomes are typically determined by chance rather than skill.
HISTORY OF GAMBLING IN INDIA
The history of playing gambling in India is very old. During 4th century BC, people used to play games with dice, chopper, pachisi were played and was an important part of society. Even at the time of Mahabharat, people used to play gambling, but at that time gambling was looked upon negatively. After this from 16th century, Mughals came and another form of gambling was created, which was Cock Fighting. After this Britishers came and they introduced Horse Racing and Cricket in India, so people
started betting and gambling.
“THE PUBLIC GAMBLING ACT, 1867”
At that particular time, Gambling Houses were made where people gather and gamble. There were so many cases occurring in gambling houses, fights increased so much along with robberies, it was getting out of control of Britishers and to deal with all this Britishers passed a law on 25th January, 1867, named “The Public Gambling Act, 1867” and even today this act is followed in India. This law was made mainly to ban “gambling houses”, also this act banned “gambling based on animal fighting”. At that time there was no internet and no online fantasy apps, so nothing about it was mentioned in that particular law. In section 12 & 18 of this act, it was mentioned that gambling is an illegal activity in India, but if anyone plays any skill based game, then it can be played. Its entirely legal. Means gambling on “Game of Chance” is illegal and “Game of Skill” is legal, but it wasn’t defined in this act that what would be considered as game of skill and what would be game of chance, and all things that weren’t defined puts everything in trouble when cases go in courts. Horse races and lotteries weren’t restricted much.
POST – INDEPENDENCE SCENARIO
Now, after Independence when Indian Constitution was formed, “The Public Gambling Act, 1867” was adopted as it is without any change, but we did one thing that was categorizing it in state list of Seventh Schedule means if that state wants it can make some changes or can follow it as it is. So, states like Bihar, Chhattisgarh, Chandigarh, Madhya Pradesh, Manipur and many other states followed it as it is in their states. On the other hand, states like Andhra Pradesh, Assam, Goa, Gujarat, Maharashtra, Kerala these states amended this law and then implemented in their state.
Now, from here the real struggle starts, day by day things got modern but the law, was old that’s why even after law, problem wasn’t solved. At that time, case by case, as the case was filed in court and on that basis the solution was found
R.M.D CHAMARBAUGWALA V.S. UNION OF INDIA (1957)
There was a man named – R.M.D Chamarbaugwala, he made a club and organized card related competition in which people used to bet money. So, some people complained that this isn’t a competition but gambling is played regarding all this R.M.D Chamarbaugwala filed a case regarding that this competition isn’t illegal but completely legal under the “Public Gambling Act, 1867 because this is a game of skill and it is legal. After multiple discussions in court, it was proved that Chamarbaugwala was hosting a game of skill and not game of chance. Now, this case is termed important in the history of India because the law of India didn’t define the game of skill and game of chance.
The judgement given by Supreme Court of India, gave clarity to people what the game of skill is. Be it any game somewhere or the other, it has luck or chance, but the court says that the dominating factor should be skill and not luck. If skill is dominating the game, then it’s a game of skill which includes mental ability, physical ability and it’s not gambling. But, if luck is only dominating then it’s a game of chance where random factors and responsible, which has no control.
Currently, the guidelines are that gambling in public place is illegal, so people who play cards or even ludo in public by gambling are arrested by police.
K. SATYANARAYANA V.S UNION OF INDIA (1968)
A man named K. Satyanarayana was running a rummy club and police raids there that gambling was being played here, Though K. Satyanarayana was trying to explain that it’s a game of skill, but police doesn’t agree and the entire case goes into court to decide whether rummy is a game of chance or game of skill.
In the judgement, court said that to play rummy you need to remember cards, one has to decide which card to throw. Hence, it’s not just a game of chance, but also a game of skill.
K. Satyanarayana wins the case and from year 1968, Rummy game becomes legal in India. There are some states like Andhra Pradesh, Assam, Sikkim, Nagaland, etc. These states had banned rummy, as states have their choice to change the law related to gambling. So, whenever a game is mentioned in India, then in which state it is being played, that is checked first.
K.R. LAKSHMANAN V.S UNION OF INDIA (1966)
Debates on horse racing were also going in India. There was a company named – The Madras Race Club, from 1896 this company had a business of people betting in horse races. When talks regarding its legality were going that its gambling and should be banned, then a man named K.R. Lakshmanan, filed a case that horse racing is a game of skill and it isn’t a game of chance or gambling.
Petitioners argued that man bets on race course and not on chance, he’s looking at the performance history of horse, condition of track, skills of jockey, etc. He bets after looking at many things, so it’s a game of skill.
The judgement declared that horse racing is put in the category of game of skill and K.R. Lakshmanan wins this case and from then on, year 1966 betting in horse racing becomes legal in India.
DAMAN & DIU PUBLIC GAMBLING ACT (1976)
Later, discussions regarding Casino were also carried out that whether its legal or illegal. “Daman and Diu Public Gambling Act, 1976” was introduced which isn’t for entire India, but only implemented in Goa, Sikkim and Daman, which allowed casinos and slot machines in these states. Also, anyone cannot start any random way, but need to take proper licence.
LOTTERIES REGULATION ACT (1998)
Now, after this lottery was hosted side by side in India and till 1998, there were many cases on it. There were many private players started doing fraud in it and ran with people’s money and lot of cases were being filed. Huge loss was being done, so central government brought an Act only for lottery, named “Lotteries Regulation Act,1998”. After it was introduced fair guidelines and transparency system with all the private and illegal ways of running lotteries were banned in India. But, the states made rules according to their own. Leaving 13 states, all other states banned lottery. Among these 13 states, there’re many state government which runs lottery themselves.
FANTASY AND ONLINE GAMINGS
Fantasy apps are a type of online prediction games, which can be connected with real life games. Whatever sports in going live in real world, the virtual teams are created in accordance with it. Betting is made on these fantasy apps by making predictions. Real life sports person is linked with fantasy players and it makes the player feel like his players are playing, but it’s actually fake and a world of fantasy. According to the scores made by the real life sports person, fantasy player’s points are increased accordingly. Whosoever makes highest point, that person wins. The fantasy app hosts paid contests where users pay an entry fee to participate. The amount of the entry fees contributes to the prize pool, which is then distributed among winners.
ORIGIN OF FANTASY APPS IN INDIA
In the beginning of year 2000, the culture of online gaming was increasing rapidly amidst the dispute between game of chance and game of skill in India. After introduction of online gaming, online betting and fantasy apps were also introduced where people bet money virtually and there wasn’t any rule for this.
These all starts in 2001, when ESPN & Star Sports together bring a fantasy app, named – Super Selector, but till 2003, they were at loss and so it closes down.
After this, in 2007, a person named Harsh Jain introduced a new fantasy app in India during 2008 IPL. After this there were ample of fantasy apps available in India.
REVENUE OF FANTASY APPS
The participants for participating deposits the money. Then 28% GST is charged from it. The owner of fantasy app takes their cut which is between 15-30%. Then technically the left amount should be given to winner completely, but he has to pay 30% TDS according to Government Budget, 2023. After all these cuts, the left money is given to the winner. Government’s profit is the highest by including both TDS and GST.
THE DARK REALITY OF FANTASY APPS
According to the reports of Hindustan Times, the illegal betting market in India is worth $150 billion (Rs. 9.9 lakh crore) a year. That includes $200 million bet on every one day International played by Indian Cricket Team. According to the reports of The Economic Times, the fantasy gaming industry is projected to attain a revenue of Rs. 25,240 crore, up from Rs. 6,800 crore. Overall, the fantasy gaming industry is expected to grow at a rate of 30% compound annual growth rate.
If we consider a mega event for a fantasy betting then around 1.5 crore people participate, and entry fees is Rs. 49, then a total of Rs. 73.5 crore is collected. Among which, Rs. 33.28 crore is collected by government including GST and TDS. And Rs. 10.58 crore is earned by the owner of fantasy app. This is the amount by only a single match and these are abundant matches held every year. Ample amount of money is earned by central and state government along with fantasy apps owner. These fantasy apps are advertised by celebrities and sports person, and they collect revenue for being the brand ambassador. Even BCCI grants many rights to these fantasy apps and they also collect revenue from the collected amount.
This implies that BCCI, State government, Central government, Sports persons, Celebrities are collecting ample amount of revenue, which is collected from the pockets of common people who bets money. These fantasy apps collect its revenue and becoming Unicorn by fooling people and showing them the fake dreams of becoming billionaire. Mathematically the probability of winning in such bets is extremely low. If considering a mega event, the probability is 0.00000667%.
THE ADDICTION OF FANTASY APPS
The winner of these fantasy app, thinks he is clever and he’ll surely win, so again he puts money. On the other hand, one who has lost, again puts money in order to recover the money, and all of them participate again and again which goes like a virtuous circle, which is unending. Due to the low prize barrier, its users are overloaded. Even childrens are becoming addictive towards it. According to the report of American Psychiatric Association, the gambling addiction is put under Substance related disorder. The findings published that the parts of the brain that control the impulses is weak in people with gambling addiction.
WHY FANTASY APPS ARE NOT BANNED
According to the analysis of Indian fantasy sports contribution, the sector gave the Indian sports ecosystem Rs. 3,000 crore a year through variety of sports teams. It contributes to the GDP of country. Foreign Direct Investment is made on Indian Fantasy apps. If government takes any initiative, then no only the current investors but also the future investors will stop investing. If the revenue system of fantasy apps is tickled even a bit, then the revenue of BCCI, State and Central government, IPL, Celebrities, Sports persons, all of their income would get deeply impacted. That’s why experts says that even many regulations are formed but it is never going to be banned, and hence all the old laws are left and not changed according to needs.
Even after petitions in court, judgement always declares fantasy apps as a game of skill as players are choosen by self. From year 2007, the fantasy apps gets a legal status as platforms for fantasy sports are legal businesses that are protected by article 19(1)(g) of the constitution.
CONCLUSION
In conclusion, the legal scrutiny of deceptive plays in fantasy and betting apps reveals a pressing need for government initiatives to regulate and monitor these platforms. As the thin line between entertainment and scams becomes increasingly blurred, it is imperative for authorities to establish robust frameworks that safeguards users from fraudulent practices.
Simultaneously, individuals should be encouraged to exercise caution, steering clear of the allure of gambling, instead channeling their efforts into hard work and productivity to earn money legitimately.
