Author: Vaishnavi Shukla, Arya Kanya degree college constituent college of Allahabad University
To the point
Gambling involves engaging in games, activities, or events where individuals stake money or other valuable items on an uncertain outcome, with the main aim of winning additional money or prizes. It is essentially the act of betting, where a person risks money or valuables in the hope of earning more in return. While most gambling outcomes are based on chance, certain games may also require skill or strategic thinking. Gambling appears in many forms, including casino games (such as slot machines, roulette, and poker), sports betting, lotteries, online gambling, and card games like blackjack and baccarat. Interestingly, gambling can be carried out both in physical settings and on online platforms. Traditional gambling usually occurs in casinos, at sporting events, or in other physical venues, whereas online gambling is conducted through digital platforms, often using credit cards for placing bets, with winnings and losses settled electronically. Technological advancements have transformed the online gambling industry, making it more accessible, convenient, and innovative. To regulate such activities, the Public Gambling Act of 1867 was enacted, serving as a key piece of legislation in India. This article presents an overview of gambling, online gambling, its legal status in India, and the penalties associated with online gambling in the country.
In India, online gambling refers to engaging in betting or wagering activities through internet-based platforms or websites. In simple terms, it involves using the internet to place bets and earn money in a virtual setting. Instead of physical cash, participants often use digital payment methods or virtual currencies for transactions. Numerous websites and mobile applications provide access to online gambling, with card games like Teen Patti and Rummy Draw being particularly popular among Indian users. While discussing online gambling, the term “online gaming” also comes into play. Generally, if an online activity depends on a player’s skill, it is categorized as gaming, whereas if the outcome depends mainly on chance, it is considered gambling. The Public Gambling Act of 1867 does not contain any provisions addressing internet-based gambling. However, the Information Technology Act, 2000, acknowledges web-based wagering and gaming, though it does not specifically address online gambling. Since gambling is listed as a State subject under the Indian Constitution, individual states have the authority to enact their own regulations on the matter. Even in states where online gambling is allowed, it is usually subject to certain rules, such as minimum age requirements, licensing obligations, and restrictions on the types of games or bets permitted.
Use of legal jagron
Within the Indian statutory and constitutional framework, online gambling refers to the engagement in betting or wagering transactions through internet-based services, mobile applications, or other electronic communication networks. Legally, it involves the risking of monetary stakes, digital currencies, or other items of value on the outcome of an event or game, where the determination may depend wholly on chance or, in some circumstances, on a blend of chance and skill. In the domestic market, popular digital card games such as Rummy Draw and Teen Patti serve as common examples of such activities.
The Public Gambling Act, 1867, being a pre-independence enactment, continues to operate as the primary legislation governing gambling in India. However, its provisions are confined to physical gaming houses and do not extend to activities conducted in a virtual environment. The Information Technology Act, 2000 addresses certain unlawful online conduct and transactional aspects but does not specifically regulate online gambling as a distinct category.
As per Entry 34, List II of the Seventh Schedule to the Constitution of India, “betting and gambling” are matters within the exclusive jurisdiction of State Legislatures. Accordingly, States and Union Territories have the constitutional authority to frame, amend, or repeal gambling laws within their territorial boundaries. This decentralised competence has resulted in a non-uniform legal regime while States such as Nagaland and Sikkim have introduced targeted laws like the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2016 and the Sikkim Online Gaming (Regulation) Act, 2008, other jurisdictions impose an absolute ban.
In States where online gambling is permitted, participation and operation are subject to statutory licensing, minimum age thresholds, and strict compliance requirements. Operators must secure prior governmental approval, implement technological safeguards, maintain robust Know Your Customer (KYC) verification processes, and comply with anti-money laundering obligations under the Prevention of Money Laundering Act, 2002. Breaches of these regulatory mandates can attract penalties ranging from monetary fines to licence revocation, and in certain cases, criminal prosecution.
In the realm of Indian legal discourse, the expression “online gambling” refers to the act of placing wagers or stakes whether in the form of monetary consideration, virtual currency, or any other asset of value through internet-enabled platforms. The determination of profit or loss in such activities may depend entirely on chance or on a combination of chance and skill. The proliferation of digital technology, including mobile applications and dedicated gaming portals, has reshaped conventional gambling into a virtual and technology-driven model. Within the Indian context, games such as Teen Patti and Rummy Draw are notable illustrations of these activities.
Legislative Position
The Public Gambling Act, 1867 continues to be the primary statutory instrument regulating gambling in India; however, its provisions are confined to physical gambling establishments and do not extend to online or virtual formats. Under Entry 34 of List II in the Seventh Schedule of the Constitution of India, legislative competence over “betting and gambling” rests exclusively with State Legislatures. Accordingly, States and Union Territories have unfettered authority to legislate, regulate, or prohibit gambling within their respective jurisdictions, resulting in a fragmented and non-uniform legal framework.
Some States most notably Sikkim and Nagaland have enacted specific laws to govern online skill-based gaming. The Sikkim Online Gaming (Regulation) Act, 2008 authorises and regulates designated online games within its territorial boundaries, subject to licence requirements. Similarly, the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2016 draws a statutory distinction between “games of skill” and “games of chance” and provides a licensing framework for the former.
Judicial Pronouncements
The differentiation between games of chance and games of skill has received substantial judicial attention. In State of Bombay v. R.M.D. Chamarbaugwala (AIR 1957 SC 699), the Supreme Court held that competitions predominantly involving skill fall outside the constitutional definition of “gambling.” This doctrine was reaffirmed in Dr. K.R. Lakshmanan v. State of Tamil Nadu (AIR 1996 SC 1153), wherein horse racing was classified as a game of skill. More recently, the Madras High Court, in Junglee Games India Pvt. Ltd. v. State of Tamil Nadu (2021), recognised online rummy as a game of skill and upheld its protection as a legitimate trade under Article 19(1)(g), subject to reasonable restrictions under Article 19(6) of the Constitution.
Supplementary Legal Provisions
While the Information Technology Act, 2000 does not specifically regulate online gambling, certain provisions—such as Section 67 (dealing with the publication or transmission of obscene content) and Section 69A (empowering the blocking of public access to certain information)—have been utilised to curtail unlawful betting portals. Additionally, operators conducting monetary transactions must adhere to compliance obligations under the Prevention of Money Laundering Act, 2002, the Foreign Exchange Management Act, 1999, and follow KYC/AML norms issued by the Reserve Bank of India.
Regulatory Compliance and Sanctions
In jurisdictions where online gambling is lawful, service providers must obtain the requisite statutory licence, verify the age of participants, implement geo-blocking technology to restrict access from prohibited areas, and maintain responsible gaming safeguards. Breach of these obligations can result in monetary fines, revocation or suspension of licences, and, in severe cases, criminal prosecution under applicable penal laws.
The Proof
In India, gambling laws are not governed by a single, uniform statute; instead, their regulation is complex and varies depending on the type of gambling and the laws of individual states. As gambling falls under the State List in the Seventh Schedule of the Constitution, each state has exclusive authority to make laws governing such activities within its borders. At the national level, the primary legislation is the Public Gambling Act, 1867, which prohibits certain forms of gambling but makes a distinction between games of chance and games of skill. Since this Act was enacted long before the internet era, it contains no explicit provisions for online gambling, leaving the legal status of such activities ambiguous.
Several states have introduced their own gambling regulations, which either ban or control online gambling within their jurisdiction. For instance, Maharashtra, Telangana, and Andhra Pradesh have laws that make most online gambling activities illegal, while states like Madhya Pradesh, Uttar Pradesh, and Delhi have adopted the Public Gambling Act with modifications. In contrast, states such as Goa and Sikkim have taken a more liberal approach by legalizing and regulating certain gambling activities. Under the Sikkim Regulation of Gambling (Amendment) Act, 2005, and the Goa, Daman, and Diu Public Gambling Act, 1976 (later amended to permit slot machines in five-star hotels), these states issue licenses to operators who meet their regulatory requirements, allowing them to offer online casinos, sports betting, and other approved gambling services.
Relevant Authorities and Legislative Framework
In India, the regulation of gambling and skill-based gaming is primarily governed at the state level, with each state determining the legality and licensing requirements for various gaming activities. The legal status of each product whether in physical or online form depends on its classification as a game of chance, a game of skill, or a hybrid of both, and on whether the respective state law expressly allows, prohibits, or regulates it.
Casino Gaming (Roulette, Blackjack, Slot Machines)
Casino games are generally classified as games of chance and are therefore restricted under most state gambling statutes. Exceptions exist in certain jurisdictions:
Sikkim: Licensed under the Sikkim Online Gaming (Regulation) Act, 2008, these games can only be offered within the state and are regulated by the Finance, Revenue and Expenditure Department.
Goa, Daman and Diu: Governed by the Goa, Daman and Diu Public Gambling Act, 1976, casinos can operate in designated venues, including offshore vessels, under licences issued by the Home Department.
Land-based Casinos in Sikkim: Regulated by the Sikkim Casinos (Control and Tax) Act, 2002, overseen by the Tourism Department.
Poker
While certain courts and state laws such as in Nagaland and Sikkim recognise specific variants like Texas Hold’em and Omaha Hold’em as skill-based games, the classification varies across states. For example, West Bengal expressly excludes poker from its gambling laws, while the Gujarat High Court has deemed it a game of chance (a decision currently under appeal). Nagaland licenses online skill-based poker under the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2016.
Bingo
Depending on the format, bingo may be treated as either a lottery or a game of chance. If categorised as the latter, it is prohibited in most states unless operated as a state-run lottery.
Betting
Betting on games of chance is generally banned under state laws, with exceptions for certain activities such as horse race betting.
Horse Race Betting
Recognised by the Supreme Court as a skill-based activity, horse race betting is allowed in many states under specific conditions—such as wagering only on race days and within designated enclosures. Online betting is permitted in select jurisdictions like Maharashtra, Telangana, and West Bengal through turf club arrangements, though regulatory challenges remain in states like Karnataka.
Fantasy Sports
Courts in Punjab & Haryana, Bombay, and Rajasthan have upheld formats like those offered by Dream11 as games of skill, granting them protection under the Constitution as legitimate businesses. The Supreme Court has repeatedly dismissed challenges to their legality, affirming their status while noting pending appeals in related tax matters.
Lotteries
Lotteries are excluded from most state gaming prohibitions and are regulated under central and state lottery laws. Private lotteries remain banned under the Bhartiya Nyaya Sanhita, 2023 unless authorised by the state.
Social and Skill Gaming without Monetary Stakes
Games without monetary or equivalent rewards generally fall outside the scope of state gambling prohibitions. Games that are predominantly skill-based are exempt in most jurisdictions, though Sikkim and Nagaland require licences for their online formats.
Central Oversight for Online Gaming
In April 2023, the Ministry of Electronics and Information Technology introduced amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, establishing a co-regulatory framework for online gaming. Under these Online Gaming Rules, platforms classified as “online gaming intermediaries” must comply with due diligence obligations. Self-regulatory bodies, recognised by the Ministry, are tasked with verifying whether an online real-money game meets prescribed criteria before it can be offered to the public.
Abstract
This piece examines the intricate legal environment surrounding gambling and online betting in India, tracing its historical evolution and the current regulatory structure. It underscores the urgent need for a cohesive and comprehensive national policy to govern online gambling and betting activities. The discussion evaluates both the potential benefits and the risks of legalising online sports betting, particularly in relation to challenges such as match-fixing, loss of tax revenue, and the circulation of unaccounted money. It reviews the differing legal positions adopted by various Indian states, stressing the importance of clearly distinguishing games of skill from games of chance and implementing robust regulation for online gaming platforms. In addition, the article analyses the suggestions put forward by the Lodha Committee and the Law Commission of India, outlining possible steps toward establishing a harmonised and well-defined legal framework for the sector.
Case laws
1.Case Name: R.M.D. Chamarbaugwala v. Union of India, AIR 1957 SC 628
Court: Supreme Court of IndiaYear: 1957
Facts:- R.M.D. Chamarbaugwala ran crossword prize competitions in Bombay, offering cash rewards to winners. The Bombay Lotteries and Prize Competitions Control and Tax Act, 1948 sought to regulate these as gambling. Chamarbaugwala argued they involved substantial skill, not pure chance, and thus were protected under Article 19(1)(g). The key issue before the Supreme Court was whether such skill-based competitions could be classified as gambling under state law.
Judgement:-The Supreme Court drew a clear distinction between games of skill and games of chance. A game is considered one of “mere skill” if skill predominates, even when an element of chance exists, and such activities are not classified as gambling. Competitions requiring substantial skill qualify as legitimate business activities and are safeguarded under Article 19(1)(g) of the Constitution. In contrast, games where chance is the dominant factor constitute gambling and may be prohibited by the state. Consequently, prize competitions based largely on skill cannot be restricted under gambling laws. This judgment laid down the “Predominance of Skill Test,” which continues to guide the legality of various games in India, including online gaming and fantasy sports.
2.Avinash Mehrotra v. State of Rajasthan (2021 SLP) — Combined Facts & Judgment
Facts:-Avinash Mehrotra approached the Supreme Court through a Special Leave Petition, contesting a 2020 ruling of the Rajasthan High Court which had categorised fantasy sports platforms, such as Dream11, as games where skill predominates over chance. He contended that these activities amounted to gambling and should therefore be barred under state gambling statutes.
Judgment:- The Supreme Court refused to entertain the petition, thereby affirming the view that fantasy sports constitute games of skill and not gambling, placing them within the protection of Article 19(1)(g) of the Constitution. The Court also observed that this question had already been conclusively determined in prior judgments by various High Courts, including those of Punjab & Haryana and Bombay, making it a settled legal issue (res integra).
Conclusion
India’s legal landscape for online gambling is fragmented and evolving, influenced by a combination of outdated central laws, state-specific regulations, and judicial rulings. The Public Gambling Act of 1867 governs traditional gambling but does not cover digital platforms, creating a regulatory void. Since states have the authority to regulate betting and gambling, rules differ widely across the country. Courts have drawn a clear distinction between games of skill and games of chance, allowing skill-based platforms such as fantasy sports while restricting chance-based gambling. Tax provisions, including a 28% GST on gaming fees and a 30% tax on winnings above ₹10,000, aim to regulate the sector, yet illegal online gambling continues to operate, often through offshore websites. Cases like the Mahadev Betting App expose enforcement difficulties and potential money laundering risks. In response, courts such as the Allahabad High Court have emphasized the need for comprehensive legislation that defines online gambling, establishes regulatory oversight, and safeguards consumers. Although certain forms of online gaming are legally recognized, the sector largely remains unregulated, highlighting the urgent necessity for a unified national framework to manage online gambling effectively in India.
Reference
1.Navigating the Legal Maze: A Comprehensive Policy Analysis of Online Betting and Gambling Laws in India (IP & Legal Filings, 27 February 2024) https://www.ipandlegalfilings.com/navigating-the-legal-maze-a-comprehensive-policy-analysis-of-online-betting-and-gambling-laws-in-india/
2.
‘Online betting apps: understanding India’s digital gambling challenge’ VisionIAS, Current Affairs – Polity & Governance (date not provided) https://www.visionias.in/blog/current-affairs/online-betting-apps-understanding-indias-digital-gambling-challenge#:~:text=The%20legal%20distinction%20between%20’games,to%20online%20platforms%20creates%20ambiguity.
3.Sanju George, Richard Velleman and Benedict Weobong, “Should Gambling Be Legalized in India?” (Indian Journal of Psychological Medicine, March 2021) https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8313460/
FAQs
1.Which legislation serves as the main central law governing gambling activities in India?
Ans. The Public Gambling Act 1867
2. Under the legislation of India “ game of skill” is :
Ans.B A game where skill is the dominant factor, even if chance is involved.
3.Under which Article of the Indian Constitution is the right to carry on a profession or business, such as running a game of skill, safeguarded?
Ans.Article 19(1)(g)
