What is Gambling?
Gambling is the risking or staking of money or any other valuable security, referred to as “stakes,” on an event with an uncertain outcome, with the main intention of winning more money or a material benefit. Three essentials must be fulfilled: consideration (the amount that is put at stake), the risk taken, and the price or outcome of placing the money at stake. The outcome can be immediate (e.g., rolling dice, spinning a roulette wheel) or long-term (e.g., a future sports contest). Traditional gambling occurs in physical spaces, while modern gambling encompasses computers, mobile phones, and the internet.
What is Betting?
Betting is a specific form of gambling, often used in the context of sports gambling. It involves a structured agreement between two parties, where one predicts an outcome and places a bet while the other person agrees to pay the bet amount if the prediction is incorrect.
Laws Governing Gambling in India
Most gambling activities in India are under strict control, with exceptions such as horse racing and lotteries. Gambling is a state subject, meaning only state governments can formulate and govern such activities. The Public Gambling Act, 1867 is the general law governing gambling in India, but many states have their own legislation to regulate gambling. Most laws were enacted before the rise of online gambling, primarily addressing physical gambling forms. Historically, all forms of gambling were prohibited in many states during British rule, with Goa and Sikkim being notable exceptions that allow regulated gambling.
The Public Gambling Act, 1867
Main prohibitions under this Act include:
- Owning, keeping, occupying, or managing a gaming house.
- Participating in gambling at a gaming house.
- Advancing money for gambling in a gaming house.
Types of gambling prevalent in India include casino gambling, sports betting, horse racing, lotteries, online gambling, and school games. The legal framework divides gambling into games of skill and games of chance.
Game of Skill vs Game of Chance: Validity and Laws
Skill games, defined by the Supreme Court, are competitions where success depends on skill. For example, horse racing involves a significant amount of skill and is not categorized as gambling, while games like “flash” or “flush” are considered games of chance. Rummy has also been classified as a game of skill.
Online Gambling and Betting
The Public Gambling Act does not specifically address online gambling. Many online betting operators exist, enticing gamblers to place bets online. The Reserve Bank of India regulates electronic payments related to gambling via the Payment and Settlement Act, 2008. Although there is no explicit law against online gambling, significant restrictive measures exist, particularly concerning payment processing.
Different Types of Gambling and Their Legality
1. Gambling in Casinos
Casino gambling is regulated by the Public Gambling Act. Only Goa and Sikkim have legalized casino gambling under strict regulations.
2. Sports/Horse Race Betting
Betting on horse racing is recognized as a game of skill, with specific regulations set forth. Sikkim allows licensed online sports betting.
3. Cricket Betting
Cricket betting is not outrightly prohibited, but the government views it as a game of chance. Legalization has been suggested to curb money laundering.
4. Poker
Certain variations of poker are considered games of skill and are permitted under Indian laws.
5. Bingo
Bingo may be classified as a game of chance and is banned in many states.
6. Lotteries
Government lotteries are regulated under the Central Lotteries (Regulation) Act, 1998, allowing state governments to organize lotteries.
Application for a License and License Restrictions for Gambling in India
- Casino: Governed by Goa and Sikkim laws, requiring licenses for operations.
- Poker: Generally permitted without a license in most states, but Sikkim and others may require it.
- Betting: Most states prohibit betting as a game of chance. License requirements vary by activity.
- Sports/Horse Betting: Requires licenses for physical horse races but not for online betting on these races.
- Lottery: State governments can appoint distributors for government lotteries.
- Social Gaming: Typically does not require licenses.
Tax Levies for Gambling and Betting in India
- Income Tax: Winnings over INR 10,000 are subject to a 30% withholding tax.
- Equalisation Levy: A 2% tax on online services supplied to Indian residents by offshore operators.
- GST: A 28% tax is applicable on gambling services and entry to entertainment events.
Need for a Lawyer
Since gambling laws vary by state, hiring a lawyer is essential for navigating these laws effectively. A lawyer can assist in legal defense for gambling-related cases and help report illegal gambling activities.
These guides are not legal advice, nor a substitute for a lawyer.
These articles are provided freely as general guides. While we do our best to ensure these guides are helpful, we do not guarantee their accuracy or appropriateness to your situation, nor do we take any responsibility for any loss caused by their use. Always seek experienced legal advice first.