In this blog post, Dipti Soni, pursuing M.A. in Business law from NUJS, Kolkata, tells if casinos are legal in India or not.

What is Gambling

Dealing in goods and services using some skills for earning a reasonable and expected monetary return forms the regular course of any transaction or business activity. But dealing in money and its kind using very little or no skill and relying more on luck for earning unreasonable and unexpected monetary returns can be termed as ‘Gambling’.

What is a Casino

A Casino can be simply defined as a public room or building where gambling games are played.

What is The Central Gambling Law

In India, the Public Gambling Act of 1867 prohibits running or being in charge of a public gaming house or a ‘Casino’. The penalty for breaking this law is a fine of Rs.200 or imprisonment of up to 3 months.

Additionally, this Act prohibits visiting gambling houses. The penalty for visiting a gambling house is a fine of Rs.100 or imprisonment of up to one month.

What Are the Individual State Laws in India

However, gambling is a state subject in India and only states are entitled to formulate laws for gambling activities within their respective states. Currently, out of 29 states and 7 Union Territories, only 3 of them allow casinos as legal.

Which States in India Allow Casinos

• GOA 

Until 1999, land-based casinos were outlawed in all Indian states. Goa was the first Indian state to permit casino gaming. Other states in India have followed Goa’s lead in introducing casinos to encourage tourism.

There are 10 casinos in Goa, out of which six are land based and four are floating casinos that operate on the Mandovi River.

The floating casinos in Goa are –

• Casino Deltin Royale

• Casino Deltin Jaqk

• Casino Pride

• Casino Pride 2

In Goa, Casinos are taxed at the rate of 10%.

In summer 2012, the Goa government began the process of drafting comprehensive casino legislation.

The aim of the new law is to address labor issues, standardize equipment testing processes and introduce mechanisms to track the number of casino patrons. The first of these laws were implemented in winter 2013 when anti-money laundering measures were rolled out.

In December 2015, the Home Department of India drafted a new set of laws that seek to ban local residents visiting casinos, raise the gambling age to 21 and require identification to be presented upon entry to a casino. The bill requires approval by the Goa government before it is implemented in whole or in part. It is expected to go into effect in 2016.

• Daman & Diu

An onshore casino has been launched in the Union Territory of Daman. The largest casino in the entire country of India is Deltin Daman Casino which is located in Daman.

According to the Goa, Daman and Diu Public Gambling Act, 1976, casinos can be set up only at five-star hotels or offshore vessels with the prior permission of the government.

• SIKKIM 

There are two casinos in Sikkim – one is called Casino Sikkim and the other is Casino Mahjong. News reports also suggest that Visakhapatnam is also being looked on as the next casino destination.

What Are The Requisites to Open a Casino in Goa or Daman-

As per the Goa, Daman and Diu Public Gambling Act,1976, the following are utmost essential –

• Casinos can be set up only at five-star hotels or offshore vessels with the prior permission of the government.

• As per the recent amendment, the casino operators have to shell out Rs 5 crore for running casinos instead of the earlier license fee of Rs 1 crore.

Apart from the above two major factors, the applicants have to abide by other formalities as specified in the Act.

The Goa government has received many applications on this but is going slow considering political and social aspects.

Are Casinos Coming Up in Coastal Cities in Karnataka

Taken from a news report by ‘ timesofindia.indiatimes.com ‘, now it’s clear that the Karnataka tourism department is pushing a proposal to promote offshore casinos and cruise arguing it will boost tourism and allow the government to earn revenue and generate jobs.

It has suggested the state to allow offshore casinos which could operate from a yacht off the coast where entry is restricted to foreign tourists.

If the venture turns out to be successful then the government will consider similar casinos in Belekeri, Malpe, Tadri and other beaches which will allow entry to Indians.

Industries minister RV Deshpande who came up with the proposal when he held the tourism portfolio said that a plan to start casinos in Karwar will be placed before the cabinet. But tourism minister Priyank M Kharge was skeptical.

“Two agencies have come forward to run offshore casinos on the lines of those in Goa but we are treading cautiously. A move to launch casinos may generate opposition since the state has already banned lottery and gambling. In the next few days, we will discuss legalizing offshore casinos” he said.

He said the government had discussed bringing out a casino and cruise policy during Invest Karnataka 2016.

“We must have a policy before granting casino licenses” he added.

At present, only Goa, Sikkim and Daman and Diu allow casinos. Sources said a few top government functionaries and state ministers are not averse to the offshore casinos move.

A senior tourism official said that the proposal was prepared after studying the concept of offshore casinos in Goa, their revenue model and various other aspects.

“It’s time casinos were legalized in coastal areas to promote tourism. A lot of people from Karnataka go to Goa to visit casinos. Many illegal clubs are functioning from apartments and rented office spaces. The state is losing out on a lot of revenue by not legalizing casinos” he added.”

Also, many other states are considering offshore casinos as a remedy to attract foreign tourists.

Are Online Casinos Operating in India

Online gambling is in its infancy in India and online casinos are not yet completely into existence in India. The state of Sikkim offers online horse betting and lotteries. Sikkim planned to offer three online gambling licences in 2010. It was expected that other states would follow Sikkim thereby, opening up a major online gambling market throughout India. This failed despite India being the most sought out country for online gambling.

Funding Option Laws To Consider (Forex Law)

There is a law in India that says that it is illegal to fund online gambling sites without using Rupees as the currency. This law is called the Foreign Exchange Management Act.

It says that if you have to place a bet at an online bookmaker or gaming site you need to do so in Rupees. Only a few sites take currency in Rupees in which you can fund and withdraw via the same currency so, most players from India simply choose to use an electronic wallet. Examples of the most popular ones are Moneybookers, Paypal, and Neteller.

Conclusion on Online Casinos and Gambling

As discussed, though online casinos are not yet allowed as per The Public Gambling Act, 1867, there are too many loop holes in the Indian Governmental betting laws. With a growing middle class and youth, a huge population and offshore casino giants are looking to make a stand in India. It is only a matter of time before online licenses are given out to betting firms offshore to fully allow online betting and gambling in India.

What Does One Do with Casino Income in India & What Are The Tax Liabilities

Let us take an illustration to understand this –

Say, Mr. X earns an amount of rupees 1 lakh in a casino in Goa. So he can deposit his income from casino, that is this rupees 1 lakh in his bank account. Now Mr. X needs to file an income tax return for that particular year as he would fall under the category ‘Individual’. The tax on the income earned by Mr. X through gambling is thirty percent along with a surcharge of ten per cent on the above tax.

No deductions and exemption are available against such income under the income tax act.

Mr. X also needs to check if the gambling house has deducted tax at thirty percent before handing over his winnings to him. If not, he is liable to pay the same when he files his income tax return. The said tax on “winnings from gambling” is covered under Section 194 B of the Income Tax Act.

If Mr. X earns casino winnings outside India the host country will usually deduct tax on his winnings before handing over his balance amount. The said amount can be deposited in his local account in India provided he transfers the same through banking channels otherwise, it is illegal to carry huge amount of cash across international borders. Usually, an amount of USD 5000 is allowed as foreign currency into India if it exceeds the limit. The same has to be reported to customs.

If Mr. X transfers the winnings from abroad the said amount will attract tax, as he is a resident of India. For a resident of India, his global income is taxable in India so he will be required to pay a tax locally in India in addition to the tax he pays in the foreign country.

In Casino Gambling Why Does The House Always Win

If the house would not win it wouldn’t exist. Games in a casino are designed in such a way that it preserves the house edge so that over the thousands of bets, the casino will come out on top.

While individually people may win millions on individual bets, in the long run, players as a whole will give the casino a small percentage more money than they take away from it. So the house does not always win in the short run. But in the long run, it is a very profit making business.

For example, you may very well go to a casino in Goa for a weekend and double your money gambling in that casino but if you go to Goa every weekend of your life, your chances of profiting from the excursions go down to almost zero or even negative.

What Are The Benefits of Casino Gambling

Let us discuss benefits of Casino Gambling in a country like ours from both an individual point of view and government point of view.

Benefits from an individual point of view –

• While gambling in a Casino, a person has the possibility of making as much money as he wants immediately without any limitations on time or effort put, provided he wins.

• The amount of money to be won does not remain in only a few percentage of the capital employed as in other standard business activities. One can earn even twice, thrice or many fold times the capital employed, that is the money invested or put on stake.

• Besides earning money playing in a casino is a kind of leisure for a person. One has to do his routine business activities as a necessity to earn his living but in a casino, it’s like you are playing and enjoying and earning at the same time.

• Regular business can become monotonous and boring to a person but in casino gambling, one can choose from many games available. For example, poker, bingo, roulette and many more.

• Playing in a casino becomes a stress buster for an individual as it serves as a relaxation method.

• If a person wins often, it can develop a technique of self-discipline.

• Not much skill is required in a casino, it’s more of a chance based place to win so, the unskilled and unemployed can also earn.

Benefits from the Government point of view –

If casinos are legalized in a state, the government can reap the following benefits –

• Casinos can attract and boost tourism in a state considerably.

• Tourists from other states bring in more money to the state and tourists from other countries bring in more foreign exchange.

• Government can collect revenue right from the issuing of licenses stage.

• If proper taxes are levied on the casino operation, a government can reap handsome taxes.

• Successful and popular casinos boost employment generation directly and indirectly in a state.

• More money spent by people, more money in the form of taxes to the government, more employment generation leads to better infrastructure programs by the Government.

• All this adds to the overall growth and prosperity of the state.

Why Are Casinos Not Legal in Most Parts of Our Country & What Are The Limitations of Casino Gambling

Now, let’s discuss the limitations of casino gambling with respect to an individual or a society and also with respect to the government –

Limitations from an Individual or Social point of view

• While gambling, a person can lose all his money immediately if he loses his bet. So, winning might be a possibility, losing all the money can be a big blow to a person.

• A business provides more or less fixed or secured percentage of profit or loss but a casino bet can completely take away 100% of your capital, can even leave you in a debt.

• As playing in casino is a leisure, a person does not realise when he over does his bets and risks.

• Too much of fun and ecstasy in the casino games leaves a person completely out of his senses, only to repent later after heavy loss.

• No person can always win in a casino, that is why it ultimately drains the peoples savings to land in the hands of a few owners.

• Losing money often makes a person pessimist and leads to depression as a disease or even suicidal attempts thereby, ruining families altogether.

• As not much skill is required to earn, this misleads the youth and takes them away from education and hardwork.

• Casino gambling is addictive in nature regardless of a person winning or losing. If a person wins, he plays further to win more. If a person loses, he plays to win back his lost amount. Thus, this forms a vicious circle, making difficult for a person to overcome it.

Limitations from the Governments point of view

The Indian Government and the State Governments also still holds an orthodox approach when it comes to the legality of casino gambling except a very few states because of the following reasons –

• Casino gambling involves too much money usage at a place thereby increasing the risk of crime, blackmailing, formation of underworld gangs, extortions, which is not good for the law and order of the area.

• As it’s very expensive, the rich indulge more thereby, making the owners or a few handful of people richer, leading to an imbalance in the society.

• Presence of casino leads to an increase in prostitution, drugs and alcohol usage in the locality thereby, misleading the youth, taking them away from growth and development.

• All this creates a threat to the social safety and security.

• Though casinos boost tourism, it can ruin local businesses and social life because easy money attracts the local businessmen on a regular basis, affecting their routine life.

• Too much of money involvement for setting up a casino to manage its day-to-day affairs, to pay taxes, leads to increased corruption in the system as well as weakens law and order.

Conclusion – Whether Casinos Are Helpful or Harmful For Social and Economic Growth & Development

Casino gambling is not really a problem only if proper rules and regulations are set up and followed by the governing bodies, owners and the consumers. World’s greatest cities and tourist destinations have the most famous and successful casino houses because they abide strictly by certain rules and regulations as set by their regulators and authorities. Best examples range from Las Vegas Casinos, farthest from the west, to Singapore, Hongkong – Macau, Quala lumpur Casinos, nearest in the east.

What Measures Are Required To Be Taken To Make Casino in India Yield Benefits & Cut Down The Limitations

Gambling laws for casinos can so be amended and put into work that we can reap all its positive effects on social and economic front. Also, the shortcomings and fears of the limitations can be put aside through the following suggested measures (a part of these measures are already being observed but it should be followed more diligently to curb all the disadvantages) –

• Government should choose those places for casinos which are or can be developed into tourist attractions. This will attract more of foreign exchange and tourism based employment.

• Requisite fees for license agreements should be high to minimise competition within and maximise government funds for welfare of the people.

• The taxes on casinos should also be high to minimise income gap in the society, also this will again increase government revenues.

• Local people should not be permitted to enter the casino for playing thereby allowing a normal socio-economic life for the localites.

• People from other states can be allowed in the casinos to gamble, only with a ceiling in number of times to be allowed to play in a certain period, with a fixed limit for playing. They should not be allowed to play beyond that limit.

• Minimum age for gambling can be fixed to 21 or above, may be till 25, so that the youth are settled in their life and can make sensible decisions regarding gambling.

• Proper records should be maintained as per the identity and income of the persons entering and gambling. Thus, their gains or losses would be accounted for, making a hard route for black money to exist.

• People below a certain income group should not be allowed in the casinos so that they don’t lose their precious money to their leisure which would otherwise fulfil their basic necessities.

• No limits should be fixed for foreigners and NRIs to attract foreign exchange in the country.

Final Word

Today, when demonetisation is the order of the day, the above measures would go a long way in curbing black money, corruption, and current ill effects of casinos and building up a transparent and growth friendly gambling system for a healthy and ever growing economy.

Where casinos are considered bad /a sham in the conservative world, they’re are creating utilities in the psychological & economic sector. Isn’t it? Drop your comments & Share the article.

 

References –

• casinocity.in
• timesofindia.indiatimes.com
• onlinebetting.com
• gamblingtodayblog.wordpress.com
• wikipedia.org