This article is written by Smaranika Sen, from Kolkata Police Law Institute and updated by Subhadeepa Sen. This article deals with the online gambling scenario in India. 

Introduction

Gambling has existed for a long time. It is a game of betting where money is involved as a bet. The game is based on an uncertain event, where the main aim is to win money or any goods. Online gambling has been in existence since the mid-1990s. Online gambling is the same as gambling. The only difference is that in online gambling the whole gaming process takes place over the internet. Virtual poker, sports betting, etc are different types of examples of online gambling. Both gambling and online gambling are prevalent in India. However, there still lies a lot of confusion regarding the prevalence of online gambling, its effects, legality, etc.

History of online gambling

Online gambling, an increasingly popular mode of entertainment, is not a new phenomenon. Interestingly, it has quite a history attached to it. The genesis of the same lies in the rich cultural history of India which dates back to thousands of years. Ancient India reflected certain instances where gambling emerged to be a favourite pastime of people. There have been direct references to the same in the ancient epics like Mahabharata and Ramayana. It can be observed that such gambling activities were quite prevalent in various festivals and gatherings in the form of board gambling, betting and animal fights.

In the early 2000s, online casinos in India rose into prominence. As information technology in India grew leaps and bounds and so did the World Wide Web, Online Gambling platforms saw a huge rise in the demand. Over the last few decades, this online gambling industry gained huge popularity. The burgeoning appeal of Online Gambling had definitely given rise to a very fresh dimension to the nation’s landscape. In India, that constitutes a staggering populace of approximately 1.3 billion individuals, a surprising statistic emerges that reveals that almost 40% of the population that constitutes adults of age 18 and above engage in such gambling activities at least once every year. 

Online casinos have become a very sought-after choice for the Indian users who seek to engage in an immersive casino experience. The underlying reason for the same is the manifold advantages that it brings about to its users. Some of the notable advantages would be the convenience it provides to its users, a veritable spectrum of banking options, their sterling reputation, the robust security measures that have been incorporated in such places and the wide array of games accessible to them. Some remarkable initiatives have been taken by certain pioneering online gambling platforms that boast to have embraced cryptocurrency as their primary mode of all their financial transactions, thereby adding their hint of innovation and novelty in their landscape. These online casinos rely themselves on provably fair gambling algorithms that serves as the foundation stone to ensure that utmost fairness and verifiability is maintained at all times and at all levels.

Types of online gambling

Keeping in view of the nature, characteristics and risks associated, Online Gambling can be categorized in a few different types in which they tend to operate.

Online casinos

These casinos are designed in such a way that allows the user to have the same experience as he would if he were at a physical casino. It offers an assortment of entertaining games like roulette, slots, blackjet, etc., with high quality graphics and sound effects that brings it closer to a real casino environment. One of the primary risk that is associated with online casinos is the risk of getting addicted to the same due to its extremely easy accessibility and the online nature of it allows for a very smooth gateway to spend money which often gets spent more than one intends to and later have deleterious consequences on one’s financial and mental health. 

Sports Betting

This form of online gambling is another game in which the players involved bet on what the outcome of the game will be. For instance, a particular cricket match is scheduled to take place. The players will now bet on a particular team that they think might win the match and if they actually do, the player would be rewarded. Sports betting can be seen in traditional sporting events like football, baseball etc., but also some niche sports like horse racing, darts, cycling and so on. The risks involving such games are the risk of identity thefts due to its online nature, rigged games as well as unfair payouts. Dishonest operators may also cause trouble to the players due to its unregulated nature. 

Online Lotteries 

This is a very common and popular form of online gaming that works very similar to a physical lottery that takes place around our local neighborhoods. The players have to purchase the tickets and unlike the ones that place in our neighborhood, the players purchase such lottery tickets from around the world. Some of the traditional lotteries would be Powerball and Mega Millions.  

Online Poker

Online Poker is perhaps the most popular form of online gambling and has been very systematic in its working. There are numerous events and tournaments that are hosted by the online poker sites and the players are often lured by the huge prizes that come with it. A wide arena of games including Omaha, Texas Hold’em, Seven Card Stud, allow the players to choose to participate in whichever sparks their interest. A large specter of opponents to play against is what is an unique experience that the players get in online poker however, it is also plagued with risks like cheating and collusion.

Game of chance v. game of skill (Before Online Gambling: the current scenario)

The Supreme Court of India on various occasions has distinguished between game of chance and game of skill. The Apex Court in the case of State of Bombay v. R.M.D Chamarbaugwala (1957) held that a game is required to involve a significant amount of skill in order to not get termed as a game of chance. It must predominantly rely on skill and the term “mere skill” should not be interpreted otherwise. This stance was further clarified in the case of K.R. Lakshmanan v State of Tamil Nadu (1996) where the court laid down the preponderance of skill test. This test essentially means that in order to be classified as a game of skill, the success of the player in the game should in essence rely upon the attention, knowledge, experience, training, application power etc of the player. Even if an element of chance exists, it should not dominate the skill of the player in determining the winner in the game. 

Rummy, which is regarded as one of the most popular games online, was declared to be a game of skill by the Supreme Court in State of Andhra Pradesh v K. Satyanarayana & Ors (1967). The Court took into consideration the fact that game involved memorizing the cards, holding them and discarding them which involved significant amount of skill at the same time there was an element of chance involved since the distribution of cards are not predetermined, nor based on the skill of any player rather it is based upon sheer luck. However the court distinguished that a mere element of chance cannot take away the entire character of a game of skill if it is predominantly dominated by the skill of the players. An element of chance is present in every game of cards however this cannot lead to the conclusion that no skill is involved in the game of rummy. 

Various High Courts have also expressed their views on this issue. The Bombay High Court in the case of Gurdeep Singh Sachar v. Union of India (2019), distinguished fantasy sports from gambling. This distinction was made based upon the fact that the results in real life sport matches do not determine the results of winning or losing in fantasy games thus it is not a game based on sheer chance. The High Court of Punjab and Haryana in the case of Shri Varun Gumber v. Union Territory of Chandigarh & Ors (2017) held that fantasy sports involved application of skill in building the team based upon various factors in real life.

Online gambling: the current scenario

Online gambling is very popular in India. As the years are passing, online gaming is growing enormously. Some business tycoons have also stated that within 5 to 10 years, this industry will have massive growth and surpass many other online gaming industries. A study shows that in India, almost a huge section of young people, especially those below 45 years of age are involved in online gambling. This section of people consists of almost 75% of India’s population. This will enhance the growth of this industry. 

The main attraction of this industry is the winning prize. Online gaming has always been a favorite of youngsters. But when such gaming involves cash or any material goods, more people are interested to play. People in the age group of 30 to 40 years are likely to play this game. A lot of websites are increasing day by day in the field of online gambling starting from casinos to online poker. Even the number of users is increasing day by day. An estimation of India’s online gambling market value is about $60 billion per year. Though 50% of it comes from illegal gambling.

One of the most important factors of online gambling is its prevalence to a huge lot of mass. Previously, for online gaming one has to depend on gaming consoles, desktops, etc. But now with the advancement of technology, online gambling can also be played on our smartphones. And we know that nowadays the availability of android or iPhones etc is very common. Even the way of playing such online gambling has become much easier and thus more and more people are playing it. The year 2020 and the ongoing year 2021 have shown a massive factor in the growth of the online gambling industry. Due to the pandemic, we are all sitting at our homes, and starting from work to education everything is being done over the internet. At this time, online gambling has been a boredom reliever to a lot of people. A huge section of people are now interested in playing it.

Advertisements of online gambling apps have also played a huge role in its growth. We all know how much India loves cricket. Apps like Dream11, Gamezy are being advertised in a huge way on television which is solely based on cricket. This has also influenced a lot of people.

Law and online gambling: the grey area 

In India, online gambling or betting is under the control of the State Government. It is not illegal. There is no such particular provision or Act that is solely dedicated to online gambling and which prevents one from engaging in online gambling activities. The Constitution of India states that gambling or online betting is a state subject. It is at the discretion of the State if they want to prohibit any online gambling or exclude any game from the prohibition list in their respective States.

Every State has its legislation regarding online gambling. There is one Central Act i.e. Public Gambling Act, 1867 which is recognized by some states of India. However, provisions of online gambling are not expressly present there. This Act is also of the belief that the laws here are pretty old. 

Online gambling is at times governed by the Information Technology Act, 2000. In this Act, online gambling provisions or punishments are not expressly mentioned. However, this Act gives the right to the government to block some foreign websites or illegal websites that might be harmful to the people of which are immoral to public policy. This Act also permits the government to take down any site which deems to be harmful.

One of the other important factors about online gambling which determines its legality in each State is the game of chance and the game of skill. The game of chance is such a type of game where the game is solely based on luck. In games of skill, the game is played predominantly based on skill. The skill needs to be nourished and the game should be such where the players need to have proper knowledge of the skill. For example, Poker is often considered as a game of skill as it involves a player who needs to have a piece of proper knowledge and experience in this field. It is believed that all games are somehow dependent on luck. But the only thing which differentiates the game of chance from the game of luck is the predominant factor applied in the game. Games of skill are often excluded from the prohibition list of online gambling activities in many States.

Regulation of gambling in India: the curiosity 

One has to realize that gambling needs to be regulated in India. India consists of a huge population and it has been observed that more than half of the population is somehow involved in gambling. The 276th Law Commission Report gives us a detailed view of the gambling scenario and how laws are implemented or regulated in our society. Online gambling laws are solely governed by state legislatures. Some of the state laws on online gambling are:

• Nagaland: Nagaland Prohibition of Gambling, Prohibition, and Regulation of Online Games of Skills Act, 2015 regulates the online gambling laws there. It mostly prohibits online gambling that is solely based on luck. However, it gives licenses to those games which are based on skill. It also allows those corporates who are licensed by the Nagaland government to practice online gambling in other states as well, provided that other states have not banned any of such games.
• Sikkim: Sikkim Online Gaming Regulation Act, 2008 regulates gambling activities in Sikkim. It is one of the leading states in India that have legalized most online gambling activities. They have also given licenses to online casinos. However, as it is State legislation it is only applicable to its state and not wholly over India. As Sikkim is not a large State, it is not gaining a profitable market in the field of online gambling.
• Goa: Goa is popularly known for its offline gambling activities. But the online gambling activities are still not expressly legalized by any law. It is said that some online gambling takes place but most of them are still illegal in Goa.
• Telangana, Andhra Pradesh, Tamil Nadu: These three states have expressly prohibited online gambling activities in their States.
• Kerala: Kerala Gaming Act, 1960 regulates all the gambling activities in Kerala. Some of the online gambling activities like online casinos are permitted.
• West Bengal: West Bengal has been quite liberal regarding gambling laws. It is the only State that allows card games. Online gambling activities are also prevalent here as there is no such law that expressly prohibits it. West Bengal Gambling and Prize Distribution Act, 1957 regulate gambling activities. 
• Uttar Pradesh: Uttar Pradesh is most likely to scrap the Public gambling Act, and introduce its laws in the State to regulate over all the gambling activities there. All sorts of betting including online gambling are strictly prohibited here. 
• Rajasthan: Rajasthan Public Gambling Ordinance, 1949 regulates all gambling activities there. All sorts of betting including online betting are strictly prohibited.

As we know online gambling takes place over the Internet and gambling involves monetary transactions. In India, a lot of e-wallet sites need to be licensed by the Reserve Bank of India to permit any sort of transactions that take place in online gambling. This is regulated by the Payment and Settlement Act, 2007.

Why is there a need to regulate online gambling in India

There are primarily two reasons why there is an ardent requirement to regulate online gambling:

1. i) It enables fraudulent transactions, and 
2. ii) It causes user addiction 

Fraudulent transactions 

There are various kinds of fraudulent transactions which have infested the sphere of online gambling. Few of them are as follows: 

Chargeback abuse 

The concept of chargeback essentially means a user who has faced an unauthorized transaction can claim a chargeback through their banks.The problem arises when the users claim chargebacks even for legitimate transactions. These false claims for chargebacks cause huge losses to gambling establishments. Since upon the grant of these chargebacks the establishments not only lose out on the original revenue but also incur additional processing fees and penalties. The online gambling establishments have to lose out on these amounts primarily because this sector is unregulated and thus it is not convenient for them to pursue these disputes in courts. 

Player collision 

There are instances where online players use spoof locations to create an illusion to other users that they are in different locations. However, in reality, they are together and use their in-person connection to sway the outcome of the “game of chance” in their own favor. 

Multiple account fraud 

One of the prominent methods of conducting frauds on online gambling platforms is creation of multiple accounts by players who take advantage of this and trick other players thereby rigging the entire process of the gamble/game. A very widespread manner of using multiple accounts to fraud is ‘bonus abuse’ where fraudsters take advantage of their multiple accounts and misuse perks like free credits for new accounts. The new sign-ups which happen are essentially just superficial in nature since it is being created by the same set of individuals who use up the promotion benefits for new sign-ups and thereby causing losses to the online gambling platforms. Another form of conducting these frauds is by playing against one’s own self through multiple accounts, in this case, regardless of the result, the same person shall reap the benefits of the gamble. 

Computer/ AI fraud 

With the advent of Artificial Intelligence and its popularization within the masses, the online gambling sector has not remained a stranger to it. Users often use AI to rig the entire gambling process. It is done since the AI has a higher probability and prediction skill than an average human-being therefore when put up against a human it proves to be a better gambler, therefore causing wrongful gain to the fraudster and wrongful loss to the other players. 

Problem of addiction and consumer issues 

The popularity of online gambling has been on the rise since the past one decade. The easy availability and easy access to gambling through online platforms is one of the prime factors contributing to the growing participation of individuals on a global basis. This also brings along with itself other ancillary problems such as vulnerable populations having access to these gambling opportunities which pose additional risks and harm to them. In absence of regulation there is a high possibility that minors, especially those in the adolescence stage, may fall victim to the addiction of gambling. Online gambling platforms provide their users with interactive, immersive environments. In addition to this, the players use digital forms of money in these transactions which leads to them feeling that they are not losing “real money” and they keep indulging more in such activities. The money that is being spent on these unregulated platforms have a high probability of being utilized in crimes such as money laundering etc. Since people do not realise the amount of spending they do on these websites they end up losing a lot of money.

Lack of certain laws a reason for the fall of a promising industry

Online Gambling is a promising industry because a huge amount of revenue can be earned from it. This will not only enhance growth in online gambling corporate industries but also in the whole online business revenue system. However, it believes that this industry is very hard to establish in Indian society. More than 70% of the online gambling industry start-up fails at a very tender level. Several reasons lead to the failure of the online gambling industry. The first and the foremost reason being the lack of any unified and specific law regarding online gambling in India. Different states have formulated different laws regarding gambling. Most of the states have not expressly addressed any laws regarding online gambling. This has led to a lot of confusion among the online gambling industry. As we know, according to the Supreme Court of India games of skill are exempted from the purview of gambling. However, legislation on gambling is a state subject and many states have also banned games of skill as well. Even most of the States have not expressly defined the games of skill and games of chance. Due to the said reasons, the online gambling industry remains in apprehension to introduce any new apps in the market. Even due to the lack of any proper definition or characteristics that are required to make a game identified as a game of skill, a lot of apps are being banned or not released in the market.   

Another important factor that is leading to the decline of this industry is that online gambling corporations are unable to access the wants and needs of the Indian audience. Most of the online gambling industry tries to copy the westernized way of marketing. This does not attract a huge section of the Indian audience. They have to understand the audience’s needs and bring that into their games and marketing nature. 

Ways to deal with the problem

There are certain ways in which this online gambling industry can be extricated:

• Each State should make proper laws especially dedicated to the online gambling industry.
• The laws should be very expressive and distinct.
• It should properly define the terms and indicate the requirements of what is legal and what is not. 

The industry of online gambling especially games of skill, has to improve its technology and make it much easier so that it becomes accessible to a lot more users. It has to understand the needs of the customer and design accordingly. As many online gambling apps are banned they have to be designed in such a way that it gets approval of the government. While making such apps, the industry needs to abide by the law and make it accordingly. 

We have to also understand that many online gambling activities are banned, yet they are prevalent. Some of them are harmful to people and can cause a lot of monetary loss. More strict laws should be created to prevent illegal gambling. Laws can be also made on the limitation of the amount of money one can use in a day for such activities(if it is legal) so that huge money loss can be prevented.

Comparative analysis of online gambling

Different countries and different jurisdictions have opted for different approaches with respect to online gambling activities and hence, it can be a little complex and challenging to compare the legalities of the same. Some countries may boast of a robust legislative framework that regulates the online gambling industry making it legal for its residents and even non-residents to participate in such gambling activities within or outside its borders but some countries may not even have laws relating to gambling or online gambling. These two types of approaches by the countries primarily form the basis of such online gambling sites. There are some countries that deem certain specific forms of online gambling as legal, for instance, lotteries or ‘skill-games’ and certain others as illegal like online casinos. Countries like Finland and Canadian Provinces prevent non-residents from accessing online gambling platforms that are essentially jurisdiction based. Netherlands on the other hand, does not allow the residents to access online gambling sites that are positioned outside its borders. There are some other countries like Australia which prohibits its residents from accessing sites that belong from their own jurisdiction. And lastly, countries like Pakistan, Saudi Arabia do not allow any form of gambling including Online Gambling to be operative within their country. 

United Kingdom 

The national gambling commission regulates online gambling in the UK. Online gambling activities like horse race betting, online sports betting, games of skill or betting exchanges are deemed as legally operative in the country and the UK residents are allowed to participate in the same. Due to the operation of Gaming Act of 1968 as well as the Lotteries and Amusement Act of 1976, currently, it shall be illegal to set up and operate internet casino or bingo or gaming machine sites but bets can be placed by the UK citizens at offshore online casinos provided no british laws are broken. Online lotteries are barred; however, traditional lottery tickets may be purchased with the aid of Internet and email technologies only if some action by a human operator is undertaken. The new national Gambling Act of 2007 states that online gambling may operate from the UK soil but must adhere to the regulatory requirements and requisite licensing. 

Australia

The Interactive Gambling Act of 2001 regulates online gambling in Australia at the federal level. State specific gambling legislations can be formulated by the Australian states and few of the gambling activities that are allowed to be legally played by the Australian residents are skill games and poker rooms. In addition, online sports and race books are also permitted. Online lotteries are permissible to be operated however, instant lotteries, scratch tickets and keno-style games are barred. It is noteworthy that in the government licensed online casinos of Australia, the Australian residents are not allowed to operate.

Conclusion 

Online Gambling can be an addiction if it is not taken under control. It can become very harmful to people. It is often observed that in this type of activity the young aged group easily gets involved and eventually destroys their future. The excitement of getting cash on playing any game or betting can be very intriguing. It might lead even the middle-aged group to forget about their responsibilities. Often people involved in gambling are seen to be involved in drugs and other immoral activities. It also leads to a disruption in mental peace. However, online gambling can become a beneficial industry. It has been observed as one of the most recreational online games. Lastly, the government has to put an eye on online gambling activities and make laws accordingly. 

Frequently Asked Questions (FAQs)

What can be anticipated for the future of Online Gambling in India?

Gambling overall is a topic of much debate. In July 2018, the Law Commission of India (LCI) had put forth a recommendation requesting the government to critique and explore the legalization of online gambling india as a potential source of government revenue. It can be concluded that this conversation about the future of online gambling in India remains ongoing. With potential legislative adjustments and by garnering the evolved public perspectives, this industry can shape its trajectory. 

Why is there a need to regulate Online Gambling in India?

Advocating the need for enforcing a robust regulation for Online Gambling is because this would provide the much needed player protection and better oversight. Countries like the United Kingdom wherein Online Gambling industry is regulated UK Gambling Commission ensures a safer gaming experience for the patrons.

What is the difference between betting, wagering, and gambling?

Wagering basically includes all kinds of actions in which probability underlies. This simply means the event has the possibility of happening and also not happening. These events or actions are completely illegal in India. Betting is somewhat similar to wagering but it restricts itself to certain specific events mostly, the sporting events like cricket, horse race, etc,. It is done on the resulting day of the event. Gambling stands in stark contrast to the other two because Section 65-B (15) defines “gambling” under the Finance Act, 1994. Gambling is an interplay of three aspects, Consideration, risk (chance) and lastly, prize. 

How does Online Gambling relate to the Indian Contract Act?

The Indian Contract Act, 1872 governs the legality, validity and enforceability of any contract that is entered into by the parties. And according to Section 23, if the consideration or object of an agreement is not lawful in its nature or it is against the public policy or is considered immoral by the court, then such a contract shall be regarded as void and unenforceable in its nature. Gambling or betting has been questioned several times on the morality grounds. Similarly, a wager agreement too is considered null, void and is unenforceable. The money that is lost by engaging in such an agreement, will also be non-recoverable.  

References

• https://core.ac.uk/download/pdf/185287561.pdf

• https://www.outlookindia.com/outlook-spotlight/the-rise-of-online-casinos-in-india-a-comprehensive-overview-news-310243 

• https://www.mondaq.com/india/gaming/1198906/state-of-play-online-gaming-and-anti-gambling-laws-in-india 

• https://medium.com/@jackbrown.iguru.uk/the-history-of-online-gambling-51ed8904be9b 

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