WAGERING CONTRACTS IN INDIA – PROGRESS AND PERCEPTIONS

Introduction

To begin with, let’s have a look at what a contract is. A contract is a quid pro quo relation where both parties agree to do something in exchange for something. It is, in simple words, something an agreement between two or more parties that is enforceable by law. There are a few necessary conditions required to form a valid contract which is stated in Section 10 of the Indian Contracts Act, 1872. These include: Offer and acceptance, intention to create legal relation, lawful consideration, free consent, lawful object, the capacity of parties to enter into a contract, certainty of meaning, possibility to perform, and the legal formalities. Once all the necessary conditions have been fulfilled, a legally enforceable agreement or a contract is formed.

Concept of Wagering Contracts

One such type of contract is a wagering contract. Agreements entered into between parties under the condition that money is payable by the first party to the second party on the happening of a future uncertain event, and the second party to the first party when the event does not happen, are called Wagering Agreements or wager. In this case, there is an equal opportunity of winning and it mostly depends on the happening or non-happening of an event. The essence is that the parties should have no other interest in the event other than the sum to be won or lost. A wagering contract is essentially a bet or a gamble. But, wagering contracts or agreements are void in nature. They have been expressly declared void by the Indian Contracts Act in section 30. Section 30 of the Indian Contracts Act reads:

Agreements by way of wager are void, and no suit shall be brought for recovering anything alleged to be won on any wager, or entrusted to any person to abide the result of any game or other uncertain event on which any wager is made.”

However, it also states that there exists an exception in the case of horse riding.

Status of Legal Provisions with respect to wager

Each country has its regulations, provisions, and legislations regarding the status of gambling and betting but India has been unclear about its terms and conditions and has failed to stay updated according to the needs to the present times. While casinos and online gambling is allowed in some states, it is completely banned in others and attracts punishment. Eastern states, for example, Sikkim and Nagaland offer a free environment for gambling and casinos. Sikkim is the only Indian state to run both online and land-based betting. Goa on the other hand has laws regarding off-shore gambling. The law in Goa was enacted under the Portuguese influence where the law allows gambling provided it’s done off-shore. The law was exploited and failed to serve the purpose it was framed for. While in Maharashtra, any kind of gambling is strictly prohibited whereas, lottery which is a type of wager, is famous among the public and it’s legal, making it one of the 13 Indian states to have legalized online lottery system. This all indicates that the Indian legislation is all muzzled up when it comes to laws regarding online and on-land betting and gambling.

Analysing the problem

Under Section 30 of the Indian Contracts Act:

This section shall not be deemed to render unlawful a subscription or contribution, or agreement to subscribe or contribute, made or entered into for or toward any plate, prize or sum of money, of the value or amount of five hundred rupees or upwards, to be rewarded to the winner or winners of any horse-race.” This means that betting a sum of rupees 500 or more is allowed in horse racing.

The question, in the frame, is why certain kinds of gambling are legal whereas others are criminalized. The most frequently stated answer to this question has been that these games require skill and talent. Thus, skill competitions are an exception to the concept of wagering agreements. However, if you observe and analyze the activity, you will notice that most of the gambling games require skills and techniques which not everyone possesses. For example, the Dream11 app. Dream 11 is a fantasy sports platform based in India which is exempted from the provisions of the Public Gambling Act, 1867. The app resembles betting as it includes the pooling of money from various people who bet on the happening or the non-happening of an event where the calculation of the rewards is based on the performance of the players. But, the high court of many states has declared it legal and valid as it is a game requiring skill and talent. The high court also held that this is a legitimate business and hence, shall be protected under the provisions of Article 19(1)(g).

Pros of legalising wager

It is possible to reap various benefits if only a particular area of gambling is not criminalized.  India’s large population would mean that more people would be willing to bet money on betting and in casinos. It would massively impact the economy. Legalizing all kinds of gambling would mean a greater amount of revenue. This would also generate employment as decriminalizing gambling would mean a greater number of operating casinos which would eventually lead to thriving casino industry. The generated taxes could also be put to use by providing a support mechanism for problem gamblers as they fall victim to the addiction of gambling and are often ostracized by society. Gambling also promotes tourism. For example, Canada attracts a huge tourist crowd as it is home to over 100 land-based casinos and people visit Canada just to have the casino experience. The future of gambling and betting is bright in India as it’s a relatively easier way to earn money and put your spare time to use. Due to technological advancements, online betting has gained quite some popularity as it helps the players retain their privacy and everyone is allowed to play regardless of their financial condition or social status. It is high time that laws are passed that render to the needs of the present times and provide a level playing field for all the players.

The need to stay precautious

Since India is a land of a culture where morality is engraved in each of our actions, the step of decriminalising gambling would mean a step against the moral values of our culture. Also, there are always risks associated with the activity due to its addictive nature. Many people end up losing their assets and wrecking their lives due to their addiction to gambling. Legalising these kinds of wager would give rise to a need for regulations and strict governance. Since the merits outweigh the demerits, with improved legislation, we might be able to explore the perks of this industry in greater depth.

Conclusion

To sum it up, various forms of wager have been banned while others are perfectly legal. The reasons as to why the laws were enacted have failed to serve the purpose. Additionally, the argument by the government for legalizing some forms of wager and criminalizing others is vague and flawed. The basic reasoning by the government is that games requiring skill and talent can be legalized is faulty as a lottery is a form of wager that’s legal in some of the Indian states and it does not fit the reasoning provided by the government. India needs to take a clearer stand on its perception of a wagering contract for a better estimation of future economy and governance in the gambling industry.

Author(s) Name: Vaishnavi Agarwal (Nirma University, Ahmedabad)