Gambling is a game that incorporates the act of predicting the outcome of a match based on chance or minimal skill and contains a monetary advantage to the participant, and this act is known as “Online Gambling” when conducted online. In India, gambling has a long and storied history, with records reaching back to 1700 BC and 1100 BC in The Rig Vedas. The Gambling Legislations do not define ‘gambling.’ The literal meaning of gambling is “to risk something on a contingency; take the chance.” To look at it another way, gambling is defined as betting, gaming, or participating in an event to attain a substantial sum of money or any other reward by wagering a specific amount of money. Gambling has increased in popularity as a recreational activity and a pleasure among the general populace, and it is widely held in five stars hotels, casinos, social events, and other venues. People have grown less interested in getting to know each other as the people began to spend much more time inside their dwellings, with technological devices such as Smartphones and Internet connections readily available, and as a result, the aspect of gambling in a society transformed throughout time. People across the country were constrained to remain at home while the virus spread, resulting in an exponential growth in the number of Web users. This seems to have been a massive increase in the sector for online gambling, with the Internet functioning as both a way of connecting individuals and a source of pleasure. Many individuals considered it to be a sort of entertainment, but with so many people losing their jobs, it has become a stream of income, but for some, the only means of revenue.
In this blog, we will further discuss the legality of gambling, its constitutional aspects, and cases explaining the difference between a game of skill and a game of chance.
Laws Relating to Gambling:
The Public Gaming Act of 1867, India’s foremost major gaming legislation, was passed in 1867 to oversee gambling throughout the country. In terms of gambling’s legality in India, there is no uniform law that governs any gambling operations because it lies within the State list of the Constitution’s 7th schedule. Gambling is a state-run sector, and the state has sole jurisdiction over the laws that govern gaming within its borders. Under the Indian Constitution, state legislatures have substantial regulatory discretion in enacting state-specific gambling laws.
Constitutional point of view:
Constituent assembly debate on September 2, 1949, presented ways of coping with betting and gambling. It was in the seventh schedule’s Part 2 section. Members of the Constituent Assembly debated choosing whether or not to outlaw betting and gambling entirely, with Dr Ambedkar speaking out against it. He claimed that if Entry 45 of the Betting and Gambling Act is repealed, state governments will be unable to regulate it, but this does not mean that betting and gambling should be legalized. He emphasized that Entry 45 is merely a mechanism that state governments can use to legalize or forbid betting and gambling. After multiple debates and decisions, betting and gambling were added to the state list, allowing state governments to supervise and regulate them. In a broad sense, lotteries and horse racing are two activities on which betting is authorized in India. The Indian parliament has the jurisdiction to regulate any lottery established by state and local governments or the Indian government, according to Entry 40 List 1. According to List 2 of the seventh schedule in Entry 34, state governments have the jurisdiction to adopt gaming laws. According to the Constitution, the state is responsible for protecting children and youths from gambling fraud.
Betting/ Gambling, a wagering contract:
As a result of technological innovations, several internet gambling platforms have garnered considerable attention in past few years. The winner of these ostensible skill games’ is paid if they win. These are sports wagering games where a player would join a group and his or her win is evaluated by his or her companions’ performances. The overwhelming bulk of these communities is oriented to the sport as cricket is such a big deal in India. Such forums have been endorsed by prominent cricketers, resulting in increasing public engagement. The Indian Contract Act of 1872, Section 30, stipulates that wagering contracts are void. Wagering agreements are those that are dependent on the occurrence or non-occurrence of a certain event, and in which the party has no inherent interest. The event does not have to happen in the future; it could happen in the past, but neither of the parties to the contract ought to be aware of it. There are few exceptions to Section 30 that prevent such contracts from being declared void. The most typical contracts involve expertise, such as horseracing. The same approach is applied to online sports betting, which is classified as an exception. While many people conflate wagering agreements, betting, and gambling, betting is simply the process of placing a wagering amount (valuable or liquid cash) on the likelihood or non-occurrence of an event. It’s always conducted against a second party who puts his money at risk against the first.
Exceptions of Section 30:
Horse races are mentioned specifically as an exemption in Section 30. All horse racing activities, except for those specified by section 294A of the Indian Penal Code, should be regarded as legitimate. Moreover, the competition is not a lottery if abilities have a substantial part in the outcomes, and accolades are given based on the qualities of the solution (Gamble). As a result, literary competitions like crossword puzzles are not betting contracts.
Difference between a game of chance or a game of skill
Instead of being a game of chance, a “game of skill” is predicated on a player’s mental or physical ability. One of the most substantial advantages of a skill-based game is that it enables players to put their athletic abilities to strain. These games challenge players to learn a system of regulations also while seeking ways to improve and acquire new approaches through repetitions. It is a common misconception that skill games do not have a probability aspect; however, success is determined by the individual player’s abilities, which encompass a variety of parameters. Chess, Carrom, Rummy, Teen Patti, Horse Racing, and Fantasy Sports, for example, are classified as skill games.
In contrast, a “game of chance” is predominantly determined by a stochastic factor of whatever kind. Talent is used in games of chance, but victory is determined by a greater amount of possibility. Games dependent on probability include cards, roulette, dice rolling, and even picking a numbered ball. It’s critical to emphasize that the players do not influence the player’s performance. Two examples are blackjack and roulette. However, when a player is pitted against other players of similar abilities, the game is classified as a skill game. Furthermore, any person who can effectively demonstrate that a certain game combines the use of abilities such as statistics, mathematics, and strategy, as well as a little degree of luck or chance, the game will be categorized as a game of skill. There are several judicial dictums on issues pertaining to classifying specific groups as games of skill vs games of chance, particularly by the Hon’ble Supreme Court of India.
Many lawsuits have been registered by gaming groups and organizations to have themselves recognized as a skill game to get legal recognition and avoid being labelled as unlawful. Courts have analysed ability and chance in each game from time to time to determine which has the upper hand or whether betting in such games is gambling. The following are some of the most important Indian judicial judgments that emphasized the line between skill and chance games.
Manoranjithan Manamyil Mandram v. State of Tamil Nadu (2005):
In this case, it was determined that assessing whether a game is a “game of chance” or a “game of skill” is a factual matter that must be assessed based on the information and circumstances of each game. Rummy is a skill-based game.
State of Andhra Pradesh v. K. Satyanarayana (1968):
The Hon’ble Supreme Court in the case stated that inferred the differences between various games ‘Teen Patti’ and ‘Rummy,’ holding that even though the aforementioned was a pure chance game, the latter required some skill even though one must try and remember the fall of the cards and the gradual building of Rummy needs significant skill in determining which cards to preserve and which to throw away. As a result, the Supreme Court concluded that the game of rummy is more popular and thus counts as a skill game.
Dr K.R. Lakshmanan v. State of Tamil Nadu (1996)
The Hon’ble Supreme Court stated in the case that horse racing is not to be considered ‘gambling’ or ‘gaming,’ but rather a game of mere skill,’ and that the term mere talent’ would infer a substantial degree of domination of skill. Horse racing is based on the animal’s potential and opportunities, the jockey’s skill and competence, the horse’s structure and physical ability, the amount of load it can bear, and the racing duration, all of which are genuine elements that racegoers can judge or research. As a result, it was determined that the prognosis of the race’s outcome is the result of understanding, study, and observations, i.e. abilities, rather than chance.
Indian Poker Association (IPA) v. the State of Karnataka (2013)
The Hon’ble High Court of Karnataka held that poker is a game of skill and that no license is considered necessary for performing a game of skill, including Poker, in club premises clearly meant for recreational activities, as long as it is conducted in compliance with the law enforced by the State. It went on to add that since poker is not considered gambling under the West Bengal Gambling and Prize Competitions Act, 1957, law enforcement agents are unable to intervene.
Gambling and betting have undoubtedly gained popularity, and they now have a worldwide reach. The idea of a de facto ban on gambling has taken hold to gambling control as time has passed, however, it should be noted that controlling gambling will be exceptionally hard for the country to achieve. The global gaming market has expanded significantly in the past few decades. In Asia, it has grown by 39%, while in Europe, it has increased by 41%. Gambling might start as a fantasy and end in monetary loss, or it can lead to bitterness and self-destruction in a person’s life. In an unregulated environment, gambling fosters both corruption and illicit behaviour. Its main drawback is an economic penalty, which in certain situations can lead to bankruptcy, and then individuals borrow more money from others, culminating in diseases such as depression and stress. If gambling is permitted in India, the government would be able to retrieve a significant amount of tax revenue, which will aid in the strength of the economy. The building of new casinos will increase tourism, which also will enhance GDP substantially. The government will be able to monitor transactions among operators and players in real-time, so they should be able to participate in taxation but match-fixing and sports fraud should be considered illegal offences.
Author(s) Name: Abhishek Chadha (Guru Gobind Singh Indraprastha University, Delhi)
Sourav Ganguly, Virat Kohli Using Star Power To Promote Online Gaming, Madras High Court Not Amused After Suicides <https://www.outlookindia.com/website/story/sports-news-sourav-ganguly-is-a-star-if-he-appears-in-ads-people-are-becoming-victims-court-sees-red-as-online-gaming-operators-tu/364801> (Last accessed on 10 March 2022.)
LAW COMMISSION OF INDIA Report No. 276 LEGAL FRAMEWORK: GAMBLING AND SPORTS BETTING INCLUDING IN CRICKET IN INDIA (July 2018)
Section 294A of Indian Penal Code 1860 “Keeping a Lottery Office”
DR. K.R. LAKSHMANAN v. STATE OF TAMIL NADU AND ANR. (1996) AIR 1153
AIR 2005 Mad 261
AIR 1968 SC 825
(1996) 2 SCC 226
2013 SCC Online Kar 8536