Dream 11, FOREX Law and More, What Is The Status of Gambling in India?

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Since the ancient period, gambling has been an integral part of Indian culture. This has been prevalent irrespective of its many vices. The Indians used the Bibhitaki tree nuts as dice, long before inventing the six side dice. Gambling references can be traced back to the Mahabharata.

The prominence of online gaming is demonstrated by the established online card games. It includes poker and rummy and modern-day games like fantasy sports. A research by KPMG India from September 2019 shows that by 2024 the Indian online gaming industry will reach an INR 250.3 billion.

The diversity and prevalence across digital media has expanded with technological advancement. The most popular online gambling sites in India are the cards game sites. The sites which organize Rummy and Poker tournaments.

Gambling Laws In India

Gaming law came into existence even before the internet existed. Gambling laws deal with gambling in a physical environment. It is called as “common gaming houses.” Also, the terms of those laws do not cover online gaming. Hence, the concept and relevance of such gambling laws is much more challenging.

Gambling- A State Subject

Gambling is a state subject. And states in India have the right to draft gambling legislation under their respective laws. The basic reason behind it is the Seventh Schedule of India’s Constitution. It gives states the right to legislate and make “gambling and betting” related policies. Within the Seventh Schedule Entry 34 List II, it is very clear that states may allow gambling if they want to do so. Online games, for example, are banned under the ‘Bombay Wager Act’ and are an offence in Maharashtra state.

Sikkim and Nagaland

The Sikkim and Nagaland states have been the only states that have passed unique laws. These laws enable and allow to control online gambling. On 28 June 2008, the Sikkim Online Gaming (Regulation) Act 2008 (‘Sikkim Gambling Law’) was then passed. It was for the dual goal of controlling and monitoring online gaming. Both in electronic or non-electronic formats. It also sought to tax such games in Sikkim.

Sikkim Online Gaming Law 2009 was implemented on 4 March 2009, and the same has been amended. A concerned person may get a “license” under the Sikkim Gaming Laws. A licensee can take prior approval from the government. This can be to sell any other online games under the license. Although the State of Sikkim has authorized online sports betting, there is still a grey area. The step by the State of Sikkim may be further affected by the Information Technology Act 2000. It prohibits the exchange of any information on the internet that may contribute or promote gambling.

Prohibition of Online Skill Games Act 2015 and the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Skill Games Rules 2016 (‘Nagaland Gambling Law’), monitors skill games. These include chess, sudoku, quizzes, binary options, bridge, poker, rummy, nap, spades, auction, solitaire, virtual golf and virtual racing games.

Telangana

The Gambling Act of Telangana was further modified by the State of Telangana. This is as an enhancement to the law. The sole reason was to expand the spectrum of crimes related to online media, among other issues.

Kerala

In Ramachandran K vs. Police Circle Inspector ‘s case, the Kerala High Court observed that playing Rummy for bets would lead to the gambling offence. The offence is according to the Kerala Gaming Act, 1960. In the case of Play Games 24×7 Pvt Ltd v K & Anr Ramachandran, a petition for review was filed against the Kerala High Court order. The court dismissed the petition and held that the violation would be then decided on a case to case basis. The court held that the way the games are played and performed using electronic means is also important. The stakes involved in the matter is also an aspect that might appear for consideration. 

Information Technology Laws 

This was the Indian government’s most newly adopted law. It covers a wide array of online items. These are addressed as either immoral or socially unacceptable. It contains anything relating to “money laundering or gambling”. Currently, no laws were illegal for Indian states to permit online gambling. IT Act specifies that if these pages are illegal or taboo, an Internet Provider (ISP) must block these pages. This type of censorship is not effective. Even though there is no fear of online betting among Indians. A few have been mentioned here in below:

Gambling

It says “gambling” is illegal in the first place and must be further banned. Gambling is a bet on something that has no definite result.

Poker

There is no evidence to show otherwise, but many legislators look the other way around rather than make online poker into “gambling.” A new computer algorithm called counterfactual regret minimization has been further used to fix a poker variant called the Texas Hold’em heads-up limit. The simple truth that research teams are able to create a poker-solving method proves poker can’t all be down to chance. Poker is talent, and skill games in India are not illegal.

Sports

Sport gamblers conduct sports betting globally. Some people are making it far enough that bookies wouldn’t even consider taking their bet. Or they do alter the probability about how much they bet, as they’re so successful! Sports betting is a skill, then why is “gambling” supposed to cover that type of sport?

Casino

Online casino games are one way you can consider gambling. Fortunately, the way in which India’s laws are structured, it lets states do whatever they want. And you see Sikkim is offering online games such as online lotteries etc.

The Government Wants Legal Online Betting

First, the government claims that they would like legitimate betting sites in India. Because that would be countering corrupt practices with unlawful bookies. They utilized match-fixing to fund terrorist acts and crime. Mr Haroon Lorgat, ex-CEO of the ICC, asked Indian authorities to allow cricket betting sites. Because he feels that is the only way to combat corruption and match-fixing in sport. ICC had also advised India to allow offshore companies. Those in the United Kingdom to collaborate with Indian casinos. This will lead to a legitimate form of online wagering.

It is the absolute opposite of the perspectives of the US and the National Football League. They want to rigidly ban betting. Although this will be instrumental in tax collection. And also would represent as a regulator for nefarious behaviour. As per a study by the All India Gaming Federation, the Indian exchequer loses nearly INR 2 Lakh Crore each year due to illicit cricket betting. Indian online betters wager about 50 million USD on any IPL betting match.

Funding Legislation, an option to consider (FOREX LAW)

Indian legislation states that it is unlawful to finance online gambling sites without using Rupees. The law is also known as the Foreign Exchange Management Act. If you’d like to place bets on an online bookmaker or gaming system, you need to do that in rupees. But most Indian consumers prefer using an online wallet. One of the most popular ones are Moneybookers, Paypal, and Neteller.

Fantasy sports games available in India can also be further classified as games where a skill component prevails the aspects of chance. An argument that foreign direct investment can be then allowed in such games can be further made. Foreign direct investment in companies that offer skill-based games, such as rummy and fantasy sports, has lately seen a significant rise.

The Case of Dream 11 

In 2017 the Punjab and Haryana High Court became the first and sole Indian court to conclude that fantasy sport is mainly skill-based (Shri Varun Gumber v. UT Chandigarh & Ors). The plaintiff proceeded to Court claiming that fantasy sports is not skill-based. And that Dream 11 carried on business shielded by the ‘gambling’ definition under the Punjab State Gambling Rule.

The PH Court based it’s view on a Supreme Court ruling in K.R. Tamil Nadu’s Lakshmanan v State. This stated that betting on horse races was a test of skill. The PH Court acknowledged that sports in which achievement rested on a large level of talent were not gambling. The skill factor was further presumed to be prevalent in the result of the fantasy game.

The PH court also ruled that since fantasy sports did not lead to gambling, Dream 11 performed a business practice under Article 19(1)(g) of the Constitution. A special leave petition against the PH court’s decision was then brought before the Supreme Court. Yet the Supreme Court dismissed the petition in September 2017. In a 2019 case, the Bombay High Court maintained the judgment of the PH Court. Besides, the Court held that Goods and Service Tax (GST) is not applicable to the player ‘s complete deposit. It is applicable only to the fee payable / collected for the supply of products or services or both on the site.

Conclusion

Online gambling is a global industry. The central government has no jurisdiction over UK licensed bookmakers lawfully operating under EU and international law. Some action has been further taken to make access to these sites more difficult.

For example, Betway is a Malta-based company but they have clients worldwide. Their betting platform is available in several languages and currencies (including Indian Rupee-INR). As far as foreign sites are concerned, Indian rules do not apply to them explicitly. Since they run under a valid gambling license in other jurisdictions. Despite no servers, ads, or anything else that’s happening in India.

The authorities can’t do anything to stop them from serving Indian clients. It helps Indians use an e-wallet, and bet on matches such as IPL cricket at sites like Betway and 10Cric.


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