Gambling in India – regulation and changes in 2023
Gambling in India enjoys considerable popularity in both physical and online formats. This exciting activity not only attracts a lot of participants but has also played an important role in boosting the economic growth of the country. Gambling operators not only provide an opportunity for people to have fun but also play a major role in job creation.
Gambling also has a positive impact on the tourism industry in India. This activity is a powerful magnet for foreign tourists which attracts them to India.
OVERVIEW OF THE REGULATORY FRAMEWORK FOR GAMBLING IN INDIA
India is one of the countries where gambling is stipulated in its Constitution as a legal activity. According to clause 34 of the Seventh Schedule of Schedule II (List of States) of the Constitution of India, 1950, separate states have the power to enact laws relating to gambling and betting. However, when India was a British colony (i.e. before independence in 1947), there were no such provisions like the one mentioned above. At that time, the main gambling and betting regulation in the country was the Public Gambling Act, 1867 (“PGA“). Remarkably, the PGA does not define the term “gambling.” Generally speaking, it provides for the punishment of organizing public gambling and maintaining common gambling houses in the United Provinces, East Punjab, Delhi and Central Provinces.
Clause 12 of the PGA states that it shall not be held to apply to any game of mere skill wherever played. So it follows that Indian law distinguishes two broad categories of games:
- games of skill – legal;
- games of chance – illegal.
“The game of Rummy is not a game entirely of chance like the ‘three-card’ game mentioned in the Madras case. The ‘three card’ game which goes under different names such as ‘flush’, ‘brag’ etc. is a game of pure chance. Rummy, on the other hand, requires a certain amount of skill because the fall of the cards has to be memorized and the building up of Rummy requires considerable skill in holding and discarding cards. We cannot, therefore, say that the game of Rummy is a game of entire chance. It is mainly and preponderantly a game of skill.”
After the declaration of India’s independence in 1947, most of the states have enacted laws to regulate gambling related activities that are based on PGA. But apart from this, some states have passed laws that conversely prohibit gambling.
Due to the fact that the main Indian gambling law, the PGA, was enacted prior to the emergence of online gambling, it is limited to physical gambling only. As a result, there is no general federal specific law that prohibits activities related to online gambling. Essentially, online gambling falls into a gray area and complexity arises because each state in India has the right to make its own decisions on this matter. But based on the above, at the moment online gambling is legal in India.
Currently, only a few states in India have modern laws that regulate or prohibit online gambling (for example, it is allowed in the states of Goa, Sikkim). However, even if other states do not have regulating legislation on online gambling, people there still have the opportunity to play online in various gambling games.
TYPES OF GAMBLING IN INDIA
Despite its lucrative nature, gambling in India is highly regulated and only some states allow it under license requirements. This approach allows states to control and regulate gambling in accordance with their socio-cultural and economic characteristics. As a result, licensed operators can provide gambling services in accordance with the requirements and regulations established in each particular state.
Table 1. illustrates the types of gambling that are available in the Indian legal framework and the list of states in which they are permitted.
Table 1. Types of gambling in India
|Type of gambling||Regulatory states|
|Sikkim: Sikkim Casinos (Control and Tax) Act, 2002 (“SCA“) prescribes a license regime for casino gaming in five-star hotels in Sikkim. Sikkim has also officially allowed the establishment of online casinos with a special license. For this purpose, the Sikkim Online Gaming (Regulation) Act, 2008 (“SOGA“) was enacted. SOGA covers certain casino games such as roulette, blackjack. These games may only be offered via intranet within the State of Sikkim. The license is generally valid for 5 years unless revoked or withdrawn. The regulatory authority under SOGA (for issuing licenses for online games that are offered within the intranet of the State of Sikkim) and SCA (for issuing casino licenses) is the Finance, Revenue and Expenditure Department of the Government of Sikkim.|
|Meghalaya: Meghalaya Regulation of Gaming Act, 2021 (“MRGA“) and Meghalaya Regulation of Gaming Act Rules 2021 (“MRGAR“) allow operators to acquire a license to provide online and in-state gambling games such as slots, roulette, keno, wheel of fortune, etc. Only Indian citizens or a legal entity registered in India can apply for a gambling license in Meghalaya. Each license is valid for 5 years and licensees will have to pay “Gambling Royalty”. MRGA also states that it is illegal to operate a casino or offer games in the state without a license.The licensing authority is the Government of Meghalaya and the Commissioner of Taxation or any other officer authorized by the state government adjudicates offenses under MRGA and MRGAR. The Meghalaya State Gambling Commission is responsible for controlling the licensees and making sure that they comply with the license requirements. It also issues new regulations regarding the games offered.|
|Goa, Daman, Diu: The Goa, Daman and Diu Public Gambling Act, 1976 (“GDDPGA“) regulates casinos and permits the offering of “electronic entertainment/gaming machine games” in five-star hotels in Goa, Daman and Diu under a licensing regime. Table games and gambling games may also be offered on board marine vessels. Offshore casinos require a license to operate under the GDDPGA.In Goa, the Commissioner of Commercial Taxes acts as the Gambling Commissioner.|
|With the exception of the states of Sikkim, Nagaland and Meghalaya (regulate games of skill), and the state of Tamil Nadu (prohibits real money poker), poker is not regulated by other states. The Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2015 (“NPGPROGSA“) and MRGA establish that poker is regulated as a game of skill.NPGPROGSA designates the State Financial Commissioner or any other authority authorized on his behalf as the “licensing authority” for offering online games of skill.|
|It can be played in different formats (online or in the states) and they fall under the category of lotteries or the category of gambling (the last prohibited by most gambling laws).|
|Several types of betting are stipulated:sports betting – in the states of Sikkim and Meghalaya, sports betting is allowed under license via intranet;horse race betting – they have been judicially recognized as a game of skill and many gambling laws exclude them from their list of prohibitions. Also since most gambling laws started before the Internet, there is no regulator, no definition of “online horse racing betting” and therefore no license is required. But the club organizing the horse race can impose certain conditions.Betting on physical horse racing is regulated by certain state governments (Karnataka, Telangana, West Bengal, Maharashtra, Delhi and Tamil Nadu). Additional conditions may be imposed by the club organizing the race itself and operating under the terms of a license issued by the state government.fantasy betting – regulated in some states: Nagaland and Meghalaya have enacted laws (NPGPGPROGSA and MRGA) introducing licensing regimes for virtual fantasy sports league games. Both laws recognize “virtual team selection games” and “virtual sports fantasy league games” as games of skill.In Andhra Pradesh and Telangana, fantasy sports for betting or winning are strictly prohibited.|
|Lotteries||Excluded from the sphere of gambling laws and regulated by state and national lottery laws. Private lotteries, except those permitted under a license issued by a state government, are prohibited under the Indian Penal Code (45 of 1860) (“IPC“). Among those state governments that organize lotteries themselves, physical lotteries are conducted by their authorized departments or the state finance ministry.In the states of Punjab, Kerala, and Maharashtra, only physical lotteries are authorized.|
|Social Games||Since there are no cash prizes, gambling laws will not apply. There is also no special regulator.|
|Skill Games||Gambling laws provide special exemptions for skill games. In most states in India, except for Nagaland, which has an online skill games licensing regime, a license is not required to conduct skill games.|
CHANGES IN INDIAN GAMBLING REGULATION LEGISLATION
In 2022, the Indian government announced its intention to create a new gambling law to replace the PGA.
In January 2023, the Government of India issued new rules to regulate online gambling, with the intention of creating “self-regulatory” bodies to oversee the sector.
The Ministry of Electronics and Information Technology (“MEIT“) issued amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules 2021 (“ITR“), which came into effect on April 6, 2023.
According to Article 2 of the ITR, “online game” means a game that is offered on the Internet and is accessible by a user through a computer resource or an intermediary.
“Online real money game” means an online game where a user makes a deposit in cash or kind with the expectation of earning winnings on that deposit.
It also states that any online game must not violate existing laws (such as those that establish state-level gambling bans).
ITR cover permissible online real money gambling, which is divided into two groups:
- Permissible online real money gambling (“PORMG“)
- Any other online games that are not online real money games (such games may be blocked in India).
“PORMG” means an online real money game verified by an online gaming self-regulatory body (“OGSRB”).
Under Article 4A of the ITR, the MEIT may, by a notification in the Official Gazette, designate as many OGSRBs as it may consider necessary for the purposes of verifying an online real money game as a PORMG.
An entity which fulfills the following criteria may apply to the MEIT for designation as an online gaming self-regulatory body:
- the entity is a company registered under section 8 of the Companies Act, 2013 (18 of 2013);
- its membership is representative of the gaming industry;
- its members have been offering and promoting online games in a responsible manner;
- its Board of Directors is comprised of individuals of repute and do not have any conflict of interest and possess special knowledge or practical experience suitable for the performance of the functions of such self-regulatory body, and consists of:
- an individual having special knowledge of or practical experience in the online gaming industry;
- an individual having experience in promoting the interests of users of online games;
- an educationist;
- an expert in the field of psychology or mental health or such other relevant field;
- an individual having special knowledge of or practical experience in the field of information and communications technology;
- an individual who is or has been a member or officer of an organization dealing with the protection of child rights;
- an individual having practical experience in the field of public policy or public administration or law enforcement or public finance or other relevant field, to be nominated by the Ministry; and
- such other individuals as may be appointed with the previous approval of the Ministry;
- its memorandum of association and articles of association contain provisions relating to:
- the performance of its functions under these rules, including the redressal of grievances;
- the disclosure and reporting by and accountability of its members in relation to the online games verified by such body;
- the clear and relevant criteria, consistent with the ITR, for the
acceptance and continuation of a person as its member, and for revoking or suspending such membership after giving such person an opportunity of being heard;
- the requirement that the amendment in the memorandum of association and articles of association in relation to any matter referred to in subclauses above, is carried out with the previous approval of the MEIT;
- the entity has sufficient capacity, including financial capacity, to perform its functions as an online gaming self-regulatory body under these rules.
OGSRBs should develop regulations to protect users from harm (e.g. gambling addiction). In addition, it is important to protect children and prevent various financial crimes.
OGSRBs should oblige participants to comply with user verification procedures, Know Your Customer (KYC) procedures to ensure safety and protect the interests of users.
They need to develop a complaint handling procedure to ensure transparency and fairness in handling complaints from users. This helps to build trust in the gambling industry and ensure that the rights and interests of users are protected.
Finally, OGSRBs should have a contact address within India that allows users to contact the body with questions, suggestions or complaints. Having a local contact ensures easy communication between the authority and users and also demonstrates the authority’s commitment to regulate and protect the interests of users.
All these measures help to ensure safe and responsible interaction with gambling in India, protecting the interests of users and preventing potential risks and abuses.
WHY IS INDIA A POPULAR GAMBLING DESTINATION?
India possesses a range of factors that make it attractive to gambling enthusiasts. Here are some reasons why India is considered a great destination for such games:
- Traditional skill-based games: In addition to games of chance, India has a long-standing tradition of skill-based games like chess and rummy. These games require strategy, critical thinking and expertise, making them popular among players who prefer to test their abilities rather than rely solely on luck.
- Legal framework: While the legal status of gambling varies from state to state in India, some states such as Goa, Daman, and Sikkim have established a legal framework for gambling activities. These states have licensed casinos and gambling establishments, providing a regulated and safe environment for gamblers.
- Online gambling opportunities: With the advancement of technology, online gambling has gained significant popularity in India. Many reputable online casinos and betting platforms serve Indian players, offering a convenient and accessible way to enjoy gambling without leaving home.
- Growing casino industry: The casino industry in India is steadily growing, with new casinos opening up. This growth creates new job opportunities, stimulates the tourism sector, and contributes to the overall economic development of the country.
- Cultural diversity: Different regions of India have their own traditional games, rituals, and customs associated with gambling. Learning about these diverse gambling traditions can be a fascinating and enriching experience for players.
All these factors make India an attractive destination for gambling enthusiasts, offering diverse opportunities, rich cultural experiences and the thrill of participating in a rapidly growing industry.
But it is also important to always take a responsible approach to gambling and comply with the legal regulations and age restrictions in place in the relevant jurisdictions.
If you are interested in acquiring a gambling license in India, the Manimama team is ready to assist you.
|Is gambling legal in India?|
|According to the Constitution of India 1950, each state makes its own rules regarding gambling and they can either allow or prohibit such activities.|
|How is online gambling regulated in India?|
|At the moment, there is no general specific law in India that would regulate online gambling and accordingly prohibit it. Therefore, it is quite legal to engage in this activity. But also some states have their own regulation of online gambling and set licensing rules.|
|What is the difference between games of chance and games of skill?|
|In India, there is a distinction between games of chance and games of skill from the point of view of legal regulation.The PGA, as the main law for regulating activities related to gambling, prohibits gambling within India. But clause 12 of the PGA provides that it shall not apply to any game based on mere skill wherever it is played. So it follows that Indian law distinguishes two broad categories of games:games of skill – legal;games of chance – illegal.Games of chance are games in which the outcome depends wholly or largely on chance, probability or luck and where the bets, entry value or prizes are determined in accordance with that outcome (e.g. games such as dice, cards, slots and lotteries). Skill games, on the other hand, refer to games where the outcome depends entirely or largely on the player’s skill, ability, knowledge or experience (e.g., chess, rummy).|
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Author: Valeriia Ukolova, lawyer at Manimama Legal&Growth Agency