Participation in gambling activities has been an always-present behavior in India, and there is plenty of evidence, which alludes to how deeply rooted in the culture of the country it is. Today, gambling is all the more pleasurable pastime in India, and it has started to gain even more popularity, thanks to the availability of a larger number of betting portals over the Internet.
TimelineThe gambling industry has seen a massive boom over the past few years, and this is so because of the technological advancements, the country’s thriving economy, and the ever-changing lifestyle of people.
Regulations of Sports Betting in India
Overview
History
Regulations
TaxationTo get an idea of the prevalence of gambling in India, it might be enough to say that approximately one-half of adult men take part in gambling, while one-third of them tend to engage in multiple forms of gambling. It is also interesting to point out that playing the lottery is the most chosen form of gambling.
That being said, the legislation in India is ridden with challenges because it has not been updated for a while now and because of the lack of tight control over the different forms of gambling. Getting a proper idea about the way gambling is regulated in India might be a stretch because the regulation and legislation differ greatly between the states and the union territories of the country.
Timeline of Major Gambling-Related Laws in India
Gambling is a form of entertainment, which garners a lot of attention in India, and as we mentioned already, it is deeply ingrained in the culture of the country. While India’s central government has a say while defining the legal status of gambling, each state is given the right to prohibit or legalize gambling activities. It should be pointed out that India is a country, which is divided into 28 states, and 8 united territories, meaning that it has 36 entities in total.
As you will see, most of the enactments that determine the gambling environment in India were introduced many years back and refer to placing bets at physical premises that are also known as “common houses.” additionally, since most of the gambling-related laws in India were passed prior to the development of online gambling, it therefore makes sense that the online medium is barely referred to.
Let’s take a look at the development of gambling and sports betting through the lens of history, and more specifically, the central laws that determine the legal framework.
Constitution of India
Indian Penal Code 1860
Public Gambling Act 1867
Prize Competition Act 1955
The Lotteries Regulation Act 1998
Payment and Settlement Systems Act 2007
Information Technology Rules 2011Gambling Regulations in Indian States
Legalization
Online Gaming
Gambling
StatesThe gambling market of India continues to garner attention from overseas operators, while residents of the country hope for a shift towards the legalization of more gambling activities. Yet, while some states show more openness for change, others stay firm that sports betting and other forms of gambling should remain illegal.
Sikkim
The State of Sikkim undoubtedly makes some bold steps towards the legalization of a broader range of gambling activities, sports betting included, and one of the first steps legislatures made was to pass The Sikkim Casinos (Control & Tax) Act back in 2002. What should be noted, however, is that a couple of years after the Act was approved, those who live in the state were banned from playing in casinos.
The Sikkim Online Gaming (Regulation) Act 2008 is the very first piece of legislation, which specifically addresses online gambling within India. Under the Act, along with a number of casino games, sports betting was also made legal, given that the operator has obtained a license from the state. Under the provisions of the Act, participating in sports betting is possible only if it comes to predicting the result of a particular event or betting on its outcome, and the available sports include football, chess, golf, lawn tennis, cricket, and horse racing. This applies to wagers placed on the event or just a part of it. The legislative changes made many sports betting operators turn their eyes to the untapped market, which left many people in a tizzy.
Still, the availability of such sports betting options was significantly restricted exclusively to gaming parlors through terminals. This happened after the Sikkim Online Gaming (Regulation) Amendment Act was given the nod back in 2015. The introduction of these legislative changes made many people hope that they will set the stage for the creation of the first betting shops in the country.
The States of Meghalaya and Nagaland
The state of Meghalaya also has an interesting stance when sports betting is concerned, as according to recently adopted legislative changes, the sport of teer, which is a form of archery, no longer falls within the scope of the Gambling Act. This is to say that it is not illegal to place bets on it, but the operator needs to obtain the respective license.
The state of Nagaland is the one to give the most clear-cut description of skill-based games, and there, it is possible to place bets on team selection sports and virtual sports, given that the respective licensing conditions are met. The Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2015 categorizes virtual games like wrestling, soccer, archery, snooker, fighting, and fantasy games as skill-based games, and therefore, renders them available for betting action.
States That Prohibit Sports Betting
Not all Indian states are so open-minded when gambling is concerned, and Odisha, which was formerly known as Orissa, and Assam are among the territories, where gaming or gambling is strictly against the law. Offering such services or taking part in gambling activities, no matter the chosen medium is prohibited and is considered an offense, which is the reason why operators steer clear of providing their services within these territories.
The Odisha Act 17 of 1955 is the piece of law, which determines the legal status of gambling within the state. Under the provisions of the Act, keeping a common gaming house and taking part in gambling activities are punishable. Those who are found to infringe the laws will face imprisonment and/or a fine. Still, it should be pointed out that lotteries are excluded from the description of gambling, which is provided within the Act.
The blanket ban on gambling activities in Assam was introduced with the passage of The Assam Game and Betting Act 1970. Currently, sports betting and playing casino games within the state is illegal, but it should be pointed out that playing the lottery and betting on horse racing is permitted, given that certain requirements are met.
The State of Telangana also deserves more attention because of its tough stance on gambling, and more specifically, its zero tolerance when it comes to the participation of its residents in such activities. The state is set out to do away with all forms of gambling, and to achieve this, legislatures gave the nod several amendments to the Telangana Gaming Act 1974 back in 2017. Perhaps, one of the most important changes in the Act was the implementation of the term “cyberspace,” which made it possible to cover all gambling mediums. Besides, the scope of prohibited gambling activities was also widened as games of skill were also specifically addressed.
The legislative changes that take place within the state of Andhra Pradesh are very similar to those that are introduced in the state of Telangana. Back in 2020, lawmakers approved amendments to the Andhra Pradesh Gaming Act 1976 that scaled up the scope of the forms of illegal gambling by adding skill-based games to it.
A Closer Look at Sports Betting in India
Games
Fantasy Sports
Industry Grow
Horse RacingLearning the ins and outs of the gambling-related legislation of India might be time-consuming and challenging, considering that each state has the freedom to bring in its own laws. Read ahead to learn more about the availability of betting on fantasy sports and horse racing in the different states.
Fantasy Sports
Games of skill and games of chances are clearly differentiated within the Indian legislation, and the former are not within the ambit of the gambling-related legislation. Because of this, there is some controversy when it comes to the legal status of fantasy sports. Considering that they are mainly skill-based, this should mean that they should not fall within the scope of the gambling-related enactments.
The High Courts of several states have already examined several formats of fantasy sports and have concluded that they are skill-based. This issue is given more attention in the legislation of the state of Nagaland, and according to The Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act 2016, fantasy sports are skill-based. Still, offering fantasy sports within the state is not possible without getting a license before that.
The revenue figures of this industry go to show that it has seen remarkable growth over the past few years. Figures go to prove this as the revenues the industry generates have increased by 199.69% between 2016 and 2017. The emergence and growing usage of 3G and 4G mobile services are easily among the biggest growth drivers when it comes to the popularity of fantasy sports.
Horse Racing
What is interesting to point out about the legal status of sports betting in India is that, as with betting on fantasy sports, wagering on horse racing is also considered a skill-based game. When it comes to placing bets on this sport over the Internet, there is no regulator, which is tasked with the oversight of gambling operators.
It is important to note that, to a large extent, wagering on horse racing in India is under the sway of six turf clubs. These include the Royal Calcutta Turf Club, Hyderabad Race Club, Delhi Race Club, Bangalore Turf Club Ltd, Madras Race Club, and Royal Western India Turf Club Ltd. These clubs are tasked with the responsibility to draw up the respective laws according to which races are held and oversee their enforcement.
In order for these turf clubs to provide their services, they are required to apply for a license before the government of the respective state.
While discussing the legal status of sports betting, betting on horse racing, included, the Dr K R Lakshmanan v State of Tamil Nadu case from 1996 should be given due consideration. Back then, the Supreme Court concluded that betting on horse racing is a skill-based undertaking, and as such, it is not under the provisions of the respective enactments.
In spite of the fact that in the majority of the cases, betting on horse racing is excluded from the definitions of gambling in most enactments of the country, it should be pointed out that wagering on this sport is possible only if several requirements are met. Thus, punters are only allowed to lay bets on the occurrence or non-occurrence of specific events, given that the bet is placed on the same day when the race will take place or in an enclosure, where it will be held.
In spite of the fact that it is hard to determine whether these conditions are met when betting on horse racing over the Internet, after the Coronavirus outbreak back in 2020, two of the turf clubs were allowed to start offering their services online.
Online Sports Betting in India – Regulated or Prohibited
Management
Payments
Betting
LotteriesForeign direct investment within India is determined by the provisions of the Foreign Exchange Management Act 1999. According to these policies, foreign direct investments are forbidden in several sectors, gambling included, so are technology collaborations.
The Foreign Exchange Management Rules 2000 was designed to curb the payments when it comes to the legalized forms of gambling included in Schedule 1. Foreign transactions are prohibited when it comes to the remittance of winnings from football pools, lotteries, sweepstakes, racing, or riding, among others. Thus, it is impossible for overseas operators to accommodate gambling enthusiasts from India.
The two states that have made sure that their gambling-related legislation is up-to-the-minute are Nagaland Telangana. As it was already mentioned, Sikkim is the only Indian state, which has legalized and regulates playing casino games and betting on sports over the Internet. Another reason why fans of sports betting hope that things might change soon is that some of the turf clubs were permitted to offer their services online.
Presently, betting on horse races over the Internet is allowed in Tamil Nadu, Maharashtra, Karnataka, Telangana, and West Bengal. As for Sikkim, betting on sports there is possible only through the parlors of intranet networks.
Lotteries are available online and on paper within the states that have legalized them. When it comes to the offline form of lotteries, it should be mentioned that buying tickets is possible at stalls and shops. When it comes to online lotteries, it is worth noting that entries are not available over the Internet.
As for the financial payment mechanisms Indians can make use of, they will depend on the preferred betting activity. Going for skill-based gambling activities is punters’ best bet as normally, they will be allowed to choose from everything from bank transfers to mobile payments, which is exactly the case in Sikkim. Yet, this does not apply to playing the lottery, as buying tickets is only possible at the vendor’s shop and through cash payments.
Digital currencies are becoming an all the more chosen payment solution for punters, but it should be noted that the Reserve Bank of India does not consider them a legal tender.
Regulatory Body and Types of Licenses
Approval
Licenses
Hotspot
PracticesThe official approval, which is required in order for the respective gambling products to be offered is determined by several factors, including the type of the services and the medium through which they are made available. By this time, having a license is a must when betting on physical horse races is concerned. Yet, this is not the case with races that are held outside India.
The state of Sikkim is indeed a hotspot when it comes to betting on sports, and such services can be offered on its territory only if the government has issued the operator a seal of approval. The authority, which is tasked with the issuing of the licenses is the Finance, Revenue and Expenditure Department, and in order for operators to apply for a stamp of approval, they will be required to provide a bank draft of 500 rupees and to fill in Form 1.
Licenses are issued also within the states of Diu, Goa, and Daman, and such are required for casino games offered on offshore vessels and five-star hotels. The cost of the license is INR20,000, and the annual fees are significantly higher for five-star hotels than with offshore vessels.
It should be pointed out that the duration of the licenses issued in Sikkim, Nagaland, and Goa, Daman, and Diu is five years. This is not the case in West Bengal, where the permits are issued exclusively for specific events.
The application fees also vary between the different states, and along with it, operators face an annual license fee, which is determined by the specific state.
As for the regulatory bodies, The All India Gaming Federation (AIGF) is an apex industry body, which is created to guarantee the best practices when it comes to skill-based games offered over the Internet.
Pending Litigation about Sports Betting in India
The most important question, which is still unresolved by the Supreme Court, is whether sports betting is skill-based. As long as the court concludes that betting on sports is entirely based on skills, this form of gambling will no longer fall within the provisions of the gaming enactments and will be accessible to the residents of a greater number of states.
As it was already mentioned, the state of Telangana also adjusted its gambling-related legislation a few years ago to make it up-to-date and broaden the scope of the illegal forms of gambling. Still, after skill-based games were deleted from the list of the legal forms of gambling in the state, the Telangana Amendment Act is now under challenge before Hyderabad’s High Court.
Penalties for Participation in Illegal Gambling
The enforcement action, which might be taken against Indians if they are found to take part in illegal forms of gambling varies greatly from state to state. Normally, what Indians will be up against is a fine and/or imprisonment, and the size and duration of which are state-specific.
What is important to note is that under the provisions of the Public Gambling Act, those who visit gaming houses will face a fine of INR100, while everybody who is found to keep such will need to pay INR200. Up to three months imprisonment is another enforcement action, which might be taken against infringers.
The penalties that are imposed for the second offense are tougher, as the infringer will face imprisonment of up to six months and/or a fine of INR1,000. For three or more offenses, the stay in prison and the fine are doubled.
Taxation of Gambling-Related Winnings in India
Under the Indian legislation, anyone who wins more than INR10,000, while playing the lottery, games, solving crossword puzzles, or betting on races, among others, will face a 30% withholding tax. It is important to note, however, that when the winnings are paid partially or wholly in cash, the payor is required to make sure that there will be sufficient funds to cover the withholding tax.
Introduced recently, the Equalization Levy is imposed on online services or goods that are offered to residents of India by overseas operators or companies. The rate at which such services are taxed is 2% of the turnover.
The Under The Goods and Services Tax or GST is imposed on services that have to do with accessing casinos or admission to entertainment events. The tax runs at 28%, and it is charged also when the player bets against the house, which is exactly the case with betting, gambling, and lotteries that are described as actionable claims. Yet, it is important to note that the tax is not charged when skill-based games are concerned.
Please note that when the operator provides the platform players need in order to bet against each other, which is also referred to as a peer-to-peer model, whether the GST will be imposed or not depends on the offered services, and the level of human intervention, in particular.
Gambling Management Tools and Player Protection
Rules
Advertisement
Government
ResponsibilityConsidering that most rules and regulations in India are passed with the idea to ban the different forms of gambling, it makes sense that the protection of gambling enthusiasts and minors is not an issue, which is that wildly addressed.
With this in mind, the regulatory frame, which has to do with advertisements and TV shows, is determined by the Consumer Protection Act 2019 and the Cable Television Network Rules 1994. Some of the guidelines for the advertisement content include that individuals under the age of 18 cannot advertise gambling-related services and products, such products should not be trouted as a better source of income, or suggest that engaging in such activities will make people more successful.
The state of Nagaland has a clear-cut stance on the protection of players, and there, placing real-money bets on skill-based games is possible only if players are at least 18 years old.
Because of the inadequate regulations and absence of proper oversight from the Government and state legislatures, there are not a number of self-regulatory associations that are set out to introduce standards for the provision of gambling services. This is exactly the case with the Federation of Sports Gaming and the All India Gaming Federation.
These two associations have focused on several key points when it comes to social responsibility requirements, including the content and the targeting audience of gambling-related advertisements, financial integrity, the provision of player protection measures, the likes of self-exclusion schemes, and the availability of an age verification system.
The usage of Aadhaar, which is a unique identification number is also seen by operators as a viable gambling management tool. In fact, several operators have already started to request the unique 12-digit number as part of the KYC policies they are required to abide by. The Law Commission of India approved the idea of using Aadhaar and making gambling-related transactions cashless as this is the best way to achieve the coveted transparency of the industry.
Closing Thoughts
There is a perception that the gambling industry in India does not get proper oversight from legislatures or that gambling is completely prohibited. In fact, this is far from the reality as figures show that the gambling industry of the country, the unregulated one included, is estimated to have produced more than $90 billion back in 2020.
While some states are moderately friendly to gambling activities, others continue to maintain their tough stance on sports betting and casino games, which makes the legal landscape of India hard to understand right away.
The number of offshore sports betting platforms that are looking to penetrate the untapped market continues to increase in spite of the claims that they provide their services in violation of the law.
With this in mind, most people from the country have a bright outlook for the future because The Supreme Court of India is expected to determine whether betting on sports is a skill-based activity or not. If the Supreme Court says that sports betting is skill-based, it will be exempted from the current enactments, which will pave the way for its broader introduction across India.