Introduction to Legal Gambling in India
Gambling in India refers to the act of staking money or valuable assets on an uncertain outcome, with the goal of winning more money or material rewards. The legality of gambling in India is a complex matter, governed by a mix of federal and state laws. While some forms of gambling are permitted, many remain strictly regulated or prohibited across different states.
In this article, we will explore the legal aspects of gambling in India, including the types of legal gambling activities, regulations governing gambling, and the legal framework surrounding online gambling.
What is Gambling?
Gambling is the act of risking money or valuables (known as “stakes”) on an event with an uncertain outcome. There are three essential elements that define gambling:
- Consideration: Money or valuables put at stake.
- Risk: The act of taking a chance.
- Prize: The potential reward or outcome of the gamble.
Gambling can have immediate outcomes, like a roulette spin or dice roll, or longer-term outcomes, such as betting on future sports events.
What is Legal Gambling in India?
Legal gambling in India is regulated through both federal laws and state-specific regulations. While most forms of gambling are banned, certain exceptions are made, particularly for games of skill and specific gambling activities.
Forms of Legal Gambling in India
- Casino Gambling: Casino gambling is legal in India only in the states of Goa and Sikkim. These states permit casino operations in five-star hotels and on offshore ships, with strict regulatory frameworks in place.
- Horse Racing and Sports Betting: Horse racing is classified as a game of skill, and betting on it is legal under certain conditions. In addition, Sikkim has legalized sports betting within its jurisdiction. Online betting on horse races is also allowed, provided it complies with local regulations.
- Poker and Card Games: Poker, especially when played as a game of skill, is legal in India. However, states like Sikkim, Nagaland, and Gujarat may require specific licenses to operate poker games.
- Lotteries: Government-run lotteries are legal and regulated under the Central Lotteries (Regulation) Act, 1998. State governments can issue their own regulations and authorize lottery operations. However, private lotteries are prohibited in most states.
- Fantasy Sports: Fantasy sports, if considered games of skill, are legal in many states. Some states, such as Nagaland, require operators to obtain a license to offer fantasy sports games.
The Legal Framework of Gambling in India
The Public Gambling Act, 1867
The Public Gambling Act of 1867 is the primary legislation governing gambling in India. It criminalizes the operation of gaming houses and the act of gambling in public places. However, certain states like Goa and Sikkim have legal exceptions and have created regulations to manage gambling activities.
Games of Skill vs. Games of Chance
The distinction between games of skill and games of chance is crucial in determining whether an activity is considered gambling under Indian law:
- Games of Skill: These are games where success primarily depends on skill rather than luck. The Supreme Court of India has ruled that games like horse racing and rummy are games of skill and, therefore, not subject to the same restrictions as games of chance.
- Games of Chance: Games like three-card poker (flush) are considered games of chance and are subject to stricter gambling regulations.
Online Gambling in India
The Public Gambling Act, 1867 does not address online gambling, as it was enacted long before the internet era. However, there are several indirect regulations that impact online gambling, such as restrictions on financial transactions related to gambling. The Information Technology Act, 2000 allows the government to block foreign gambling websites, making it difficult for Indian players to engage in online gambling without facing restrictions.
Despite these challenges, there is no explicit law that outlaws online gambling, and players can legally access international casino sites and betting platforms, though obstacles such as payment restrictions may arise.
Types of Legal Gambling in India
- Casinos: Legal only in Goa and Sikkim, where licenses are issued to five-star hotels and offshore ships for casino operations.
- Horse Racing: Betting on horse racing is legal under the skill-based exemption. Turf clubs regulate betting on physical races within their premises, and some states, like Sikkim, have allowed online betting on horse racing.
- Sports Betting: Sports betting is illegal in most states but legal in Sikkim under strict regulatory conditions. The Supreme Court has considered legalizing cricket betting but has not taken decisive action yet.
- Poker: Recognized as a game of skill, poker is legal in many states, but some like Sikkim, Gujarat, and Nagaland require licenses for operators.
- Bingo: Considered a game of chance and prohibited in most Indian states, although there are exceptions in specific jurisdictions.
- Lotteries: Government-run lotteries are legal, and states have the authority to regulate and conduct them. Private lotteries are prohibited in most states.
Gambling Licenses in India
To offer legal gambling services, operators must obtain specific licenses depending on the type of gambling activity:
- Casinos: Only Goa and Sikkim issue licenses for casino operations, either in hotels or offshore ships.
- Poker: Operators may need a license in states like Sikkim, Nagaland, and Gujarat.
- Sports Betting: In Sikkim, operators must obtain a license for offering sports betting games.
- Lotteries: State governments are authorized to regulate and distribute government-run lotteries.
- Fantasy Sports: States like Nagaland require licenses for fantasy sports operators, while others may not.
Taxation on Gambling and Betting in India
- Income Tax: Winnings from gambling exceeding INR 10,000 are subject to a 30% tax withholding. This tax is deducted at the time of payment.
- Goods and Services Tax (GST): A 28% GST applies to gambling activities, including casino services and betting. Games involving skill, like poker, are generally exempt unless classified as Online Information Database Access and Retrieval Services (ODAIR).
- Equalization Levy: This tax applies to offshore e-commerce operators providing gambling or betting services to Indian residents. The tax rate is 2%.