Sports Betting in India: Wagering Agreements or not?

Reading time : 8 minutes

Introduction

In the present scenario, with the advent of technology, several online gaming platforms have grabbed the spotlight. Claiming to be games of ‘skill’, these games offer money to the winner on their win. These are called sports betting games where usually a person has to form a team and his win is calculated keeping in mind the performance of his team players. India is a hub of cricket and thus majority of such platforms revolve around it only. The leading cricketers themselves endorse such platforms and the result is larger participation of people. There is but a huge controversy when it comes to these betting contracts. Whether they are by way of wager or not, this question bothers everyone. Section 30 of the Indian Contract act 1872, lays down that contracts by way of wager are void. Wagering agreements are those agreements which are based on a happening or non-happening of a particular event and in such event, the party has no inherent interest per se. The event is not necessarily a future event, it can also be a past one but the parties entering into the contract should not have knowledge of such an event. Section 30 also comes with certain exceptions under which such contracts are not held to be void. They are mainly the contracts involving skill like horse races. The same reasoning is given for online sports betting and they are claimed to come under the exceptions. Although wagering agreements and betting and gambling are considered to be same but betting can simply be defined as an act of putting at stake a wagering amount (valuable or liquid cash) on the prediction of occurrence or non-occurrence of an event. It is always done against a second party who places his stake against the one placed by the first party.[1]

Prerequisites for a wagering contract

For a contract to be held as a wager following essentials should be met-

  • Mutual chance of gain or loss

There should be a 50-50 probability of winning or losing. A contract is not by way of wager where one part has appropriate chance of winning but not losing and vice versa.

  • No other interest

The parties entering into such a contract should not have any other interest than the betting money itself. This essential is the basis because of which insurance agreements are not considered to be wagering. A person no doubt in an insurance agreement has other interests in the agreement part from the insurance money. He has certain relationship with the dead and even in case of a motor vehicle, he has inherent interest lying in it. A truck owned by A was transferred benami to B who got it insured in his own name. The truck was involved in an accident and it seriously injured a young army officer who claimed heavy damages from the owner, driver and the benamidar and the insurance company. It raised the plea that an ostensible owner (a benamidar) had no insurable interest and that it was a wager for that reason. Both these pleas were negated by the High Court.[2]

  • Two Parties

As in any normal contract, there should be the existence of two parties each having equal probability of winning or losing.

Exceptions under section 30

Horse races are explicitly recognized as exceptions under section 30. All transactions related to horse racing should be held valid except those which are hit by section 294A of the Indian Penal Code. Also if skills play a substantial part in the result and prizes are awarded according to the merits of the solution, the competition is not a lottery. Otherwise it is.[3] Literary competitions like that of crossword are thus not wagering contracts.

Game of skill and game of chance

There are very less such agreements which can be compartmentalized and said to be based on either upon a game of chance or a game of skill. In KR Lakshamanan (Dr) v. State of Tamil Nadu[4], the court tried to lay down some points which would help in distinguishing between the two. A game of skill is based on the knowledge, training, experience, adroitness of the player while a game of chance depends merely upon the luck. Therefore we can classify horse racing which includes the skill of the jockey as not a game of mere chance. On the other hand, if we enter into a contract where we decide that the horses would run on their own and whosevers horse stops first, would be declared as the loser, it is the game of mere chance. No skill per se is included here and it depends merely upon the horse’s will.

Is betting legal in India?

 According to Seventh Schedule Entry 34 List II Gambling is a state subject, states have a right to make their own laws on it. States like Goa have legalized casinos and we see betting happening there on a large scale. Along with it Sikkim and Daman and Diu find no problem in casinos.  According to the Goa, Daman and Diu Public Gambling Act, 1976 casinos can be set up only at five star hotels or offshore vessels with the prior permission of the government. Other states go with the basics i.e. they have legalized only horse races. The public gambling act 1867 is a central act which governs betting in India. Also, we have the IT Act 2000 which governs the online platform also gives us some respite when it comes to betting. Though it does not lay explicitly what should be done, it helps courts in interpretation and also to the plaintiffs to fight their case. Poker is also a widely popular game and thus there were speculations whether it’s by way of wager or not. The Gujarat high court found out that this game was based on luck and thus under the Gujarat prevention of gambling act 1887, playing poker amounts to gambling.[5] The game of rummy was said to be a ‘game of skill’ and also discussion has been done by the Supreme Court on games like flush, brag etc. and they have been considered as games of chance.  Also we can see online ludo becoming quite popular where people usually put some money at stake. As ludo is considered as a game of skill, requiring concentration and skill, such betting is deemed to be legal. Lottery also does not come under the ambit of gambling.

The recent cases

Eyebrows have been raised on the legitimacy of online sports betting platforms. Dream11 is one such site which revolutionized the arena of online sports betting. After its success, several other sites have come into existence. PIL’s have been filed in high courts. But the Supreme Court has dismissed such appeals and thus Dream11 has not been declared a gambling website. A PIL was filed in Varun Gumber v. Union Territory of Chandigarh[6] whereas the petitioner claimed that it was a game of chance and wanted to proceed with a criminal case against the company as he had lost his money due to the fantasy game. The respondents showcased that how the whole game revolves around the skill of the player. The player had to choose a team keeping in mind the performance of the players. Moreover he has a chance to substitute a player if he feels that the player is not playing well within a stipulated course of time. Thus the game includes whole technique and skills of the participant. The court held Dream11 not liable and the appeal was as a result dismissed. Gurdeep Singh Sachar v. UOI[7] took the same view and the Bombay high court rejected the petitioner’s plea that the game has certain components of chance.  From the above plethora of cases, it can be successfully considered that when we specifically talk about dream11, it cannot be considered as a game of chance and thus contracts entered here are not void.

Can sports betting become legal in India?

Indians tend and like to bet. We have sports like cricket, football, basketball etc. which are very popular and thus people like to bet there. We usually see bookies being arrested especially during the time of IPL and World Cup. But betting is expected to be legalized any sooner. Minister of State for Finance Anurag Thakur said once, “legalizing betting and getting it into the formal economy will help contain “unholy and corrupt” practices like match-fixing besides giving tax revenues.” He made the remarks at an event hosted by ICICI Securities responding to a suggestion by the Economic Advisory Council to the Prime Minister’s (EACPM) part-time member and mutual fund industry veteran Nilesh Shah, who pitched for legalizing betting in the country.[8] Lots of countries in the world have legalized betting especially the sports one but in India this legalization is a far off dream for the Indians who love to bet. 

Conclusion

Sports betting in India is void per se. All such agreements are said to be entered by way of wager and thus held to be void. The online sports fantasy games that we have today are declared not as wagering agreements. The court’s take is that these games are games of skill where a person is required to use his intelligence. In spite of the fact that sports betting is illegal in India, the entire betting market was valued at 12.5 Billion US in 2019, with a projected growth of 17.5 Billion US by 2025. With the online websites we have children getting access to such platforms though the condition is that the user should be above 18 years of age. Overall whether the betting on a particular game is valid or not, it depends entirely on the ‘skill’ and ‘chance’ factor. There are certain gray areas when it comes to sports betting in India and the government should reconsider the laws to suit the present conditions and to rectify these grey areas. Certain cases have been decided till now and the 2018 law commission report can be considered while reconsidering betting and gambling. After all, laws should be clear and transparent and even.


[1] LAW COMMISSION OF INDIA Report No. 276 LEGAL FRAMEWORK: GAMBLING AND SPORTS BETTING INCLUDING IN CRICKET IN INDIA  (July 2018)

[2]  AIR 1973 All 357 at 360

[3] The state of Maharashtra and Anr. V. Bennet Coleman and co. ltd. (1936) 1 KB 416 (DC)

[4]  KR Lakshamanan (Dr) v. State of Tamil Nadu (1996) 2 SCC 226 

[5]    Dominance Games Pvt. Ltd. V. State of Gujarat and ors.  MANU/GJ/1995/2017

[6] Varun Gumber v. Union Territory of Chandigarh  MANU/PH/1265/2017

[7] Gurdeep Singh Sachar v. UOI 2004 (3) SLJ 69 CAT

[8] https://www.thehindubusinessline.com/news/minister-anurag-thakur-bats-for-legalising-betting/article33135294.ece

Author: Anushka Singhal, Symbiosis Law School, Noida

Editor: Kanishka VaishSenior Editor, LexLife India.

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