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Gambling in India as a leisure activity has been enjoyed for many decades now but with the rapid improvement in technology and its limitless potential to grow, there are many forms of gambling which have surfaced and may cause massive underground shift in commercial gaming business if left unregulated. Online gaming includes a variety of real money games like poker and rummy, e-sports and fantasy gaming. In India, online games which require the use of money for betting on the outcome of the game are categorized under games of skill and games of chance as elaborated further. Nowhere in Indian legislation has the term ‘gambling’ been given a proper legal definition. As per Black’s Law Dictionary, three elements are required to institute gambling: consideration, an element of chance and reward. Online gambling mainly refers to placing bets online and earning money through them. Online gaming or online gambling is seen as a rapidly emerging sector due to the increase in the usage of wireless internet facilities and a decline in the cost of data over the years. During the lockdown period in the year 2020 due to the COVID-19 pandemic, investment in the gaming sector in India was estimated at USD 544 million which was more than the combined investment that took place in the past half-decade. The Real Money Gaming (RMG) space, which includes casino, poker, bingo skill games wherein real money is wagered on the outcome of the game, now also includes fantasy sports and hyper casual or casual games. Although they are closely related to gambling, fantasy gaming involves players composing fantasy teams of exemplified real professional players of sports like Cricket or Hockey. Not unlike fantasy sports, the legality of gambling in India depends upon their classification as a ‘game of skill’ or as a ‘game of chance’. The Public Gaming Act, 1867 was a pre-independence law introduced by the British and it is still followed by many states to regulate cases related to gambling. Section 12 of this Act bans illegal public gambling activities with exception of games that require a good amount of skill where winning is not primarily based upon the outcome of the game which depends solely on chance. If a certain game is purely based upon chance it would be considered as illegal gambling. Therefore, In India, games of skill are excluded from being addressed as gambling. Several states in India have banned gambling in any form under their jurisdiction which has certainly deteriorated the form of such games in India. Gambling has been enlisted in the Indian Constitution under List II of the Seventh Schedule, thus regulation of gambling falls under the responsibility of the states. This becomes the primary reason for the absence of a homogenous framework regulating gambling. Especially in the case of online gambling, state laws cannot account for people belonging from other states gambling through the internet.
The online gaming industry is growing and thus there have been concerns to put up a well formed regulatory framework for it. The Advertising Standard Council of India (ASCI) on the recommendation of the Ministry of Information and Broadcasting have come up with a set of guidelines for promoting money-related games but still there are no formal regulations for the same.
To determine whether a game is to be termed as a game of skill or not, courts have made use of the ‘predominance of skill’ test and have opined that horse racing, rummy and poker are understood to be games of skill and thus can be played legally. The requirement of skill differentiates between fantasy gaming, poker and other gambling activities which are purely based upon chance. The Supreme Court in the landmark judgment Dr. K.R. Lakshmanan v State of Tamil Nadu distinguished between “games of skill” and “games of chance” and opined that “a game of chance is one in which the element of chance predominates over the element of skill, and a game of skill is one in which the element of skill predominates over the element of chance“. This is what is known as the dominant factor test today and through this case, betting on horse-racing was adjudged to be a game of skill. In a game of skill, the player’s knowledge, adroitness, training, experience and personal capabilities determine the course of the game majorly. The element of chance cannot be entirely ruled out but it is the skill of the player that dominates over chance. Through another landmark judgment of State of Andhra Pradesh v K. Satyanarayana, the court mainly decided about the game of rummy being a game of skill or a game of chance and came to the conclusion that it cannot be categorized as either of these exclusively. Apart from the condition that the game in concern should for the most part be a game of skill, there is another step that is taken into account to determine whether an act can be considered as gambling. If the organization that provides the activity gains money on profit from the activity, it will be considered as gambling. It was through the R.M.D Chamarbaugwalla v Union of India case that it was decided that games in which the use of skill dominates over chance are to be excluded from the penalization that the Prize Competitions Act of 1956 offers.
In India, Andhra Pradesh, Assam, Orissa and Telangana have banned online gaming in their states irrespective of the games being categorized as a “game of chance” or “game of skill” even poker and rummy which have previously been decided upon by the courts as games of skill and their legality. West Bengal has excluded poker, rummy and bridge when defining gambling. Gambling apps are not available for download from Google Playstore in India as India is not included in its list of countries where gambling is allowed. This might be because of recent state directions to ban such apps like Paytm first games. Sikkim came up with the Sikkim Online Gambling (Regulation) Act 2008 to regulate online and offline gaming. The Act also offers licenses to the gaming service providers on its territory. Similarly, Nagaland enacted the Nagaland Prohibition of Gaming and Promotion and Regulation of Online Games of Skill Act in 2016. Through it, the state can license as well as regulate online games under its territory. It also confers protections upon the licensed entity. Any such entity which provides games of skill to be played on their platform for profit is supposed to get an approved license from the state authorities for the same. Players from any place in India can play through these platforms and it would not be considered illegal gambling as long as the place where the players belong to has not prohibited such activities or game of skill. Therefore, one can sit and operate in Nagaland for all users in other states that consider “game of skill” as legal. Nagaland specifies game of skill as per the dominant factor test which was articulated in the Satyanarayanan case. This Act provides a list of games it considers legal such as rummy, poker and virtual games like virtual cricket and virtual football and term them all games of skill. This Act departs from the Satyanarayana case and does not prohibit a licensed entity to make profits from the games offered on its platform.
Sikkim governs gaming and gambling on its land and consequently on offshore vessels through the Sikkim Casinos (Control and Tax Act), 2002 and Sikkim Casino games (Control and Tax) Rules, 2007. This Act only allows for in-state presence of websites through the intranet and bars any person residing outside the state to take part in these activities through their platforms so that the state law does not interfere with any of the laws related to gambling in other states. The Sikkim Act also has provisions to impose tax upon the gambling service providers and even advertisements for the same are permitted to the extent they do not contain any indecency.
All these state-specific acts as well as the Public Gaming Act of 1867 have provisions fitted to gaming in spaces made of brick and mortar and most of these acts do not provide specific provisions when it comes to online gaming. To straighten this out and to make use of laws which have been primarily designed for a particular set of circumstances, in more scenarios than was previously thought of, the principle of ‘functional equivalence’ is used. The Public Gaming Act having been enacted before major technological advancements happened, did not account for the virtual form of gaming that is popular now-a-days and was termed around “public gaming houses”. Therefore its vitality in the current situations can be made out with the help of this principle. This principle enables us to apply legal prohibitions and protections that can be applied in an offline situation to a digital or virtual sphere correspondent. The Public Gaming Act and the state-specific legislations upon games of skill for stakes are there to enforce a legal basis upon these games and therefore can be extended to the point when these games are being played on a virtual platform, and are considered as online games. But apart from the applicability of these laws in the online mode, there is a change of environment that affects the nature of a game and therefore the core on which the principle of functional equivalence works may change in such a scenario. Consider any card game that is usually played on a game table with all the players in close physical proximity of each other as they try to bluff each other and try reading the physiological signs of emotions of their opponents to collect as much information as they can in order to win. All the things described above depends from person to person and their individual skills to read the table and play the game accordingly. When the same game is played on a virtual platform without them knowing who their opponents are and having no means to read their opponents emotions, the skill set that is required to play the game changes. If a player cannot account for the fall of cards it would render the player incapable of memorizing the cards and therefore cannot come up with a proper strategy for play and again an important skill needed for the game is rendered moot.
When the mode of money related games is changed from offline to online, the risk of money related fraud becomes obvious and thus a proper legal framework regulating gaming platforms is need to safeguard the players from potential risk. Unethical practices by the gaming service providers in the absence of a well formed framework puts the interest of the consumers at risk. There is no legal clarity and rules if the players do not receive their reward after winning a game. If a particular state puts up a blanket ban on online gaming involving stakes, it cannot be guaranteed that the vast nature of online gaming will come to a stop. It would probably lead to an unregulated game market for the same and the income that would be generated from it would go unaccounted thus creating an underground parallel economy and increased circulation of black money. The Federation of Indian Chambers of Commerce and Industry believes the online gaming sector to reach Rs 187 Billion by 2022 and thus by proper regulation, the government can expect to gain a sizable amount of revenue from the sector.
The Law Commission of India, under the direction of the Supreme Court, released a report emphasizing on the legalization of gambling in India as it impossible to monitor when it is easily available in the online format. It recommends that the gaming operators should be licensed and the players as well as the operators should be identified whenever a payment is to be made. It also suggests to put limits on expenditure by a player depending upon the winning percentage and income status of the player. The money transactions are recommended to be cashless so that it helps to keep them under check and regulated by imposing taxes.  The United Kingdom set up a Gambling Commission for regulating all forms of online betting, casino gaming, poker, lottery gaming and bingo. This results in the promotion of safe gambling practices for its citizens by licensed hosts. The primary objectives that were put forth by the Gambling Act stressed upon disassociating gambling as a crime, fair practice and preventing the vulnerable from the misuse of gambling and the commission also prepared a White list enlisting countries which they believe to have appropriate regulations in place for online gaming and thus allows for collaboration with them.
The recent case decided by the Madras High Court struck down Part II of Tamil Nadu Gaming and Police Laws (Amendment) Act 2021, which sought to put a blanket ban on poker and other betting games involving stakes. The appellants here, were online gaming companies that demanded the ban to be uplifted as it impinged on their right to conduct their business. Primarily this case contended that poker has been adjudged as a game of skill and thus the ban infringes upon their fundamental right to practice any profession as stated under Article 19(g) as games which require skill to crack have been exempted as a form of gambling in a previous decision of the apex court. Tamil Nadu is held at a high position for transactional online skill gaming (TOSG) firms as it approximated to have about 10 percent of TOSG player base and revenue and thus this decision comes as an affirmation for the industry and its investors.  Therefore, this decision is welcomed and it shows that the online gaming scenario is slowly changing in India but still it would be more feasible if a formal set of rules is adopted by all the states and union territories in India. The current legislation do not satisfactorily attend to the needs of this industry. As gambling is a state subject, the Union does not have the power to make laws related to it but this can be changed with the help of an amendment that provides the power to the parliament to make constitutional amendments. By bringing betting and gambling under List I of the seventh schedule from List II, the Union can govern these subjects at the national level. As it is lotteries, which can be held in close connection with gambling, are already considered under List I, including betting will not be a big challenge. To safeguard players from the risks associated with dealing with money online to revenue opportunities for the government, a central legislation for online gambling is the best was forward. Licensing gambling service providers would increase their legitimacy and check illegal rise of this activity which has the potential to be addictive and act as social evil.
 H.C. Black, Black’s Law Dictionary (6th edn., 994)
Girish Menon, “Online Gaming In India”KPMG available at: https://home.kpmg/in/en/home/insights/2021/05/indian-online-gaming-market-mantra.html (last visited on August 18, 2021)
 Press Trust of India “Gaming sector in India attracted investments worth $544 million” Business Standard, March 14, 2021.
 The Constitution of India
 Advertising Standard Council of India, “GUIDELINES ON ONLINE GAMING ISSUED BY ADVERTISING STANDARDS COUNCIL OF INDIA(ASCI) 24.11.2020 (EFFECTIVE FROM 15TH DECEMBER, 2020) available at: https://mib.gov.in/sites/default/files/Advisory.pdf (last visited on 18 August, 2021).
 Dr. K.R. Lakshmanan v. State of Tamil Nadu, AIR 1996 SC 1153. State of Andhra Pradesh v. K. Satyanarayana, AIR 1968 SC 825
 AIR 1996 SC 1153
 AIR 1968 SC 825
 AIR 1957 SC 628
 Assam Game and Betting Act, 1970.
 Orissa Prevention of Gaming Act, 1955.
 Ganesh Prasad and Mukund Thirumalai Srikanth, “India: Salient Features Of The Telangana State Gambling (Amendment) Ordianance” MONDAQ, July 3, 2017.
 Mehab Qureshi “Online Gambling Apps in India: How Does It Work? Is It Legal?” The Quint, 12 May, 2021, available at: https://www.thequint.com/tech-and-auto/online-gambling-apps-in-india-is-it-legal-to-play-details-here (last visited on August 16, 2021)
 The Sikkim Casinos (Control and Tax Act) 2002, India, available at: https://prsindia.org/files/bills_acts/acts_states/sikkim/2009/2009Sikkim7.pdf (last visited on August 19, 2021).
 The Sikkim Online Gaming (Regulation) Rules, 2009, Rule 8.
 Anne Veerpallu, “Functional Equivalence: An Exploration Through Shortcomings to Solutions” 12 Baltic Journal of Law & Politics 134 (2019)
 Sakshi Anand, “INTERNET GAMBLING IN INDIA: REGULATION OR PROHIBITION?” 4 Journal on Contemporary Issues of Law 173 (2018)
 “FICCI: Online gaming sector expected to reach Rs 187 billion by 2022 at a CAGR of 43 per cent “Animation Express March 28, 2020
 Board of Control for Cricket in India v. Cricket Association of Bihar & Ors. (2014) 7 SCC 383.
 Law Commission of India, “276th Report on Legal Framework : Gambling and Sports Betting including in Cricket in India” (July, 2018)
 UK Gambling Act 2005
 Junglee Games India Private Limited and Ors. Vs. The State of Tamil Nadu and Ors. 2021 SCC OnLine Mad 2762
 Vainavi Mahendra, “Why Madras HC Verdict Against Betting Games is a Game Changer” The Financial Express available at: https://www.financialexpress.com/brandwagon/why-madras-hcs-verdict-against-betting-games-is-a-game-changer/2307428/ (last visited on August 18, 2021).
 The Constitution of India, art 386.
Author: Anindyaa Priyadarshi, National Law University, Delhi
Editor: Kanishka Vaish, Senior Editor, LexLife India.