The Previous Blog of the series discussed the judicial precedents and the need to regulate the Online Gaming Sector. This Blog shall discuss Land Based Gaming- the prevalent laws and the categorization of games in the Indian Gaming Market.
GAMING LAWS IN INDIA: STORY SO FAR
During the Pre-Constitutional era, Gaming in India was essentially governed by the Public Gambling Act, 1867 (hereinafter referred to as “PGA“) which was an enactment primarily modelled in line with the English Gaming Act, 1845 and the Betting Act, 1853.
The said legislation enacted by the British Parliament preponderantly geared to render the wagering agreements unenforceable in the Court of law, inevitably overturned the Unlawful Games Act, of 1541 that made even the games of skill including tennis and bowling illegal.
The PGA, which proscribes gambling activities and the operating of common gaming houses however does not make the games of skills unlawful, appears to signify a similar standpoint.
After the Constitution was brought into force, the regulatory concerns looming around gaming got bifurcated between the State and the Centre by virtue of Seventh Schedule of the Constitution. The State Legislatures got the upper hand in terms of legislative power related to betting and gambling activities for being listed under Entry 34 of List II i.e., the State List.
The Parliament of India was termed as the suitable authority to legislate on the lottery for it being listed in Entry 40 of List I i.e., the Union List under the Seventh Schedule. Further, Entry 62 of the State List provides for the imposition of tax on betting and gambling too.
After the promulgation of the Constitution, the majority of the Indian States adopted guiding principles enumerated under the PGA with suitable modifications. In a general sense, the majority of the gaming statutes define “gaming/gambling” as “the act of wagering or betting for money or money’s worth“.
On the contrary, these very same legislations also explicitly exclude wagering or betting on a horse race or a dog race and lotteries from the ambit of “gaming/gambling”.
The PGA, widely recognised as Central Legislation that prohibits “running or being in charge of a public gambling house“, provides for fine of Rs. 200 and imprisonment of up to 3 months for infringement of its provisions. The PGA further forbids visiting such gambling houses and imposes a fine of Rs. 100 or imprisonment of up to one month for violation.
THE INDIAN GAMING MARKET
With approximately 507 million gamers in the Financial Year 2022 up from 450 million in the Financial Year 2021 and over 900 gaming companies. The Indian Gaming Market valued at $2.6 billion is expected to worth $8.6 billion by the year 2027 in view of a Compound Annual Growth Rate (CAGR) of 27% according to a recently released report of Lumikai, a gaming-focused venture capital fund.
Being a State subject, laws governing gaming/gambling highly tend to vary from state-to-state in India meaning thereby what is allowed in one state may be an offence in the other. For instance, while the State of Maharashtra has prohibited gambling by virtue of Bombay Prevention of Gambling Act, 1887, the neighbouring State of Goa is only one of the two Indian states that have allowed running of casinos and games of chance.
While the States of Sikkim and Nagaland have legalized skillbased games via dedicated State legislations, the States of Telangana and Arunachal Pradesh consider even the games of skills as illegal.
The Indian gaming sector primarily classified in Online Gaming and Land Based Gaming can further be categorized into the following:
1. Lotteries
Lotteries in India are predominantly regulated by the Lotteries (Regulation) Act, 1998 read with Lotteries (Regulation) Rules, 2010 notified by the Central Government on 01.04.2010. Only authorized State bodies and licensed private entities are allowed to run lotteries in India.
On one hand, some states including Madhya Pradesh and Bihar have blanket ban on lotteries; on the other, about 13 Indian states have legalized running of state-run lotteries with some permitting solely not-for-profit lotteries under a duly granted license.
2. Prize Competitions
‘Prize Competition’ as defined under Section 2(d) of the Prize Competitions Act, 1955 (hereinafter referred to as “PCA“) refers to “any competition (whether termed to as a crossword prize contest, a missingword prize competition, a picture prize contest, or by any other name) in which rewards are given for solving a puzzle based on the construction, arrangement, combination, or permutation of letters, words, or figures“.
3. Horse Racing
Horse Racing essentially involves the element of skills and hence it would not be a legally sound argument to consider it pure form of gambling. Almost all major gaming statutes have created an exception for “wagering or betting upon a horse race” from the wider ambit of “gaming/gambling” definition.
However, such exemption comes with certain additional conditions enumerated under those enactments e.g., betting or wagering must have occurred in a state-sanctioned enclosure, that too on the very same day when such horse race is scheduled. It would be cumbersome to fulfil such conditions in the context of online horse race betting.
In light of the recent black swan event of Coronavirus outbreak, the State Governments of Maharashtra and West Bengal had allowed two Indian horse racing clubs (the Mumbai and Calcutta Turf Clubs) to offer online wagering on horse races held in these clubs during the pandemic. The Hyderabad Race Club (HRC) has also started taking bets via its totalizator over the internet.
4. Sports Betting
While it remains unsettled till date as to whether sports betting is a game of skills or a game of chance, the judgement of the Supreme Court of India in Geeta Rani v. Union of India & Ors. on this issue is still awaited.
The State of Sikkim has taken the first step towards legalizing online sports betting within the boundaries of the State, with the enactment of the Sikkim Online Gaming (Regulation) Act, 2008 followed by the Sikkim Online Gaming (Regulation) Rules, 2009 which mandates the due acquisition of license for placing bets on various sporting events.
In Meghalaya, betting on the sport of teer – a peculiar form of archery is also allowed with certain compliance under the Meghalaya Regulation of Gaming Act, 2021 read with Meghalaya Regulation of Gaming Rules, 2021.
Provisions related to the issuance of licenses, eligibility for placing bets on horse races, and various other games have been encompassed in these legislations.
The state of Nagaland has also permitted licensed virtual team selection and wagering activities on sporting events in a restricted sense under the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2016.
5. Game of Skills v. Game of Chance
Games are classified under the categories of Game of Skills or Game of Chance chiefly on the basis of attributes employed in winning such games. Game of Skills basically implies those games that require the players to put to use prior knowledge or experience of the game in addition to strategies, analytical, critical and logical thinking. On the contrary, Game of Chance implies those games where the “luck” element plays a pivotal role and winning purely depends on the player’s fate.
The majority of the Indian States have sanctioned legality to the games qualifying in the former category; however, games in the nature of the latter category are considered illegal and hence prohibited in India with certain exceptions.
While there exists no single definition of either of these classes; the Indian Judiciary and different States through their respective enactments have time and again attempted to define the same.
For instance, the Government of Nagaland has defined Games of Skill under the Nagaland Prohibition of Gambling and Regulation and Promotion of Online Games of Skill Act, 2015 alongside enlisting such games under Schedule A. The State of Meghalaya too has endeavored to craft legislation termed as Meghalaya Regulation of Gaming Act, 2021 incorporating such definitions.
The Supreme Court in Dr. K R Lakshmanan v. State of Tamil Nadu and Anr., [AIR 1996 SC 1153]; State of Andhra Pradesh v. K Satyanarayana, [AIR 1968 SC 825]; and State of Bombay v. RMD Chamarbaugwala, [AIR 1957 SC 699] has laid down that “a game of chance is where the element of chance predominates over the element of skill, whereas a game of skill is where the element of skill predominates over the element of chance“.
The Part IV of the series will discuss Judicial Pronouncements and the way forward with respect to Land Based Gaming in India.
Team AMLEGALS assisted by Mr. Saurin Thakkar (Intern)
For any queries or feedback, please feel free to get in touch with chaitali.sadayat@amlegals.com or aditi.tiwari@amlegals.com.
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