Status of Gambling and Betting in India

In August 2021, the Madras High Court struck down the Tamil Nadu Gaming and Police Laws (Amendment) Act, 2021, which banned games like rummy and poker on cyberspace when played for stakes. This judgment has once again sparked the debate of whether online gambling should be made legal in India. In this article, the author will analyse the provisions of laws that deal with the regulation of betting and gambling.

Historical Status of Gambling and Betting

In Indian Mythology, the famous dice game between Pandavas and Kauravas has been cited as an example to portray betting and gambling as a social evil. Manu, one of the greatest Indian philosophers, had advocated the complete abolition of gambling. In his book Arthashastra, Chanakya has allowed gambling to prevail in the state but, at the same time, restricted that the gambling must be regulated and the gambling should be allowed only in state-regulated public houses. It ensures that there is no scope for cheating in the game. Similarly, gambling was allowed in the medieval era, but the state highly regulated it. Even the British government tried to regulate gambling and came up with steps to prevent people from indulging in gambling and betting. For example, the Public Gambling Act, 1867 was enacted to punish the setting up of a gaming house.

Present Status of Gambling and Betting in India

In India, the right to indulge in gambling stems from the fundamental rights guaranteed under Part III of the constitution. Article 19(1) guarantees citizens the right to freedom of trade, profession, and occupation. The argument can be raised that gambling is a "trade" protected under Article 19(1)g. The Honorable Supreme Court has clarified the position in the case of M/s B.R. Enterprises v. State of Uttar Pradesh and Ors. The court held that gambling is not a "trade" by applying the Old Roman Law doctrine - res extra commercium. As per this doctrine, certain things do not fall within the sphere of private rights, and thus they cannot be traded. Since gambling cannot be traded, it does not fall within the definition of "trade." Hence, gambling is not allowed in India.

Black Law Dictionary defines gambling as the "Act of risking something of value for a chance to win a prize." J. Holmes, in the famous case of Dillingham v. Mclaughlin, explained that the meaning of chance is "What a man does not know and cannot find out is chance as to him, and is recognised as chance by the law." The Madras High Court, in the case of Public Prosecutor v. Veraj Lal Seth, has tried to explain the difference between the words "Gaming" and "Wagering." The court defined gaming as a stake laid by the player on the game, which may depend to some extent on the skills of the players involved in the game while in wagering, the winning or losing depends solely on the happening of some uncertain event. In India, the word betting is synonymous with the term wagering. Thus, in India, gambling or betting is considered a bet where the winning or losing depends solely on the happening of some uncertain event. Therefore, gambling comes under the scope of the Wagering Contract.

Section 30 of the Indian Contract Act, 1872 stipulates that the agreements by way of wager are void. The section states -

"Agreements by way of wager are void, and no suit shall be brought for recovering anything alleged to be won on any wager or entrusted to any person to abide by the result of any game or other uncertain event on which any wager is made."

The bare perusal of the section makes it crystal clear that wager agreements are unenforceable in the court of law. Since the betting agreement is a type of wager agreement, it is also unenforceable in the court. Thus, no claim can arise based on a betting contract.

In India, three lists demarcate the powers of the central and state governments. The second list deals with the subject matters that exclusively falls within the state government's jurisdiction, and only the state government can legislate on these subjects under Article 249 of the constitution. Entry 34 of List-II (State List) deals with betting and gambling, and Entry 62 of the list gives the power to impose a tax on the income derived from betting and gambling. Thus, the state government has the prerogative to determine whether betting is legal in a state or not. For example, while gambling or betting is completely banned in Telangana, on the other hand, in Sikkim, gambling on cricket is allowed, provided the gambling takes place within the public parlours. It brings to the foresight that there is a stark difference between the attitude of state governments regarding gambling in India.

Rummy and poker do not come under the ambit of gambling

The recent judgment delivered by the Madras High Court that the law banning citizens' right to play rummy and poker on cyberspace for the stake is ultra-vires has raised the question as to why the court has invalidated such law. The court has delivered the judgment as rummy and poker do not come under the purview of gambling.

The honourable Supreme Court, in RMD Chamarbaugawalla v. Union of India, has held that the competitions that involve skills do not fall under the category of gambling but are commercial activities under Article 19(1)(g) of the constitution. The test to determine whether the game or competition is a game of skill or a game of chance is the Dominant Factor Test.

The test postulates that it is impossible to have a game that does not involve the element of chance. As per this test, the court looks for the predominance of chance or skill in the game's outcome. If there is a predominance of skill, then the game is a game of skill and is covered under article 19(1)(g) of the constitution. The Supreme Court has applied the same test to determine whether rummy and poker are a game of chance or skill. The Apex Court in State of Andhra Pradesh v. K. Satyanarayana (1967) has held that rummy is a game of "mere skill", and it cannot be said that there is a predominance of the chance in determining the winner of the game. The court's ratio was that in rummy, there is the existence of skill as "the fall of the cards has to be memories, and the building up of rummy requires considerable skill in holding and discarding cards. It is mainly and preponderantly a game of skill." Similarly, the Calcutta High Court in 2019 has declared poker as a game of "mere skill" because the trick to winning the game is to play each hand correctly. Thus, there is a predominance of skill in the outcome of the game.

Thus, rummy and poker are considered outside the realm of gambling and are commercial activities under Article 19(1) of the constitution.

Horseracing is a game of mere skill.

Many people consider betting on horseracing as a gamble, as winning the horse race is a matter of chance. No skill is required to win the bet placed on horse racing. However, the Apex Court, in Dr Lakshmanan v. State of Tamil Nadu, held that horseracing is a game of mere skill, and there is a predominance of skill in winning the bet on horseracing. The reason was that before placing bets, the punters need to have an idea about the horse's health, speed, et cetera. Thus, horse racing is outside the realm of gambling and is a commercial activity protected under Article 19(1)(g) of the constitution.

Conclusion and Future Ahead

In India, the attitude of the government towards betting is still cynical. Most of the state governments have prohibited betting in their respective states. The constitution has empowered the state governments to make decisions regarding regulations of gambling and betting.

Recently, the Lodha Committee constituted after the 2013 IPL fixing scandal, submitted that betting plagues society irrespective of the steps taken to curb it. Therefore, the time has come to liberalise the gambling sector and enable private persons to operate betting sites. It will curb the illegal betting network and protect ordinary people from being cheated on by those who run illegal gambling sites and typical gaming houses. Before legalising betting, there is a need to have a uniform law that deals with betting regulation and imposes steps to protect the people from ruining their lives by falling into the clutches of gambling.

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