If this question was asked 5 years back in India, most of the people’s reaction would be, if something like that even exists? But today, earning money through online gaming is one of the most frequently used platforms by most of the people in India. The main reason for such new trend to grow at a very high rate in this modern world is adoption of new technology, in our case they are, high speed internet, mobile phones and easy digital payments. In olden days gambling was prohibited due to our sacred history of Mahabharata, but today due to the judgement of Supreme Court the game of skill has been exempted from the term gambling or gaming under The Public Gambling Act, 1867. There are various games played online with real money or money’s worth put at stake amongst which few are legal and few are not.
Game of Chance and Game of Skill:
The meaning of these two terms are not given in The Public Gambling Act, 1867, but the general meaning that can understood by the term ‘Game of Chance’ is, the game totally based on luck, such as Lotteries, Casino, Arcades, Bingo, Betting, and Other Gaming machines used as betting terminals. As Game of Chance is highly based on luck and, though element of skill may have some influence in the outcome, but not as much as in the game of skill, it is included in the term Gambling and therefore is prohibited under The Public Gambling Act, 1867.
‘Game of Skill’ means a game which can played or won only if the person playing have proper expertise in such game and with the element of skill, various Supreme court judgments have held that offering games of skill shall be a fundamental right of a person under the Indian constitution. In a Supreme court judgment in 1996, the court held that any game which involves substantial and preponderant degree of skill, such game shall fall within the meaning of Game of Skill. As the game of skill is highly based on the player’s skill and involves using of brain than just having faith over sheer luck, such games are made legal and not prohibited under The Public Gambling Act, 1867.
Legislation:
When the question was raised over the legality of using money or money’s worth in any game, the states were given power under List II of the Seventh Schedule to the Indian Constitution, to make laws in purview of betting and gambling. Most of the states have just directly adopted The Public Gambling Act, 1867, but few states such as Assam, Orissa, Sikkim, Nagaland, and Telengana, have enacted their own legislation by exercising their right given under The Constitution. The states, Assam, Orissa and Telengana have prohibited all kinds of betting and gambling including the games of skill. In these three states no matter if it is a game of skill or chance, all the games involving money are prohibited as per their respective Gaming Legislations. The remaining states, Sikkim and Nagaland introduced online licenses under their legislation, only if they have such permit or license obtained under their respective Gaming Legislations, they can carry on with betting and gambling in the games of skill.
Importance of the question:
The main reason behind such strict laws is the concern for money laundering, all these transactions need to be accounted properly and there shall not be any unaccounted black money, in the case of betting online, it is easy for the government to check for money laundering. After the Demonetization of currency in November 2016, the usage of online payments went up, which also led to increase in online transaction in these online games, which directly allows the government to have account of all the money used in these skill based online games.
The other important reason is the age factor, the usage of money or money’s worth in such skill based online games is a contract between the gaming company and the player, and under The Indian Contracts Act, 1872, any contract with a minor is void (cannot be enforced before a court of law). Therefore, the laws are made to make the gaming companies check whether the players have attained the age of 18. The companies do that by way of asking the players to sync their Adhaar number before they start playing the game, so that the company can prohibit the player to play the game if not attained the minimum age.
Cases and illustration:
In this case, police had raided in Harsha Sports Paradise Club, where it was alleged that the players in the club were gambling in a game of chance and were arrested under Section 79 and Section 80 of Karnataka Police Act, 1963. The players were alleged to Gamble in the game known as “Andar-Baahar”, the police not only arrested the players but also the persons of the club for allowing such gamble to take place in their premises. The petitioner had taken a contention that nowhere it is explained how the game is played or if any kind of skill is required in playing such game, and also contended that arresting them under mere allegation is wrong. The Karnataka High Court allowed the petition and acquitted all the accused from the case.[i]
Conclusion:
It can be concluded with the above given information that usage of real money or money’s worth is legal if used in a “Game of Skill” and not in a “Game of Chance”, but not in all states. In the states of Assam, Orissa and Telengana any kind of usage of money or money’s worth in any game is illegal. In the states of Sikkim and Nagaland it is legal if the club has permit or license for organizing such betting on “Games of Skill”, issued by such state. In all other States and Union Territories usage of money or money’s worth in “Games of Skill” is legal as per their own state legislation i.e. The Public Gambling Act, 1867, which such states have adopted under List II of the Seventh Schedule to the Indian Constitution.
Edited by Pragash Boopal
Approved & Published – Sakshi Raje
References:
- A Cyril Amarchand Mangaldas Blog, All In or Fold – The Legal Conundrum of Real Money Online Poker, July 10, 2019. https://corporate.cyrilamarchandblogs.com/2019/07/real-money-online-poker-legalities/?utm_source=Mondaq&utm_medium=syndication&utm_campaign=View-Original
- IDfy Blog, The rise of Real Money Gaming in India and Regulations around it, April 16, 2019 https://blog-idfy-com.cdn.ampproject.org/v/s/blog.idfy.com/online-gaming/
- com, Legality, https://www.adda52.com/legality
- Live mint, Skill-based gaming can help you make more than a living, July 11, 2019. https://www-livemint-com.cdn.ampproject.org/v/s/www.livemint.com/technology/tech-news/skill-based-gaming-can-help-you-make-more-than-a-living/
- Market Business News, What Are Games Of Chance? Definition And Examples, https://marketbusinessnews.com/financial-glossary/games-chance/
[i] Rajesh and Ors. vs. State of Karnataka (01.03.2019 – KARHC) : MANU/KA/3094/2019
(A case that proves betting on games of skill is not gambling.)
