Gaming Legislation

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Gaming Legislation

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The Supreme Court has held that under normal circumstances, rummy is a game of skill and is permitted under gambling law [3].

However, this decision comes with a disclaimer. There should not be any evidence of gambling involved in any other way — game owners should not make profits or gains from rummy and games should not be played for stakes.

The disclaimer means that several online rummy games cannot benefit from the Supreme Court's decision since they potentially involve profits for participants, who play for real money, and for game owners, who often charge participation fees.

The Kerala High Court [4] also recently held that RummyCircle online rummy did not amount to gambling.

Bear in mind here that Kerala laws do not treat rummy as gambling if no side-betting is involved, which means that courts in other states may not take the same view.

Different High Courts have given conflicting decisions on whether poker constitutes a game of skill or chance. While the High Courts of Gujarat [5] and Bombay [6] have held poker to be a game of chance and therefore prohibited, the Calcutta High Court's view is that poker is not covered under the state's gambling laws meaning that it is not restricted [7].

Again, the background here is that West Bengal gambling laws exclude poker from the definition of gambling.

The Supreme Court [8] has also observed that there is no scope for using skill in games like poker double up, blackjack and pacman meaning they are prohibited.

However, this seems to have been a passing observation based on the factual findings of the lower court which had classified these games as games of chance.

Again, this means there is no decisive ruling on poker. Unlike other online games, fantasy sports games have generally been given consistent treatment by Indian courts and have been allowed on the basis that they require skill.

The Rajasthan High Court has also followed suit [10]. The above rulings do inspire confidence in the legality of fantasy sports games.

Again, to be clear, at the current time this does not seem to be a priority for them. On 14 April , the Gazette of India published the Information Technology Intermediaries guidelines Rules, This legal document is issued under authority granted in Information Technology Act, In short, this act instructs Internet Service Providers and Website Hosts, to block access to certain types of websites and content.

While the majority of this is for areas of National Security, things that would shine India in an improper light, things that are blasphemous, illegal, pornographic etc.

The addition of gambling to the IT Act of is in conflict where much the rest of India is headed.

Again, the Sikkim Government has legalized sports betting and casino gambling, Goa has legal casinos, and 13 states have legalized lottery.

Even Mr. Haroon Lorgat, the CEO of the International Cricket Council ICC , has urged Indian officials to make cricket betting sites legal, as he feels this is the best way to prevent corruption and match-fixing in the sport.

So while the push for legal gambling in India is strong and has made some progress, the Central Government is still taking action in an attempt to make it more difficult.

At the current time — most gambling in India is illegal. However, legal gambling does exist for horse racing, lottery, and rummy paplu.

There is also a high number of betting sites legal in the UK which service Indian players with only minor hassles. The law at this time seems more concerned with scaring Indian players not to gamble than it does to prevent it.

We cannot, therefore, say that the game of Rummy is a game of entire chance. It is mainly and preponderantly a game of skill.

The chance in Rummy is of the same character as the chance in a deal at a game of bridge. The Central Lotteries Regulation Act of gave state governments the authority to hold lotteries but stipulated this was restricted to a maximum of one draw per week.

Today in most Indian states there are lottery terminals excessively available and some lotteries are drawn every 15 minutes.

Also, Sikkim licensed PlayWin Lotto is highly popular and Indians from any state can purchase tickets online, or via terminal. It is the dominant element — "skill" or "chance" that determines the true character of the game.

The Supreme Court in Dr. Lakshmanan supra held that horse racing is a game of mere skill within the meaning envisaged under the Madras City Police Act, and Tamil Nadu Gaming Act, The Court explained through various instances how horse racing can be considered a game of skill as the betting in horse races are based on evaluative skills and various other factors like skill and management of the jockey.

The State of Sikkim enacted the Sikkim Online Gaming Regulation Act, , which was passed on 28 th June by the Sikkim Legislative Assembly with dual object of controlling and regulating online gaming through electronic and non-electronic formats and to impose tax on the same within its territory.

The Sikkim Online Gaming Regulation Rules, has been subsequently enacted and the same has been amended from time to time.

The Sikkim Online Gaming Regulation Act, was amended on August 19, restricting the offering of "online games and sports games" under the licenses issued under the said Act to the physical premises of the game parlours within the geographical boundaries of the State of Sikkim through intranet gaming terminals.

Initially, the wording of the Sikkim Online Gaming Regulation Act, envisaged that the license shall allow the licensee to offer its games across India without restricting it to the territory of Sikkim.

The Government of Nagaland has enacted the Nagaland Prohibition of Gaming and Promotion and Regulation of Online Games of Skill Act, The said Act provides for regulation and promotion of "games of skill" through the issuance of licenses.

This Act provides that the license holders under the same can operate from any State in India where gambling is allowed. Sikkim has framed legislation regulating the virtual or online gaming activities within its territory.

Except for the Sikkim Online Gaming Regulation Act, and Nagaland Prohibition of Gaming and Promotion and Regulation of Online Games of Skill Act, , none of the other Central or State gambling legislation specifically mentions online gambling which puts online gambling involving 'game of skill' in a grey area.

In the present world where everyone is connected through internet, a person sitting in India can bet through a foreign owned website.

The gambling laws in India continue to be confusing and unclear. The judiciary time again through various decided case laws have tried to clear the air and provide clarity on the subject.

However, the recent technological changes have thrown open the sector and have allowed the masses to participate in activities which lie in the border line of gambling laws in India.

These activities are yet to be scrutinized and tested through the courts in India. The content of this article is intended to provide a general guide to the subject matter.

Specialist advice should be sought about your specific circumstances. All Rights Reserved. Password Passwords are Case Sensitive.

An operator must obtain a licence to offer such games under the Sikkim Act. Such games may be offered through the intranet within the State of Sikkim only.

In most other States, law enforcement authorities seek to prosecute players engaged in sports betting. It can be argued that certain versions of fantasy sports games are preponderantly skill-based games in the Indian context.

Accordingly, such games can be treated as exempted under the Gaming Enactments. Thereafter, the High Courts of Bombay and Rajasthan also recognised that the same format of fantasy sport was a game of skill in Gurdeep Singh Sachar v.

The State of Rajasthan , respectively. However, as of September 8, , there has been a stay order imposed on the judgment of the High Court of Bombay by the SC.

Accordingly, the SC may examine this issue now. The Nagaland Act expressly recognises virtual team selection games and virtual sport fantasy league games as games of skill.

If such games are sought to be offered online in the State of Nagaland, a licence would be required. The Lottery Laws permit State Governments to organise, conduct or promote a lottery, subject to certain conditions, as stated above.

Some States regulate physical lotteries such as Sikkim , and lotteries have been banned in certain States such as Madhya Pradesh.

Some States specifically provide for online lotteries such as Punjab. Section A of the IPC specifically prohibits private lotteries.

Certain States have repealed Section A of the IPC and enacted their own legislation banning lotteries apart from non-profit lotteries such as the States of Andhra Pradesh, Gujarat, Karnataka, Maharashtra, etc.

Certain other States have introduced legislation expressly banning lotteries in their States e. As stated above, games of skill are exempted from the prohibitions under most Gaming Enactments.

Arguably, such games can be offered in both land-based and digital form in all the States in which there is such an exemption.

Only the Nagaland Act has enacted a licence regime to regulate the online versions of such games. The SC has recognised certain games as games of skill, such as betting on horse racing and the game of rummy.

The issue of whether sports betting is a game of skill or not is before the SC. Depending upon the type of product, and the medium through which the Relevant Product is sought to be offered, licences may be required for certain products.

We have mentioned these below:. In so far as betting on horse races online is concerned, there are also no licences required. Based on the Lakshmanan Case, it can be argued that such games are games of skill and exempt under most Gaming Enactments.

Innovative structures can be put in place for a foreign operator to offer such games. In the case of betting on physical horse races, the conditions under the Horse Racing Exemption would need to be fulfilled.

As stated above, the question of whether sports betting is a game of skill is pending before the SC in the Geeta Rani Case.

Only the State of Sikkim offers a licence to offer sports betting through the intranet within the State of Sikkim only. There are only a small number of States in India that allow operators to conduct gambling activities under a licensing regime.

For brevity, we have only highlighted key points below:. Sikkim has also enacted the Sikkim Act and Rules under which licences are granted to offer intranet games of: a roulette; b blackjack; c pontoon; d punto banco; e bingo; f casino brag; g poker; h poker dice; i baccarat; j chemin-de-fer; k backgammon; l keno; m super pan 9; and n other sports games which involve the prediction of results of sporting events and placing a bet on the outcome, in part or whole, of such sporting event.

As per the Sikkim Act and Rules, the licensee must be a company incorporated in India, and must operate only in Sikkim.

The licensees must be entities incorporated in India, have a substantial holding stake in India, and have no criminal history; and the licence is only issued to those entities which have no interest in online or offline gambling activities in India or abroad.

The eligibility above should be read in conjunction with the criteria covered in question 2. The Empanelled Firms will then revert with either their certification or recommendations to the applicant within 30 days.

These committees are required to make their recommendations within two weeks. The Nagaland Authority will then issue the licence to the application within 14 days of receipt of certification of the Empanelled Firms.

Additional points to note are as follows:. Please include in this answer any material promotion and advertising restrictions. In addition to our response to question 2.

These restrictions, however, should not apply to skill games. The IPC prohibits advertisements for lotteries, unless they comply with the provisions of the Lottery Laws.

The advertising of prize competitions is prohibited, unless it has been duly authorised by the relevant authority. For example:. The advertising of gambling is regulated by the Telecom Commercial Communications Customer Preference Regulations, , which prohibit unsolicited commercial communications to persons that have opted out of receiving them.

These Regulations also provide that telemarketing can only be carried out by operators that have obtained a licence from the Telecom Regulatory Authority of India.

This code prohibits the propagation of products, the use of which is banned under the law. However, in cases where the winnings are wholly in kind or partly in cash and partly in kind and the cash component is insufficient to honour the withholding obligation in respect of whole of the winnings, the payor is required to ensure that the tax at the above rate is paid before the release of the whole winnings to the payee.

A new tax has been imposed which is chargeable on online services or goods supplied by offshore e-commerce operators to Indian residents or persons accessing such platforms through an Indian IP address.

The question of the applicability of this tax to offshore gaming operators can also arise and based on the specific facts of the game model, it may be possible to argue that this tax should not apply.

There are certain de minimus thresholds notified below which the gross income is not subject to this tax. Further, games offered under direct betting models where the players bet against the house constitute actionable claims.

Actionable claims relating to games of skill are not subject to GST. On the other hand, games offered under the peer-to-peer model where the players bet against each other and the gaming company merely provides the platform for facilitating such betting constitute provision of services by the gaming company.

Essentially, OIDAR services are those which can be provided through minimal human intervention. If there is sufficient human intervention in the provision of the services, such as live casinos for instance, such services should not qualify as OIDAR and accordingly should not be taxable.

Please note that to ascertain the taxability, rate of taxation and the correct tax base, the exact nature of the product offering should be analysed.

The outcomes would differ also based on whether the operators are based in India or are conducting such activities from outside of India.

Most Gaming Enactments do not prescribe social responsibility requirements for gaming operators, since they have been enacted to prohibit gaming activities.

However, in the absence of regulation, the gaming industry in India has taken the initiative to self-regulate and prescribe standards for social responsibility.

Does your jurisdiction permit virtual currencies to be used for gambling and are they separately regulated?

In India, the PMLA prohibits money-laundering activities.


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