Gaming or Gambling?
Introduction
India is a country where sports such as cricket, football are very famous among people and sports is also used as source of earning by many of them by the way of betting. Although sport betting and game fixing is banned in India the modern day fantasy gaming app allows the user to make teams and place bets with the help of these apps under the name of game of skill and because of this these apps are allowed to operate currently in India. The online gaming industry in India has witnessed an unprecedented rise over the past decade with increasing internet penetration and affordable smartphones, more people than ever are participating in online gaming and it is attracting huge capital investments from the common people and big business tycoons. However along with the growth of gaming industry there has been parallel rise in online betting and gambling, which has led to significant regulatory scrutiny. The technological advancement that came in country is attracting a lot of new players in the market especially those who are involved in real money gaming such as poker, where the financial risks are real and very high and because of which many people are loosing money.
Although in December 2023, the Indian government banned more than 100 of online gaming apps due to their promotion of gambling activities but despite this regulatory action, the online gambling sector in India continues to grow rapidly. These apps target users with their attracting advertisements showcasing stories of individuals purportedly gaining significant wealth through gaming and somehow they also promote the games which are illegal as they are based on game of chance.
Sports on these apps such as cricket encourage users to create team and potentially earn money by analyzing player’s performance. While these apps themselves are apps which promote games of skill, these apps also promote betting and gambling as making money out of player performance not just involve skills in analyzing everything properly but also luck, as the participants chose their player based on sheer hunch as to how he is going to perform. Many common people lose money in these apps while these apps makes huge profit.
The Rise of online gaming in India
India has witnessed an unprecedented rise over the past decade in online games which includes mobile based games to competitive e-sports and fantasy sports league. There are many factors which contributed to the huge rise of online games such as availability of smartphones, increased internet penetration, rise in the population of youth, etc. One of the main reason for rise in online gaming is impact of COVID-19. Lockdown and restrictions during the pandemic accelerated online gaming participation. According to experts, the value of online gaming market in India is increasing with high rate and is estimated to reach to the value of $8.6 billion by 2027.
The line between Gaming and Gambling
Gaming involves playing of games for entertainment or competitive purpose which includes both the game of skill and game of chance whereas betting and gambling includes staking of money on the outcome of games to make profit. These games are mainly based on games of luck or chance and doesn’t depend on the skills of a person.
The present legal framework in India creates a line between games of skill and games of chance. The games which are based on the skill of the person are legal because they require user to use their knowledge and strategy whereas the games which involves game of chance or those games which are purely based on the luck of individual are banned in many states of the country. The state government has power to enact law in these matters.
The Ban on Betting and Gambling in India
India has very complex legal framework when it comes to betting and gambling as this subject lies in the state list which means that the state government has power to enact law in these matters. Some form of gambling are regulated under the Public Gambling Act of 1857, online gambling lies in legal grey area because there is no specific law at national level which regulates it. But the rapid increase of online gambling platforms has increased concern regarding addiction, financial loss, etc.[1]
In the Indian legal framework the game is considered as game of skill if it is predominantly determined by skill of person and the game is considered as game of luck if it is based on the luck of person.[2] The Supreme Court in the In the case of State of Andhra Pradesh v K. Satyanarayana & Ors.[3] and State of Bombay v R.M.D. Chamarbaugwala [4]differentiated between legality of games on the basis of skill and chance. The Indian constitution states gambling as the state subject where state may prohibit games that promote gambling and betting according to their own legislative. Different states have their own legislation which regulates betting and gambling such as West Bengal Gambling and Prize Competition Act,1957, Bombay Prevention of Gambling Act,1887, Punjab Public Gambling Act,1961,ect.[5]
Different states of India have different stakes on online gambling either they have banned or heavily restricted it. Sikkim and Nagaland were the first states which enacted law relating to regulation of online gambling. After that many states such as in 2020,Tamil Nadu passed an ordinance banning online games such as poker, rummy citing them as game of luck. In 2021 karnataka also banned online betting and gambling making it criminal offence.[6]
Comparison with other country
Australia is the country with one of the highest gambling participation rates in world which leads to significant tax revenues and economy advancement. Australia has also high gambling addiction. In Australia, gambling is regulated at both state and territory level, with a national oversight for online gambling under the Interactive Gambling Act of 2001. The law prohibits the online casinos and online poker but allows sports betting and lotteries which are controlled by strict regulatory standards where as India is failing on two folds firstly it has huge number of population which is addicted to gambling and also there is no proper law which regulates online gambling in the country. The legal framework for the online gambling in India is very unclear and its regulation varies by states. Despite this, the online gaming industry continues to grow rapidly due to legal ambiguities. The absence of uniform national level laws make it difficult to control illegal gambling which leads to significant financial and social risks, including addiction and financial losses among users and to county.
Suggestions
In country like India where online gaming is growing at high rate it is very important to create a balanced environment that protects consumers and foster industry growth. Some suggestion for the online gambling in India:
- Clear legal framework: India’s currently gambling laws such as Public Gambling Act of 1867 are outdated and online gambling doesn’t fits under the purview of the Act. The central government should work with state government to develop uniform regulatory guidelines for proper functioning of it.
- The introduction of player protection mechanism should be introduced to safeguards individuals from the potential harms associated with gambling. Age verification systems, educational awareness can be some example of it.
- Fair play and transparency should be present to increase player’s confidence in the system.
- Self regulatory body should be introduced that can oversee day to day operations.
Conclusion
The rapid growth of online gaming in India requires active reforms that balance economic opportunity with consumer protection. By introducing clear legal framework, player protection mechanism, self regulatory body, India can regulate the industry effectively while curbing illegal and harmful practices.
Author: Rishav Srivastva, in case of any queries please contact/write back to us at support@ipandlegalfilings.com or IP & Legal Filing
[1] Sports law (2023) S.S. Rana & Co. Available at: https://ssrana.in/corporate-laws/gaming-and-sports-laws-india/sports-law-faq/#:~:text=Is%20there%20a%20legislation%20governing,majorly%20covered%20by%20Contracts%20Act. (Accessed: 09 September 2024).
[2] A game of skill or chance? navigating the Indian Online Gaming Landscape (2023) azb. Available at: https://www.azbpartners.com/bank/a-game-of-skill-or-chance-navigating-the-indian-online-gaming-landscape/ (Accessed: 09 September 2024)
[3] AIR 1968 SC 825
[4] AIR 1957 SC 699
[5] (No date) Gambling And Betting Laws In India [Preprint].
[6] Online gambling laws and punishment in India (no date) Legalkart. Available at: https://www.legalkart.com/legal-blog/online-gambling-laws-and-punishment-in-india#:~:text=Online%20gambling%20in%20India%20falls,the%20state%20you%20are%20in. (Accessed: 09 September 2024).
