Author: Pratyush Mahapatra

Introduction

The increase in use of smartphones, accessible internet, and digital payments has made India one of the largest online marketplaces in the world. While this has provided many advantages due to the rapid proliferation of Digital technology, it has also produced another disturbing outcome. The increase in online gambling and Gaming Platforms (such as websites and mobile applications) that operate without regulation has caused many social and legal problems. Users of these types of applications report many negative impacts on their lives from using them, including financial distress, addiction, and even suicide. As a result, policymakers and the Courts have recognized a need to review the current Laws and Legislation Governing Online Gambling and Gaming in India to determine whether or not they are sufficiently protected by the current Laws and Regulations in India.

Online gaming (in certain cases), is a legitimate way to have fun and enjoy yourself. However, due to this being so close to gambling, there is a large amount of confusion regarding online gaming. In addition, the absence of federal laws regulating online gambling and online gaming has led to a fragmented system of regulations throughout India, causing varying interpretations of Judicial decisions and issues with enforcing laws.

Understanding Online Betting and Gaming

The main issue with how to regulate online platforms involves determining if your game is a game or a gambling/betting site. Most games are just entertainment, and most do not include gambling. In addition, there is also a distinction made about how to view these things legally by Indian courts. In the past, the Supreme Court of India has decided that if an individual plays a game and uses their skill to win, the game should not be classified as a gamble. This is shown in two prominent cases in India. One is RMD Chamarbaugwala, and one is K Satyanarayana v State of Andhra Pradesh. In both of these cases, the Court decided that the law allowed that both rummy and horse racing are skill-based. There has also been further clarification of this in Dr KR Lakshmanan v State of Tamil Nadu, where horse racing is classified as an activity based on skill.

To apply or analyze this distinction in the current online arena, it has become more complex because of digital technology and the vast resources of digital platforms, creating a convergence of chance and skills within digital systems through their algorithms and randomization of digital systems.

Existing Legal Framework in India

The Public Gambling Act, 1867

The Indian gambling industry remains primarily impacted by the Public Gambling Act 1867—an act put forth by the colonial government—through its prohibition of owning a public gambling house. While the Act does not specifically prohibit online gambling (i.e., it only addresses land-based venues), and it does provide no assurance regarding the legality of any virtual gambling venue, the scope of its application to virtual operations remains somewhat ambiguous.

Constitutional Allocation of Powers

Also, as stipulated by the Constitution of India under “Betting and Gambling” (Article 34) in its state list of legislation, each state has the authority to create laws regulating betting and gambling in that state. Due to the division of powers found within the States and Union list of legislation, there is considerable inconsistency in different states regarding whether or not they allow or ban gambling based on the Game of Skill vs. the Game of Chance, which further complicates an already chaotic regulatory framework.

Information Technology Act, 2000

The IT Act provides a broad framework for the regulation of all forms of electronic communication, including websites and all content posted on websites. Section 69A allows the government to block any unlawful content that is posted online, while Section 79 allows for the government’s limitation of liability for intermediaries. However, because the IT Act does not specifically define or regulate online gambling, it is often viewed as inadequate to address the growth of the online gambling industry.

Judicial Approach to Online Betting and Gaming

Judicial intervention has had a major influence on determining whether the online gaming industry should operate legally in India. Courts have consistently defended skill-based games from being completely prohibited. For example, in the case of Junglee Games India Pvt Ltd v State of Tamil Nadu, the Madras High Court overturned amendments to the state law banning all stake-based online games, finding these to be unconstitutional. At the same time, courts have expressed their concern about the potential harm to society from the use of unregulated betting applications and have further indicated their increasing awareness of how addictive these types of applications are, while requiring that there be a clear legislative definition concerning them. However, courts have also made clear that through their judgments, they will not undertake to effectuate regulatory reform; rather, they will limit their comments to clarifying the legislative intent for such regulations.

Social and Economic Impact

As a result of the quick expansion of online gaming and betting have created numerous social issues. Young Adults are most vulnerable due to accessibility, aggressive marketing, and instant gratification. The end result of gambling addiction can be financial difficulties, mental health problems, and torn families due to the impact of gambling addiction on their lives. The Law Commission of India acknowledged the social harm that is caused by gambling due to the lack of sufficient regulations in India on gambling as identified within the 276th report from The Law Commission of India. The reports of suicides linked to individuals who have experienced massive losses from esports or online betting have prompted concern from internet users and created a greater need for consumer protection and responsible gaming.

Regulatory Challenges and Legal Gaps

One of the most pressing issues is that there is currently no comprehensive central level legislation to govern online betting and gaming activities in India. The reliance on individual state laws (some of which were passed decades ago) creates uncertainty, confusion, and problems in enforcing the law in these areas. The distinction between chance and skill as a basis for determining whether an activity is legal or illegal has been established as a legal interpretation of gambling law, but it is becoming less applicable to modern digital gaming platforms.

Many of the online gaming and betting platforms operate outside of India in foreign jurisdictions and, therefore, are not subject to Indian jurisdiction. As a result, many of these platforms are reaching Indian players who have very few protections from the regulators, and blocking websites and apps has not proven to be a long-term or effective solution.

Need for Comprehensive Regulatory Framework

There is an immediate need in India for a Comprehensive and unified regulatory framework for online betting and Gaming. The Framework will need to be National in Scope and provide a Definition of all Terminology, Licensing Requirements, and Overall Oversight Mechanisms that will apply to All Online Gaming and Betting across the Country. The Protection of Consumers must be the “Centerpiece” of any Regulation with an emphasis on Protecting Consumers from the Dangers Associated with Gambling (Addiction), Deceptive Marketing Strategies, and Financial Exploitation.

With a Balanced Registry of Skill-Based Gaming, India may Effectively Foster Creativity and Innovation without compromising the Safety and Protection of the Public. 

Conclusion

The Growth of Online Betting and Gaming Applications in India highlights the Difficulties Associated with Digital Transformation. Technological Advances have’s Created Opportunities; however, there is still Insufficient Regulation to address the Negative Consequences Created by Rapidly Changing Regulations and the Growth of Online Betting. 

Due to the Fragmentation of Laws, Regulations are Outdated and do not provide for the Complexity of and Emerging Technologies Associated with Online Betting. The Need for a Comprehensive, Integrated, Long-Term View of Online Betting Regulatory Framework Will Promote and Protect Consumers, Provide Clarity regarding the Law, and Safeguard the Public’s Interest. The Use of Legislative Reform and a Cohesive Approach to Regulatory Revisions is the Best Course of Action.