Is gambling legal in India?

One of the most critical distinctions in Indian gambling laws is between 'games of skill' and 'games of chance.' This differentiation is pivotal in determining the legality of various gaming activities and has been a subject of judicial interpretation for decades.

What are games of skill?

Games of skill are those in which success is primarily determined by the player’s knowledge, expertise, experience, and strategy rather than sheer luck. Indian courts have repeatedly emphasized that a significant degree of skill involved in the gameplay makes such activities legal under Indian law. Examples of games that have been classified as skill-based include:

Rummy: The Supreme Court of India has ruled that rummy requires considerable skill to memorize cards and strategize gameplay. This makes it legal in most states, provided it is not played for stakes in unauthorized gambling establishments.

Chess and Bridge: These traditional games are universally accepted as skill-based due to their reliance on strategic thinking and planning.

Fantasy Sports: Platforms offering fantasy sports, where participants create virtual teams and earn points based on real-world performance, have been classified as games of skill in several states. However, this classification varies, and some states still ban such activities.

What are the games of chance?

Games of chance are activities where the outcome is determined predominantly by random factors, such as dice rolls or card draws, with little or no influence from the player’s abilities. Examples include:

Lottery: The randomness in number selection makes lotteries a game of chance. While some states operate government-run lotteries, others ban them outright.

Casino Games: Games like roulette, blackjack, and slot machines largely depend on chance and are therefore heavily regulated or prohibited in many jurisdictions.

Sports Betting: While skill may influence the choice of bets, the ultimate outcome depends on unpredictable events, making it primarily a game of chance under current legal interpretations.

Legal precedents on skill vs chance debate

Indian courts have frequently weighed in on the distinction between skill and chance, shaping the regulatory framework. The landmark rulings included:

State of Andhra Pradesh vs K. Satyanarayana (1968): In this case, the Supreme Court held that rummy is not entirely a game of chance as it involves a preponderance of skill, particularly in card selection and sequence formation.

Dr. K.R. Lakshmanan vs State of Tamil Nadu (1996): The Supreme Court ruled that horse racing involves significant skill in studying the horse's form, jockey, and other factors, thereby classifying it as a game of skill.

Fantasy Sports Rulings: High Courts in states like Punjab and Haryana have upheld that fantasy sports involve substantial skill in team selection and are thus legal under Indian law.

Why is the distinction between games of skill and games of chance important? 

The distinction between skill and chance has far-reaching implications for the gambling and gaming industry in India:

1. Regulatory framework: Games of skill are generally exempt from the restrictions of the Public Gambling Act of 1867, whereas games of chance fall under its purview.

2. Economic opportunities: Skill-based games like fantasy sports have led to the growth of multi-billion-dollar industries, attracting investments and generating employment.

3. Player protection: Skill games are seen as less exploitative than games of chance, as players have greater control over the outcome, reducing the likelihood of addiction and financial ruin.

4. Online platforms: The rise of online gaming has blurred the lines between skill and chance, leading to contentious debates and legal challenges. For instance, certain online poker and rummy platforms operate in legal grey areas, depending on how states classify these games.

Challenges in determining skill and chance

The distinction is not always clear-cut and often varies based on jurisdiction and judicial interpretation. Some challenges include:

• Mixed games: Many games involve a blend of skill and chance. For instance, while poker requires strategic thinking, the cards dealt are random, making its classification contentious.
• Technological advancements: The advent of online gaming and the integration of artificial intelligence and predictive analytics in online games has complicated the skill vs chance debate.
• State laws: States have the authority to define and regulate games within their jurisdiction, leading to inconsistencies in classification and enforcement.

States like Goa and Sikkim have demonstrated the economic potential of regulated gambling. Casinos in these regions contribute significantly to state revenues through licensing fees, taxes, and increased tourism. Goa’s casino industry, for instance, generates hundreds of crores in revenue annually, supporting not only the state’s infrastructure but also its social welfare programs. A nationwide framework for regulated gambling could potentially replicate this success across other states, contributing to India’s GDP.

Online gambling platforms also present immense revenue potential. With millions of Indians engaging in online gaming, the government could benefit from taxing these activities. Proper regulation would ensure a steady income stream while discouraging illegal platforms.

Tourism boost

Casinos and other gambling facilities are significant attractions for tourists. States like Goa and Sikkim witness an influx of domestic and international tourists, drawn by the legal and regulated gambling environment.

This increase in tourism boosts related sectors such as hospitality, transportation, and retail. A well-regulated gambling industry could enhance India’s appeal as a global tourist destination, similar to cities like Las Vegas and Macau.

Employment opportunities

The gambling industry generates employment across various sectors. Physical casinos require a workforce for operations, including dealers, security staff, hospitality professionals, and administrative personnel. Online gambling platforms, on the other hand, create jobs in technology development, customer support, marketing, and compliance.

For example, the casino industry in Goa employs thousands of individuals directly and indirectly, supporting livelihoods and contributing to the local economy. Similarly, the rise of online gambling platforms has spurred demand for IT professionals, software developers, and digital marketing experts.

Support for ancillary industries

The gambling sector’s growth positively impacts ancillary industries, including technology, entertainment, and advertising. The development of online gambling platforms relies heavily on cutting-edge technology, driving innovation in software development, cyber security, and artificial intelligence. Furthermore, marketing and advertising agencies benefit from creating campaigns to promote gambling platforms and casinos.

Risks and challenges

Despite its economic benefits, gambling poses risks such as addiction, financial distress, and associated criminal activities. The social costs of problem gambling include strained relationships, mental health issues, and potential criminal behaviour. Policymakers must implement safeguards such as age restrictions, spending limits, and awareness campaigns to mitigate these risks.

Additionally, unregulated gambling can lead to money laundering and other financial crimes. A robust regulatory framework is essential to prevent illegal activities and ensure transparency in the industry.

Long-term economic potential

A regulated gambling industry could significantly contribute to India’s long-term economic growth. The sector’s potential for generating revenue, creating jobs, and boosting tourism aligns with the government’s goals of economic development and employment generation. Properly implemented regulations would not only maximize economic benefits but also minimize associated risks, making gambling a valuable asset to India’s economy.

Efforts of Indian Govt to regulate the industry

The Indian government has taken significant steps to regulate the gambling and online gaming industry through the implementation of a uniform 28 per cent Goods and Services Tax (GST). This decision, announced during the 50th GST Council meeting in October 2023, marked a turning point in the taxation framework for casinos, horse racing, and online gaming platforms.

28 per cent GST policy

Consequences of the 28 per cent GST

The need for a unified framework