Internet Gambling establishments Inc. (ICI), the world’s first internet casino, started operating from August 18, 1995, with 18 different games. Since then more than 1,400 websites, mostly domiciled in small Caribbean islands, have given rise to an industry that grosses over $3 billion a year. In fact no business on the Internet earns more revenue than internet betting. Out of the estimated 14.5 million internet bettors, almost 30 per cent are from Asia.
A bet can be placed in minutes. Anyone with a credit card can set up an offshore currency account with a betting site, leaving them free to place bets on sporting events like Wimbledon, cricket, horse racing and Formula One, or join a virtual casino to play slot machines, roulette, blackjack, online poker etc. Companies like Flutter and Betmart accept bets on anything from who is going to win the Nobel Prize to whether Madonna is getting a divorce or not. Bets can range from a nickel to thousands of dollars and according to whether you win or lose the amount is automatically adjusted to your account. The final balance can then either be mailed to you or left for future bets.
The law relating to internet betting in India needs to be understood within the country’s socio-cultural context. At the outset, betting, although not absolutely prohibited in India, does not receive express encouragement by policy makers. The Indian organized betting industry is estimated to be worth around US$8 billion. While stringent laws have checked the proliferation of gambling houses and high street gaming centres as in many other countries, barring the state of Goa, the lottery business remains the most post popular form of betting.
Though betting is not illegal, it is a highly controlled and regulated activity. Modern India is a quasi-federal Constitutional democracy and the powers to legislate are distributed at the federal as well as the state levels. Gambling features in List II of the Constitution of India, this implies that the state governments have the authority to enact laws in order to regulate betting in the respective states. Thus, there is no single law governing betting in the entire country. Different states have different laws governing betting in addition to the laws that have an application across the country. While some states have banned lotteries, other states allow state government lotteries marketed and distributed in other lottery playing and promoting states through private Nigoal123 entities.
Regulation of betting
The courts have defined betting as ‘the payment of a price for a chance to win a prize’. The dominant element of skill or chance shall determine the nature of the game. A game may be deemed to be betting if the element of chance or luck predominates in deciding its outcome. As a result, Indian courts have held that betting on horse racing and a few card games are not betting. The right to undertake the business of betting and lotteries is not considered as a fundamental right protected by the Constitution of India. It may however be pointed out that the state government run lotteries make significant contributions to the state exchequer of several state governments and the Union government, and hence there is a resistance to complete prohibition.
The following legislation is pertinent to betting:
The Public Gaming Act, 1867
This Act provides punishment for public betting and for keeping of a ‘common gaming house’. This Act also authorises the state governments to enact laws to regulate public betting in their respective jurisdictions. The penal legislations in respective states have been amended in accordance with their policy on betting. However, this legislation does not have any direct impact on internet betting unless a wide interpretation is given to the definition of common gaming house so as to include virtual forums as well.
The Indian Contract Act, 1872 (ICA)
The ICA is a codified umbrella legislation that governs all commercial contracts in India. Under the ICA, a wagering contract is the one which cannot be enforced. The Act lays down; ‘Agreements by way of wager are void, and no suit shall be brought for recovering anything alleged to be won on any wager or entrusted to any person to abide by the result of any game or other uncertain event on which any wager is made’. Gambling, lottery and prize games have held to be wagering contracts and thus void and unenforceable. While a wagering contract is not illegal, it cannot be enforced in a court of law 2499 Vip. Thus, the courts will not entertain any cause of action that arises out of a wagering contract.
Lotteries (Regulation) Act, 1998
This Act provides a framework for organizing lotteries in the country. Under this Act, the state governments have been authorized to promote as well as prohibit lotteries within their territorial jurisdiction. This Act also provides for the manner in which the lotteries are to be conducted and prescribes punishment in case of breach of its provision. Lotteries not authorized by the state have been made an offence under the Indian Penal Code. Several non-lottery playing states, like Gujarat and Uttar Pradesh, have prohibited the sale of other state-government lotteries under this Act.
Indian Penal Code, 1860
Section 294A deals with keeping lottery office. It says that whoever keeps any office or place for the purpose of drawing any lottery not being a State lottery or a lottery authorised by the State Government, shall be punished with imprisonment of either description for a term which may extend to six months, or with fine, or with both.
And whoever publishes any proposal to pay any sum, or to deliver any goods, or to do or forbear doing anything for the benefit of any person, on any event or contingency relative or applicable to the drawing of any ticket, lot, number or figure in any such lottery, shall be punished with fine which may extend to one thousand rupees.
The law related to betting is also applicable to internet betting. All betting contracts are considered to be wagering contracts and it is not possible to enforce such contracts under the ICA, detailed above.
As pointed out earlier, the internet lottery is the most popular form of internet betting in India. Most companies marketing and distributing or conducting state government-sponsored lotteries through the internet are not allowed to sell their services in the states that banned lotteries. In most cases, these marketers and distributors limit their internet services to consumers who are residents of the states where a lottery is mivdzn permissible. Notwithstanding the fact there has been no reported case of breach by any company promoting internet lotteries, most of these companies (as a safeguard) seek an undertaking from their consumers relating to their residence.
There have been instances where one state has banned the lottery of other states, including internet lotteries. In a recent case, the Karnatka High Court upheld the decision of the Karnataka government to make itself a ‘lottery free zone’ by imposing a ban on lotteries of all other states, including internet lotteries under the Lotteries (Regulation) Act 1998. The state government, in this case, directed the closure of the Nigoal444 เข้าสู่ระบบ terminals and kiosks selling the internet lotteries.
Enforcement over foreign jurisdictions
If the websites are hosted and operated from outside India, it may be difficult for the Indian authorities to issue any directive to close them down or prohibit their access without using its blocking powers under the ITA. The authorities have little to worry about, as Indian foreign exchange laws do not permit remittances outside India for betting related activity, such as the purchase of lottery tickets, football pools and sweepstakes. As a result, a betting website hosted outside India aiming at receiving money from within India cannot do so through legal channels.
On-line betting remains a highly regulated sector with seemingly limited horizons to grow. While the present regulatory framework makes it difficult for offshore betting websites to target customers in India, the India-based companies can only distribute and market state-government lotteries internet in permitted territories. The pervasive authority with the government to block betting related websites and the impossibility of enforcing gambling-related contracts further discourage the prospects for the industry..