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Report No. 276

Chapter VIII

Need for Regulation

8.1 Gamblers are often tempted to play for longer durations and up the ante when it appears to them that they are just about to win. This is, quite often than not, a mirage, and over time, this overly optimistic attitude manifests itself as 'loss chasing', wherein gamblers keep on playing in an effort to recover their incessantly accruing loss. 'Loss chasing' is one of the most important identifier of 'problem gambling', and closely resembles drug addiction. Problem gamblers also experience cravings and withdrawal-symptoms when deprived of gambling193.

8.2 Gamblers tend to over-estimate their chances of winning and often suffer from an 'illusion of control', i.e., the belief on their part that they can employ skill over an outcome which actually depends upon chance194.

8.3 There are no specific Central Laws governing online gambling in India. Sikkim and Nagaland are the only States that expressly permit online gambling. While the Sikkim On-line Gaming (Regulation) Act, 2008 (as it stands after the Amendment of 2015) restricts the offering and playing of "online games and sports games" to the physical premises of gaming parlours through intra-net gaming terminals within the territory of the State, the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Gaming Act, 2016 (hereinafter referred as Nagaland Act) on the other hand, seeks to provide for pan-India application of licences obtained thereunder.

8.4 Explanation to Section 2 (1) of the Nagaland Act states that:

"Once a licence has been obtained under this act, wagering or betting on online 'games of skill' or making profit by providing a medium for playing 'games of skill' shall not amount to gambling so long as they are being provided by players and being accessed by players operating from territories where 'games of skill' are exempted from the ambit of gambling."

8.5 Section 2 (2) of the Nagaland Act defines the term "territory" for the purposes thereof as "any territory in India in which 'games of skill' are permitted and are recognised as being exempted from the ambit of 'gambling'.".

8.6 Accordingly a conjoint reading of these two provisions may imply that the Nagaland Act, while being in consonance with Article 246 of the Constitution of India provides that a licence obtained there under may be used to offer games of skill throughout the country, provided that such games are exempted by the States in which they are so offered under their own prevalent laws.

8.7 On the other extreme rests the Telangana Gaming Amendment Act, 2017195 enacted with the object of implementing "the policy of zero tolerance against gambling which has serious impact on the financial condition and well-being of the common public". With this objective, the Telengana Act seeks to expressly prohibit gambling as a whole, both online and offline.

8.8 A District Court in Delhi was confronted with similar issues. The following issues, among others, were raised before the court:

  • Whether there is any restriction on playing games of skill with stakes on websites making profits by offering such games?
  • Whether wagering and betting on games of skill constitute the act of 'gambling'?

8.9 The court held that a game when played in a physical form as a skill based game need not necessarily be considered as such when played online, as technology can be manipulated to increase the degree of chance involved in the game. A Civil Revision Application was filed before the Delhi High Court challenging this order, however, the petitioners filed an application to withdraw the proceedings before the District Court and also the revision application filed before the High Court. The High Court allowed this request and also ordered that the observations of the District court no longer survive196.

8.10 To curb online betting and gambling, authorities rely on the Information Technology Act, 2000 (Technology Act). Section 67 of the Act, reads as:

Whoever publishes or transmits or causes to be published or transmitted in the electronic form, any material which is lascivious or appeals to the prurient interest or if its effect is such as to tend to deprave and corrupt persons who are likely, having regard to all relevant circumstances, to read, see or hear the matter contained or embodied in it, shall be punished on first conviction with imprisonment of either description for a term which may extend to three years and with fine which may extend to five lakh rupees and in the event of second or subsequent conviction with imprisonment of either description for a term which may extend to five years and also with fine which may extend to ten lakh rupees.

8.11 Further, this may be supplemented by section 69-A of the Technology Act, which empowers the Central government to direct its agencies and/or intermediaries to "block for access by the public or cause to be blocked for access by the public any information generated, transmitted, received, stored or hosted in any computer resource".

8.12 These sections may be pressed into service to curb gambling or betting activities on the ground that such activities appeal to the prurient interest or tend to deprave and corrupt persons.

8.13 As gambling is not defined in Information Technology (Intermediaries Guidelines) Rules of 2011(Rules 2011), taking action against foreign betting websites that may indulge in money laundering through online gambling, can be challenging. Moreover, as gambling websites are hosted in countries where gambling is legal, it is difficult for Indian law enforcement agencies to take any legal or remedial action197.

8.14 Initially online gaming was limited to a certain group of people. Slowly, its sphere increased and more people began to engage in it. Today, the scenario is such that people are even being hired to play or gamble online. Even Industry giants are keen to hire and invest in 'professional' gamers. For example, Cobx is ready to invest a sum of $10 million on 'professional' players from India alone. Similarly, Nazara, a mobile company, is planning to invest $ 20 million on Indian e-sports198.

It is also estimated that the current market of online gaming in India will rise from $360 million to $1 billion by 2021199. Another indicator of the flourishment of online gambling is the increase in the prize money in tournaments, which has risen from Rs.3 lakhs in the past two years to Rs.1 crore today. The trend is rising rampantly day by day. For example, as per a claim by Cobx, there were only 12 professional gaming teams in India as of 2016. However, there are 30 such teams today.

8.15 Such activities show no signs of being stopped or curbed; the least that could be done is to regulate them. The Government, being a welfare State, acts in a manner to promote economic and social well-being of its citizens, and therefore, it is incumbent upon the State to protect the vulnerable sections of the society.

The linkage of PAN / Aadhaar would restrain the people from vulnerable sections, particularly those who are below poverty line (BPL)and to whom, as a social welfare measure, Central / State Governments provide subsidies through their Jandhan accounts. Putting such restrictions is a must so that the money provided by the Government under different heads is not misused by indulging in gambling and betting. Such regulation would serve a two-fold purpose, first, to provide protection to people involved and second, to use the revenue so generated for the development of the Country.



Legal Framework - Gambling and Sports betting including Cricket in India Back




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