Gambling laws: Interpretations and issues

By L Badri Narayanan and Gopal Machiraju, Lakshmikumaran & Sridharan

The Public Gambling Act, 1867 (Gambling Act), enacted prior to the constitution is the central law governing gambling in India. While under entry 34 of list II of schedule VII of the constitution, “betting and gambling” is exclusively under the purview of the states, the Gambling Act is saved under article 372 of the constitution and applied to the territories mentioned under it, unless the states having jurisdiction over such territories sought to amend or repeal the Gambling Act. Most states in India have, however, adopted the Gambling Act with certain modifications. A few states have enacted their own laws to regulate and govern gambling.

L. Badri Narayanan, Executive partner, Lakshmikumaran & Sridharan
L. Badri Narayanan
Executive partner
Lakshmikumaran & Sridharan

The Gambling Act provides that its rigours do not apply to “games of mere skill”, and only seeks to punish gambling and betting as understood in the traditional sense. The term “mere skill” has not been defined in the act.

The Supreme Court, in the RMD Chamarbaugwala case, has held that a competition, in order to avoid the stigma of gambling, must depend to a substantial degree on the exercise of skill. A competition where the success does not depend to a substantial degree on the exercise of skill is recognized to be of a gambling nature. It also observed that despite there being an element of chance, if a game is preponderantly a game of skill it would nevertheless be a game of “mere skill”.

In September 2020, Tamil Nadu joined the list of states that have enacted laws particularly prohibiting or controlling online gaming (others being Andhra Pradesh, Assam, Odisha, Telangana, Nagaland and Sikkim). The governor of Tamil Nadu has, by an ordinance, amended the Tamil Nadu Gaming Act, 1930, the Chennai City Police Act, 1888, and the Tamil Nadu District Police Act, 1859, prohibiting and criminalizing the hosting and playing of online games. The stated objective of the ordinance is to ensure that innocent people do not get cheated and indulge in self-harm.

Unlike Sikkim and Nagaland, which control and regulate gaming activities under a licensing regime, Tamil Nadu has sought to prohibit gaming altogether. Principally, the ordinance seeks to prohibit wagering and betting.

Wagering and betting, by definition, involve activities where the outcome of the event on which the wager or bet is placed is not within the control of the parties to the wager or bet, i.e. they are substantially dependant on chance.

Gopal Machiraju, Senior associate, Lakshmikumaran & Sridharan
Gopal Machiraju
Senior associate
Lakshmikumaran & Sridharan

There are two kinds of wagering and betting – one where the person making the wager or bet paricipates in the event, the result of which is subject to chance (e.g. ludo, snakes and ladders); and two, where the person making the wager or bet does so on the outcome of an event that is dependent on a third person’s skill (e.g. horseracing, fantasy sports). There has been an increasing acceptance that the latter kind is in fact not in the nature of a wager or a bet, as it is a prediction based on a sub- stantial amount of knowledge, training and skill.

The ordinance specifically prohibits betting and wagering “by playing rummy, poker or any other game”. Rummy, for instance, has been held by the Supreme Court in K Stayanarayana’s case to be a game of skill because it requires a preponderant amount of skill in memorizing the fall of cards, and in holding and discarding the cards. The ordinance is, therefore, intended to apply to all games, whether or not they are skill based. However, it does not appear to apply to the second kind of wagering and betting, as the enumeration of rummy and poker suggests that the term “any other game” applies to the first kind where the wagerer/bettor is playing the game.

Another question that arises is, if a game is determined to be of skill, though the person does not control the outcome of the game, can playing such a game for money amount to gambling or betting? As seen above, gambling and betting involve activities that are substantially dependant on chance. Since the chance or probability in games of skill are minimal or absent, playing games of skill for money should not prima facie, in pith and substance, be within the ambit of betting and gambling under entry 34 of list II of schedule VII of the constitution, though it may be covered under entry 26 dealing with trade and commerce.

The ordinance and other similar laws imposing absolute prohibition may, therefore, be susceptible to challenge on the grounds of violating article 19 (1)(g) and legislative competence.

L Badri Narayanan is an executive partner and Gopal Machiraju is a senior associate at Lakshmikumaran & Sridharan

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