Online/Offline Gaming License in India

The central act on gambling and gaming called the Public Gambling Act, 1867 has been adopted by Uttar Pradesh, Delhi and Madhya Pradesh. But other states have enacted laws regulating gaming and gambling according to their concerns. These states are as follows:

1. Assam Gaming and Betting Act, 1970
2. Bombay Prevention of Gambling Act, 1887
3. Goa, Daman and Diu Public Gambling Act, 1976
4. Karnataka Police Act, 1963
5. Punjab Public Gambling Act, 1867
6. Sikkim Online Gaming (Regulation) Act, 2008
7. Tamil Nadu City Police Gaming Rules, 1949 ƒ
8. Tamil Nadu Gaming Act, 1930
9. The Andhra Pradesh Gaming Act, 1974
10. The Andhra Pradesh Gaming Rules, 1976
11. The Delhi Public Gambling Act, 1955
12. The J. & K. Public Gambling Act, 1977
13. The Kerala Gambling Act, 1960
14. The Meghalaya Prevention of Gambling Act, 1970
15. The Pondicherry Gaming Act, 1965
16. The Rajasthan Public Gambling Ordinance, 1949
17. The West Bengal Gambling and Prize Competitions Act, 1957
18. The West Bengal Gambling Rules, 1958

The view has been given by the Hon’ble Supreme court of India as the state enactments are silent on how to categorize a game under gambling or gaming. Through the case of Hon’ble Supreme Court has held that:

“Games may be of chance, or of skill or of skill and chance combined. A game of chance is determined entirely or in part by lot or mere luck. The throw of the dice, the turning of the wheel, the shuffling of the cards, are all modes of chance.

In these games, the result is wholly uncertain and doubtful. No human mind knows or can know what it will be until the dice is thrown, the wheel stops its revolution or the dealer has dealt with the cards. A game of skill, on the other hand – although the element of chance necessarily cannot be entirely eliminated – is one in which success depends principally upon the superior knowledge, training, attention, experience and adroitness of the player. Golf, chess and even Rummy are considered to be games of skill.

The courts have reasoned that there are few games, if any, which consist purely of chance or skill, and as such a game of chance is one in which the element of chance predominates over the element of skill, and a game of skill is one in which the element of skill predominates over the element of chance. It is the dominant element – “skill” or “chance” – which determines the character of the game.”

Hon’ble Supreme Court of India thus has given a definite litmus test for a game to be considered as casual gaming and is not criminally liable. Categorization depends upon the game being skilled or chance being games.

Gambling as per the laws is defined as act of Wagering Money or Betting for Money and Money’s Worth and where there is major involvement of luck. Gambling, however, does not include wagering on horses and dogs under certain circumstances and lotteries.

Only states of Nagaland and Telangana have specifically extended their state enactments online. The state of Sikkim has introduced a licensing regime for online gaming offered throughout state intranet.

Gambling has been legalised only in Sikkim, Nagaland and Goa. While Casinos are Allowed in Goa and Sikkim. While Nagaland has specifically categorised poker as game of skill.

With clashes over jurisdiction making headlines now and then, online gambling in India has been a muddy space with constant discord over some of the most fundamental regulatory issues. The Indian Constitutional scenario is settled at gambling being a state subject, whether offline or online. This means that States may prohibit certain games that they deem to fall within ‘gambling and betting’, according to their legislative wisdom.

Resultantly, what game may be legal in one state may not be in another. This obvious lack of clarity explains the stunted growth of online gaming companies over the years and the ever-increasing demand for uniform regulations and norms for the businesses operating in this industry. This is what has made the enforcement of gaming & gambling laws a challenge.

With an increasing consumer base for online gaming, user safety concerns have risen like never before. Conflicting governmental opinions, selective state actions, and differing judicial verdicts on the subject matter have created a deep void and a deeper regulatory vacuum as users are no longer shielded from illegal websites, legitimate harms, or even those created by legitimate skill-based gaming websites.

Depending upon the type of product and medium through which it is sought to be offered, licenses may be offered for certain products like:

Casinos: Licenses are offered in Goa, Daman and Diu under GDD Act and in Sikkim under Sikkim Casino Law.

Poker: Operators in India may offer skilled versions of poker without a license except in states like Sikkim, Nagaland, Telangana, and Gujarat. In Nagaland, you need a license to offer poker as a game.

Sports/Horse Betting:  A license is required for the physical betting of horses which does not include foreign horse racing.

The key requirement for applying for a license are entailed below:

1. Nagaland:

• The licensee must be an entity incorporated in India with a majority holding stakes in India and with no criminal record or history: license is only issued who are not interested in gambling offline or online.
• According to the Nagaland act, the licensee should have its place of effective management in India.
• Technological support should also be situated in India.

2. Sikkim Casino Law: Only Body Corporate registered under the provisions of Registration of Companies act, Sikkim 1961 may apply for license.

3. Goa and Daman and Diu: Only Land-Based Operators can ask for a license in GOA and Daman and Diu.

In Nagaland, a non-refundable application fee of INR 50,000/- is to accompany the application.

While in Sikkim fees for casino application is INR 5000/- along with INR 500 for online gaming.

In the case of Goa cost of the license is INR 2 million for onshore and offshore casinos, regardless of the number of tables or machines installed in the licensed premise.

Casino: The gaming fees payable by the licensee to the government of Sikkim is 10% of the gross gaming yield or INR 1 crore whichever is higher in the first year.

Online: INR 1 lakh annual fees under Sikkim Rules and Regulations and gaming levy of 1% of the gross game yielding to the state government.

Goa: There is an annual fee of 25 million (INR) per annum, per 100 square of land-based casinos in five-star hotels, and INR 70 million for offshore.

Experts said the regulation of games of skill online lies within the legal ambit of the Centre, not states.

The legal position in this regard, has been clarified by recent decisions of the Madras and Karnataka High Courts. “Games of skill can only be regulated by the Centre,” he said. “All high courts are clear on this”.

However, in its recent decision, the Madras High Court, despite ruling against an outright ban on online games, held that the state government does have a limited right to regulate games of skill as the “public health of its citizens” is of utmost importance.

The only leeway provided by the recent Madras High Court decision, is that the state assembly can regulate games of skill on the limited considerations of the public health of their residents and intra-state trade and commerce. However, this cannot be in the form of wholesale restrictions on such games.

Parikshith agreed on the Union government’s competence to regulate online games of skill. He referred to Entry 31 of the Union list of the Seventh Schedule of the Constitution as per which the subject matter of the online space falls within the jurisdiction of the Parliament.

Landers also pointed to that under the constitutional framework, states could only regulate betting and gambling activities – that is, games of chance – under Item 34 of the State list of the Seventh Schedule. Therefore, states do not have the power to ban online skill-based games, he said.

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