Internet Casinos Inc. (ICI), which is the first ever online casino in the world, began operating on August 18, 1995 with 18 games. More than 1,400 websites have been created, most of them located on small Caribbean islands. This has led to an industry that generates more than $3 billion annually. Online gambling is the most lucrative online business. Nearly 30 percent of online gamblers are Asian.
It takes only minutes to place a bet. Anyone can open an offshore currency account at a gambling website with a credit card. This allows them to bet on sporting events such as Wimbledon, cricket, horseracing, Formula One and Formula One. They can also join a virtual casino for slot machines, blackjack, roulette, poker, etc. Betmart and Flutter accept bets on everything, from Madonna getting divorced to who will win the Nobel Prize. You can place bets ranging from one nickel to thousands of dollars. The amount you win or lose is automatically added to your account. You can either mail the final balance to yourself or leave it for future bets.
It is important to understand the socio-cultural context of India before interpreting Indian law on online gambling. While gambling is not prohibited in India, policy makers do not expressly encourage it. Indian organized gambling is valued at around US$8 million. Although strict laws have been enforced to stop the growth of casinos and high-street gaming centres in India, except for the state of Goa the lottery remains the most popular form of gambling.
Gambling is legal, but it is highly controlled and regulated. Modern India is a quasifederal Constitutional democracy. Legislative powers are shared at both the state and federal levels. The Constitution of India includes gambling as a List II item. This means that state governments are able to pass laws to regulate gambling in their respective states. There is no one law that governs gambling throughout the country. In addition to the law that applies across the country, gambling laws in different states are different. Some states ban lotteries. However, some states allow state lottery sales and distributions in other lottery play areas and to promote states through private entities.
Gambling is defined by the courts as “the payment of a price in exchange for the chance to win a prize”. The nature of the game will be determined by the dominant element of skill and chance. If the outcome of a game is decided primarily by chance or luck, it may be considered gambling. Indian courts have ruled that horse racing betting and some card games are not gambling. Constitution of India does not protect the right to engage in gambling or lotteries. However, it may be noted that lotteries run by the state government make substantial contributions to the state exchequers of many state governments and the Union government. Therefore, there is resistance to total prohibition.
These laws are applicable to gambling:
This Act punishes public gambling and allows the keeping of a “common gaming house”. The Act authorizes the states to pass laws to regulate public gaming in their respective jurisdictions. In accordance with the state’s policy on gambling, the penal laws have been modified. This legislation has no direct effect on online gambling, unless the definition of common gaming houses is broadened to include virtual forums.
Indian Contract Act, 1872 (ICA).
The ICA is a codified umbrella law that governs all Indian commercial contracts. A wagering contract is one that cannot be enforced under the ICA. The Act states that “Agreements by way or wager are null and without effect. No suit can be filed to recover any money alleged to have been won on any wager, or to entrust any person to follow the outcome of any game or other uncertain event upon which any wager was made.” The Act has declared that wagering contracts have been held to be invalid and unenforceable in the case of lottery, gambling and prize games. A wagering contract is legal, but it can’t be enforced in court. A wagering contract is not illegal, but the courts won’t entertain any cause for action.
Lotteries Regulation Act, 1998
This Act establishes the framework for organizing lotteries across the country. This Act gives the power to state governments to both promote and prohibit lotteries in their territory. This Act also specifies the way lotteries should be conducted, and provides penalties for violations. The Indian Penal Code has made lotteries that are not authorized by the state an offense. This Act has been enacted in several states that are not lottery-playing, such as Gujarat and Uttar Pradesh.
Indian Penal Code, 1860
Section 294A discusses the maintenance of a lottery office. This section deals with the keeping of a lottery office.
Any person publishing any proposal to pay any amount, deliver any goods or do or abe doing anything for any benefit of any other person on any event or contingency related or applicable to any drawing of any ticket, lot or figure in any lottery shall be subject to a fine of up to one thousand rupees.
Online gambling is covered by the same law as gambling. All gambling contracts are considered wagering contracts, and it is impossible to enforce them under the ICA.
The most popular online gambling option in India is, as we have already mentioned, the lottery. Companies that market and distribute or conduct state-sponsored lottery online are not permitted to sell their services in states that have banned them. These distributors and marketers limit their online services to residents of states that permit lottery play. Although there have been no cases of online lottery companies promoting breach, many of these companies ask their customers to sign a guarantee about their residency.
In some cases, a state may ban the lottery of another state. This includes online lotteries. The Karnatka High Court affirmed the Karnataka government’s decision to create a lottery-free zone by banning all lotteries from other states. This included online lotteries. In this case, the state government directed the closing of all terminals and kiosks that sold online lotteries.
Enforcement in foreign jurisdictions
It may prove difficult for Indian authorities to block access to websites hosted or operated from outside India. Indian foreign exchange laws prohibit remittances from India for gambling-related activity such as buying lottery tickets, sweepstakes, or football pools. A gambling website that is not located in India and aims to receive money from India can’t do so via legal channels.
Online gambling is a tightly regulated industry with limited growth potential. The current regulatory framework makes it difficult to market offshore gambling sites in India. However, Indian-based companies cannot distribute or market state-government lotteries online within permitted territories. Further, the government’s omnipresence and ability to block gambling websites as well as the inability to enforce gambling-related contracts discourage the potential for the industry.