Is Gambling Legal in India? Laws and Regulations Explained

Is Gambling Legal in India?

Gambling is the act of placing a stake, such as money or any valuable item, in an event with an uncertain outcome, primarily to win more money or material value. In India, no limit casinos are a highly regulated activity and its legality varies significantly depending on the state, type of gambling, and whether it involves skill or chance.

Gambling Regulations in India

The Public Gambling Act, 1867

The main legislation governing gambling in India is the Public Gambling Act of 1867. This law prohibits owning, maintaining, or being involved in managing a common gaming house. It also makes it illegal to gamble or be present in such a gaming house or to provide funds for gambling activities. However, this Act is quite outdated and primarily regulates physical forms of gambling. It does not cover online gambling or modern forms of betting.

Gambling in India is a "state subject," meaning each state has the authority to create its laws regarding gambling activities. While many states adhere to the Public Gambling Act, some have enacted their laws to regulate or prohibit gambling.

Games of Skill vs. Games of Chance

The legal framework for gambling in India differentiates between games of skill and games of chance. The Supreme Court of India has defined games of skill as those where success depends on a substantial degree of skill. Such games are not classified as gambling. For example:

Horse racing is considered a game of skill.

Rummy has been declared a game of skill as it requires memorization of card sequences and strategic play.

In contrast, games like Flash or Flush (three-card games) are considered games of chance and are classified as gambling.

Online Gambling

The Public Gambling Act of 1867 does not mention online gambling, as it predates the digital age. While there is no specific law banning online gambling in India, the Reserve Bank of India (RBI) restricts payment processing for such activities. The RBI, under the Payment and Settlement Act of 2008, regulates electronic payment mechanisms, making it difficult for gamblers to use banking services for online casinos and betting sites. Additionally, foreign direct investment (FDI) policies limit enterprises from participating in gambling activities.

The Information Technology Act of 2000 allows the Indian government to block foreign betting websites and restrict access to online gambling content. As a result, while there is no explicit ban on online gambling, it is challenging for players to engage in such activities due to payment and access restrictions.

Types of Gambling and Their Legality

Casino Gambling

Casino gambling is only legal in the states of Goa and Sikkim, with specific regulations. Only five-star hotels are allowed to operate casinos and offshore casino operations are permitted in Goa under regulated conditions. Other states in India do not allow casino gambling.

Sports and Horse Race Betting

Betting on horse racing is permitted, as it is classified as a game of skill by the Supreme Court. However, there are conditions: betting must occur on the day of the race in an enclosure approved by the state government. Turf clubs regulate physical horse race betting, while online betting is subject to the same conditions.

Sports betting, such as cricket betting, is generally not allowed, except in Sikkim, where operators can obtain licenses to offer such services within the state. The Central Government treats sports betting as a game of chance rather than skill, and the Law Commission has recommended legalising it under strict regulation to curb money laundering.

Poker

Certain types of poker, which involve a significant element of skill, are allowed in some states. For example, Sikkim, Nagaland, Telangana, Andhra Pradesh, and Gujarat may require licenses to offer poker. However, variations of poker that are considered games of chance fall under gambling regulations and are usually prohibited.

Bingo and Lotteries

Bingo is often classified as a game of chance, and therefore, it is banned in most Indian states. However, state lotteries are allowed under the Central Lotteries (Regulation) Act of 1998, which gives state governments the authority to hold lotteries and regulate their operation. Sikkim, for example, has its framework for regulating lotteries and gambling terminals.

Application for Licenses and Restrictions

Different types of gambling activities require different types of licenses, depending on the state and the activity's nature. Here is a summary of the license requirements:

Taxation on Gambling in India

Income Tax

Winnings from gambling, such as lotteries, crossword puzzles, card games, or any other games that exceed ₹10,000, are subject to a 30% withholding tax, exclusive of surcharges and cess. If the winnings are partly in kind, the tax must be paid before the payout is made.

Equalisation Levy

A 2% equalisation levy applies to online services or goods supplied by offshore e-commerce operators to Indian residents.

Goods and Services Tax (GST)

A 28% GST rate applies to admission to entertainment events or access to casinos. For games involving direct betting models, such as lotteries and casino games, GST is applied to the bet amount. However, games of skill are generally exempt from GST.

Conclusion

The legality of gambling in India is a complex issue, shaped by a combination of national and state laws. While some forms of gambling, such as horse racing and certain types of poker, are permitted, others, like casino gambling, are only allowed in specific states.

Online gambling occupies a grey area due to outdated laws, and while it is not explicitly banned, restrictions on payment processing make it challenging. Anyone interested in gambling or betting in India should carefully consider the legal landscape and stay informed about the specific regulations in their state.

FAQ

Is gambling legal in all parts of India?

No, gambling is not legal in all parts of India. Each state has its own laws regarding gambling, and only a few states, like Goa and Sikkim, allow certain forms of gambling, such as casinos.

What types of gambling are allowed in India?

Some types of gambling, like horse racing and certain card games such as rummy, are allowed as they are considered games of skill. Casino gambling is permitted only in Goa and Sikkim, and online gambling remains in a legal grey area.

Is online gambling legal in India?

Online gambling is not explicitly banned in India, but there are restrictions on payment processing and access to online gambling sites, making it difficult for players to participate.

Are winnings from gambling taxed in India?

Yes, gambling winnings above ₹10,000 are subject to a 30% withholding tax, in addition to any applicable surcharges and cess.

Do I need a license to operate a gambling business in India?

Yes, licenses are required for most types of gambling businesses in India. The specific requirements depend on the type of gambling and the state where it is offered.

Are there any states where casino gambling is legal?

Yes, casino gambling is legal in Goa and Sikkim under regulated conditions, such as within five-star hotels or on offshore vessels.