The legality of Online Gambling in India: Current Regulations and Whats Ahead

He also had the opportunity to avail of Dream 11’s free-to-play variants to test his skill and gain experience. Dream Eleven canvassed the argument that the Player had been unable to perform well in the fantasy game as he had failed to exhibit the aforementioned skills. Section 4 of the Act provides that maximum prize that may be offered in a prize competition cannot exceed Rs.1,000, with the upper-limit of entries not exceeding 2,000 persons. Further, it lays down the condition that a licence must be obtained before offering a prize competition and provides for a detailed mechanism for grant and revocation of such licences. The Act also provides that any person violating these provisions shall be liable for penal consequences.

Legislative framework and classification of online games

Online gambling India

As a result, the legal framework surrounding online gambling is not well-defined. Also, the Act differentiates between games of chance and games of skill as well as declares all types of gambling unlawful in India. While analysing the nature of online games of rummy and poker, the Madras High Court in All India Gaming Federation v State of Tamil Naduiv has held that such games would be purely games of skill, even in online formats.

The draft further highlights that unregulated expansion of online gaming has contributed to addiction, debt traps, suicides, and mental health issues. Many money gaming platforms are operating across state and national borders, often through offshore servers, making regulation even more pressing. With the COVID-19 pandemic resulting in lockdowns and limited access to the outdoors, a large portion of the population has turned to the internet for entertainment. The accessibility and affordability of smartphones, tablets, and PCs has further played a role in growing participation in online gaming.

How much tax is on online gambling in India?

As per the Income Tax Act, winnings from online games are treated as taxable income and are subject to a 30% tax under Section 115BB. This tax applies not only to direct winnings but also to bonuses, referral rewards, and any other incentives provided by gaming platforms.

Gaming fans turn to illegal sites following India’s online gambling ban

Further, the jurisprudence reflected that there was a legal, judicial and executive policy to put games of skill in a different genus and specie from games of chance.  The observations of the SC in the Lakshmanan Case were relied upon to submit that Poker being a game of skill, the offering of Poker was protected under Article 19(1) (g) of the Constitution of India. The refusal of the NOC could not be said to be a reasonable restriction on such right, which was in the nature of an arbitrary and illegal prohibition. The legislative competence of the State legislature was also challenged by the Petitioners. The Constitution provided that States had the exclusive legislative competence to legislate on ‘betting and gambling.’ 26 Accordingly, unless both betting and gambling were involved, the State did not have the competence to legislate on the game.

Online gambling India

By regulating the sector instead, governments stand to gain significantly in the form of taxation considering the contribution to the exchequer from the fantasy sports segment alone which is estimated to cross INR 13,500 crore by FY24. It remains to be seen how fantasy sports and online gaming platforms will be regulated and how courts reconcile the distinctions in their categorization. The advent of technology and the constantly increasing number of internet users has led to a paradigm shift in how the gaming industry operates. Rummy, poker, fantasy sports, and other games have now found online players and audiences, but much of the regulatory realm on fantasy sports and online gaming in India remains ambiguous.

  • People must be aware of the regulations in their state and make sure they are only engaging in legal and authorised online gambling activities because the legal environment around online gambling in the country is complicated and can vary greatly across states.
  • In this judgment the SC has also passingly observed that bridge is a game of skill.
  • Our extensive drinks menu includes cocktail, beer, wine, whisky, vodka, rum and exquisite single malts.
  • Applied in case of Rummy given that the Satyanarayana Case had held that Rummy was a game of skill.

The current regulations in place to combat illegal gaming are essentially neutralized by these powerful individuals through corruption. The main legislation on the subject is the Public Gambling Act lope.bets of 1867, which forbids all games of chance other than lotteries and games of skill. Any infringement of the legislation would result in a fine of 200 Indian rupees or imprisonment for up to three months. The Bombay High Court ruled in Gurdeep Singh Sachar v. Union of India and Ors4.

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