By B Balaguhan ~ Christ University Bangalore

Introduction:

“Gambling is a game of luck. Luck is what happens when preparation meets opportunity”

  • Roman Philosopher, Seneca

Gambling is a kind of wagering agreement and it is illegal in most parts of India except few states. But the gambling market has been a huge market for black money.  These markets have a history dating back centuries. Gambling is involved in every market where there is a possibility of probability being involved along with a high amount of risk. Thus this paper tries to establish the point of legalisation of gambling and how it helps in the accounting of huge black money which is involved in this market.

Wagering and Gambling – A Comparison

Wagering agreements are agreements in which there are two parties and the agreement to do something is dependent on the happening of an uncertain future event in which neither of the parties has an interest in the event. Wagering may include betting, gambling, etc.  The Wagering Agreement was defined by Justice Hawkins in a landmark case of Carlill v. Carbolic Smoke Ball Co[1]  as ”one by which two persons, professing to hold opposite views touching the issue of a future uncertain event, mutually agree that dependant on the determination of that event, one shall win from the other, and that other shall pay or hand over to him, a sum of money or other stakes; neither of the parties having any other interest in that contract than the sum or stake he will win or lose, there is no other consideration for making of such contract by either of the parties. If either of the parties may win but cannot lose or may lose but cannot win, it is not a wagering contract

Gambling is a specific type of Wagering Agreement and it has been defined in the case of Dr K. R. Lakshmanan v. State of Tamil Nadu[2] by the Honourable Supreme Court of India as “Gambling in a nut-shell is the payment of a price for a chance to win a prize. 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”.

Gambling in Sports: Chance or Skill

Games and sports activities in India are divided broadly into two categories game of chance and game of skill. The game of chance is purely based on luck and probability factors of the game whereas on the other hand game of skill is based on the knowledge, expertise, and skill of the person playing the game. The activities falling under the purview of chance are considered illegal whereas those falling under skill are legal in India.

Gambling is a sport that is mostly considered as a sport based on luck and merely it falls under the category of skill. Thus many high courts believe that gambling must be considered as illegal as it is based on pure luck and has nothing to do with the skill, knowledge, or expertise of players taking part in such activities. Also as Gambling being a species of a wagering agreement, it has been held as per section 30 [3]of the Indian Contract Act and an exception being to this is a horse race.

The view of Horse Race being exempted is clearly defined by the Hon’ble High Court of Madras in the case R. Lakshmanan v. State of Tamil Nadu[4] that the assessor of these sports while placing a bet on the horse would be assessing the physical conditions of the horse, the performance of the jockey, the capacity of the animal. Thus it required the skill and expertise of a person who places such a bet. Thus it is a reasonable excuse by the law.

By applying this reasoning given to the exclusion of the horse race in the definition of wagering agreement for Gambling in Sports, placing bets in sports also requires the analyzing of the capacity of the player in sports, his history in playing that game, and his skill set used in the previous games he has played. Thus by imposing the above ruling for the Horse race,in this case, should also exclude it from the ambit of wagering agreement.

Legal Perspective of Gambling in Sports in India:

Gambling has been in society for time immemorial. There has been a common legislature that prohibits Gambling in India i.e., The Public Gambling Act, 1867. But the Constitution of India has enabled the particular State Government in enabling their legislation for regulating gambling in their territories.[5] Thus some states have legalized.

Gambling has been in society before the invention of the Internet. But this  British old legislation has been prohibiting the physical form of Gambling and due to the intervention of the Internet in the early 2000s  gambling has also been introduced through online platforms like Cricplay, Dream 11, and some other sites. Thus there has been no explicit ban on internet gambling as per the age-old legislation, thus these online platforms have been using this loophole in the law for their advantage and have been gambling on the sports using these platforms.

But states like Sikkim (Sikkim Gambling Law[6]) and Nagaland (Nagaland Gambling Law[7]) have framed their legislations for regulating gambling online by using the power given by the Constitution of India under the Seventh Schedule.

Needs for Regulation of Gambling in India:

Gambling in India has a high market running using Black money and has been running illegally without any proper framework for the regulation of such markets. Thus there is no proper procedure or laws in place to regulate this market. This makes it hard for the government to account for the revenue which has been involved in this market and many people use this loophole not to pay taxes for the amount of money earned through this. This makes the economy of the nation at a greater stake as the money is not accounted to the government

Thus this is the factor that makes it the most serious one to make legislation for the regulation of gambling and taxing the money out of it.

  1. Illegal Money and Tax through legalisation

As of now, India Gambling has been banned by the Public Gambling act of 1867, thus now all the players in the illegal market are going against the aforementioned act. Thus most of the money revolving inside this market is black money and thus it has been unaccounted which has been a huge amount of illegal amount involved in it. Thus bringing in legislation would increase the benefit of revenue to the government through tax.

According to a report by the Federation of Indian Chambers of Commerce and Industry in the year 2013[8], the report stated that around 3,00,000 Crore Indian Rupees have been spent illegally in sports betting. As discussed above there has been around INR 3,00,000 Crore involved in the gambling market. Thus according to the Federation of Indian Chambers of Commerce and Industry, there could be a possibility of a Taxation of around 20 per cent of the overall profit from the above-mentioned revenue which would give the government revenue of about 12,000 to 19,000 Crores.

  1. Corruption in Sports  and reduction after legislation

Corruption is dishonest or fraudulent conduct by those in power, typically involving bribery.[9] Corruption in sports has always been a huge issue in India. Mainly during the seasons of the  Indian Premier League, many cases are filed for the involvement of gambling and bookie problems in the Indian Premier League Series.

Recent cases prove that a lot of money has been involved in sports betting and bribing of officials in the Sports committee to make them favour their prediction. Mainly the problem of spot-fixing and match-fixing has been increased in the case of the Indian Premier League from the year the series has started. This huge ransom of money involved in this betting goes unaccounted for and is a threat to the national economy.

Conclusion:

The Gambling Market has always been considered an immoral act in society. this market has a huge inflow and outflow of black money in it. Thus Parliament of India must consider the recommendation of the Law Commission of India’s 276th report on Legalizing gambling in India. [10] It must create beneficiary legislation to control, regulate, and promote gambling which also would be a good industry that would generate huge revenue to the government through its tax. By bringing up welfare legislation for the regulation of Gambling in India, the government would bring up a new industry that would not only create employment but also it would attract new tourism connected to gambling in India. Thus the government must take affirmative action in bringing up a law.


[1] Carlill v. Carbolic Smoke Ball Co (1893) 1 QB 256 (CA)

[2] Dr. K. R. Lakshmanan v. State of Tamil Nadu AIR 1992 SC 1153

[3] Section 30 in The Indian Contract Act, 1872

[4] Supra 2

[5] Constitution of India, Seventh Schedule, List II, Entry No. 34

[6]Sikkim Online Gaming (Regulation) Act 2008; The Sikkim Online Gaming (Regulation) Rules, 2009

[7] Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act 2015 and the Nagaland Prohibition of Gaming and Promotion and Regulation of Online Games of Skill Rules 2016

[8] Regulating Sports Betting in India.  Available at:http://ficci.in/SEdocument/20208/report-betting-conference.pdf (last visited on 15-02-2020).

[9] Oxford Dictionary

[10] LEGAL FRAMEWORK: GAMBLING AND SPORTS BETTING INCLUDING IN CRICKET IN INDIA July 2018.  Available at: http://lawcommissionofindia.nic.in/reports/Report276.pdf (last accessed on 17.02.2020)


A Study of Legalization and Regulation of Gambling in Gaming & Sports in India

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