Topic – Should sports betting and gambling be legal in India?
ISSN: 2582-3655
Author: Prashant Daga & Clint Thattil
University of Mumbai Law Academy,
Research Focus- State of the legal framework in India and other countries with regards to sports betting and gambling, and whether it should be legalized in India.
This article studies the existent legal standing of the sports betting and gambling industry in India, and the historical evolution of the same, the boons, banes and various aspects attached to the industry, and a comparison of the same with respect to some countries that are major frontrunners and active in the said industry. Sports betting and gambling has been subject to critical scrutiny since its inception as a vice, and a detrimental activity which produces no significant good for the society, but the change of times, globalization and commercialization of sports has gradually influenced the perspective, shedding the negative connotation attached to it. New online mediums that cater to the indulgence in the said activity have professionalized it, eliminating the arbitrary aspects of it, rather make it an activity that requires considerable skill, logic, and knowledge of the sport. Proactive regulatory frameworks instituted by corporates running the business and governments have ensured it stays within the confinements of the law, and facilitate responsible enjoyment of the activity. It is now viewed in the light of a viable investment avenue to safeguard and generate revenue, a genuine alternative to the traditional income safeguarding and putting one’s money to good use. This article intends to highlight the benefits of the said activity and the various legal steps that have been taken place to discuss the state of this activity in terms of committees, reports, and studies. Further, it puts forth possible regulatory and precautionary measures that can be put in place to ensure it does not go beyond means of an individual’s financial capability and not be absorbed by the activity, simultaneously ensuring government surveillance and keeping it contained.
BETTING AND THE GAMBLING INDUSTRY IN INDIA
Betting and gambling are activities that are always viewed with a negative connotation in society. The stigma attached to it stems from the track record that it has exhibited since the inception of the activity, as it does have an addictive aspect attached to it, which is a slippery slope and the general consensus is that it eventually leads to losing all of one’s assets, income, etc. Mythology and epics such as “Mahabharat” also have the activity of betting and is the cause of the war that conspired later, due to which the belief exists and enforces the stereotypical view, that it is a taboo activity. Terms like “Satta”, “matka” etc have existed in our society since generations. This activity is looked upon as a means of winning huge with small investments and as a ubiquitous pastime by the rich and poor alike. Its notorious companionship with most other human vices is well known. It has had disastrous consequences for the families of gamblers who belong to the vulnerable class of society. Betting and gambling are also susceptible to a risk of self-inflicted damage. This has made gambling a formidable problem for law and morals.[1] According to a study by KPMG India and Google dated May 2017, it suggests that the Indian online gaming industry is set to become a USD 1 billion industry by 2021.[2] India is evolving and due to the advent of social media and globalization, is opening up to the concept and has started to accommodate and accept the activity as a genuine hobby, lucrative avenue of investment to make a decent profit such as stock markets, insurance, fixed deposits, etc, with the added benefit of combining sports/games that they enjoy and are passionate about, exercising their knowledge of the nuances, figures, statistics, trivia, and prowess in the said sport.
The definition of “Betting” as per Black’s Law Dictionary is “Making a bet occurs when there is a chance for profit if a player is skillful and lucky…A play for value against an uncertain event in hope of gaining something of value…It involves not only a chance, but hope of gaining something beyond the amount played. Gambling consists of consideration, an element of chance, and a reward…The elements of gambling are payment of a price for a chance to win a prize.”[3]
The current status of betting in India with regards to legality is intricate and complex. The Public Gambling Act, 1867, is the central enactment on the subject, which has been adopted by certain states of India. Whereas, the states truly enjoy the federal character of our constitution because the states also enjoy the liberty to enact laws as they deem fit by the virtue of the Seventh Schedule of the Constitution.[4] A considerable amount of states have enacted laws to regulate and validate the various formats of betting, states such as Sikkim[5], Telangana and Nagaland[6] have been active with the inclusion of internet and online formats of gaming and betting. The courts in various cases have applied the rationale that if an activity requires a specific degree of skill and knowledge and is not reliant on chance is a legal form of gambling and betting. The position of law is clear with regards to games of skill and is permitted.[7]
The Mahalaskhmi[8] and Gaussian Networks[9] cases were expected to bring about a change of events and laid down a concrete law for the same but the reluctance of the judiciary left the subject matter dangling. A final outcome to which came by the judgement of Shri Varun Gumber v. UT of Chandigarh & Ors[10], which validated the online format of fantasy sports[11] on an online medium required considerable amount of skill, knowledge, judgement, deliberation and discretion, and not the outcome of ‘mere skill’. Dream 11 Fantasy Private Limited (Dream 11) was the company the aforementioned case was filed against. It was noted that a substantial amount of knowledge, viewing, keeping track, tabulation and rationale was needed to play the same and the results did not arise out of sheer luck as one has to possess the integral skill of effectively drafting virtual teams, assess value of players, adhere to an upper credit limit and work within the same, ensuring a real-world team cannot be created, thus not exposing it to instances of match manipulation etc, evaluate a player’s match and performance statistics etc and partaking in leagues.[12]The room of inexplicable occurrences lie with every contract and business transaction, and if any of the said were to occur, it would not render the game as illegal because of an unexpected result. The application also has a policy that all prizes shall be subject tax (TDS) as per the Income Tax Act, 1961, according to which for the prize money, a 30% flat rate shall be deducted as tax, and the percentage would be subject to increase as per the prize money, i.e. generating income for the nation.
In a 2013 report[13], the Federation of Indian Chambers of Commerce and Industry (FICCI) estimated that the underground betting market in India is huge at Rs. 3,00,000 crore rupees. One can estimate the expanse and the literal treasure trove of potential income for the nation just by mere legalization of betting at a bare minimum investment for the government, raking in the praise of the users and enthusiasts, filling up the national purse to put it use, and curbing the illegal gaming “dens” by consequence, rendering the existence of peddlers, dealers redundant, obscuring these would make it a safe space rather than an activity fuelled by fear and physical harm for non-payment, anchoring the crime and saving individuals who have fallen prey to the unsurmountable debts because of the same. Even if it is to be believed that there are no major stakeholders to profit out of the said legalization, the time and investment on the government’s part are minuscule to not pay it to heed, if the supposed scenario does exist, it would create a business opportunity, and as the society has been privy to the overturning of past beliefs, and setting up of conglomerates such as Amazon, Flipkart, Snap deal and several such companies, taking the shopping experience online and actually creating a dent in the market, revamping the shopping and other e-commerce business modules. This could pave the way for the same, the subjunctive scenario of non-existence of stakeholders would bear mere relevance if it is treated as any other investment avenue for fiscal and financial security and profit building, and securing your finances, an alternative if one does not desire the traditional formats such as stock market, fixed deposits, bonds, etc.
It is noteworthy that the skills aforementioned are essentially what franchise owners in leagues such as Indian Premier League, Premier League Football – UK, La Liga, – Spain, NBA – Basketball and others apply, and operate upon to create their teams which participate in the said leagues for playing and generating revenue. This is just a small-scale innocuous, simulation of the same, granting common citizens the opportunity to do the same for an affordable price and feel directly involved with the sport due to the said connection, and also make their hobby productive and beneficial.
The Supreme Court had asked the Law Commission to look into the issue of legalizing betting and gambling following the spot-fixing and betting scandal during the 2013 season of the cash-rich Indian Premier League. After years of deliberation and thorough studying of the subject matter, the law commission helmed by Justice B S Chauhan concluded and recommended that the government enact a model law to allow highly-regulated versions of gambling that could be adopted by the state government. [14] The report also suggests ways to regulate it –
- Cashless transactions linked to AADHAR and PAN Card, similar to other financial transactions.
- Individuals not eligible to according to the Income Tax Act and GST Act, underage, below the poverty line, government-subsidized should not be permitted to participate in the activity.
- Regulating content and monitoring the mediums of betting, and exercise discretion in instances of objectionable content.
- It would pave the way for foreign investment in the form of setting up a business in India, such as Casinos, Online Fantasy Gaming websites, etc.
- Regulating the foreign investment, the volume and mode of the same.
- Cap on number of transactions an individual can conduct in a specific period of time
The legality of betting across the globe:
The Betting giant Bet365, a UK based online betting company reached the new heights in the last financial year as it crossed the 2billion pounds mark in revenue. The reports show that the revenue for the year ended March 25, 2018, was 2.72billion which was a significant surge of 26% over the previous year’s (2017) revenue, which itself was a remarkable figure of 1.55billion.[15]
The expenses of the famous betting company also saw a rise which almost hit the 1.63billion mark and saw a total cost paid to the staff rise nearly one-third from the previous years to 646.8million, as there was a huge number of new recruitments as the staff increased from 3,712 to 4030 the present year. The number of salaries and bonuses also increased reportedly because of recent achievements.
This also saw a rise in the tax payments made by the company, which surely put a smile on the government’s face as the tax paid was accounted to 78.2million.[16] And even after the increase in tax paid and costs in advertising and salaries to employees, Bet365 managed to end the year with a reserve of 1.8billion, which was only around 1billion 2 years back, something to be delighted about for one of the biggest betting sites in the game.
The question that arises is whether Indian citizens use Bet365, B-win or any such online betting sites, and the simple answer is yes, a large number of Indians do use these betting sites even though there a number of problems that they face in doing so. The main problem being that Indian banks do not allow them to place bets as per the law, but the way out is using online payment wallets such as Neteller and Paytm and so on by simply adding a significant amount of money in such wallets and placing their bets through it. The problems don’t end there for the Indians, for example – if they are on a winning streak or if they enjoy a major win in comparison to the amount they invested, the site tends to limit the activity of these players or even tend to freeze their withdrawals in many cases, as they would not want to incur losses to a citizen of a foreign nation. These losses and annoyances can be avoided by welcoming the activity and accepting it as a genuine avenue that people use bereft of the social and historical stigmatization of it.
Countries such as Argentina, Australia, the United Kingdom, Nigeria, South Africa, Philippines, New Zealand and various nations in Europe and etc have all legalized betting. India is comparatively liberal with regards to its betting laws as opposed to many nations that are resistant towards the wave of legalization. The United States of America in this very year ended its love- hate-tolerate a relationship with betting, similar to that of India. The Supreme Court of the United States permitted and legitimized it, with due conditions and provisions. The obvious and the most significant inference one can draw from the aforementioned examples is that betting does not pose to be the societal evil, unregulatable activity, and that it only is a facilitator for minting money for all the parties involved, the only downsides that exist are the ones that pose to be a threat with any other vice ( addiction issues similar to that of alcohol, cigarettes, drugs, etc), losses due to failure, any investment is not solid enough and could default as per the turbulent circumstances, unprecedented happenstance, and obviously “When the fun stops, stop!”[17] – the campaign adopted and embraced by the gambling industry.
Should sports betting be legalized in India?
Betting falls amidst the grey matter and hangs between legal and illegal, a blurry line separating the same. As per the recent developments, it is likely that betting in India is en route towards legalization. Betting is considered wrong as per the traditional, archaic and inane belief system in India. The judiciary in recent times has given out some judgments contrary to existent values, with a staunch stance for endorsing fundamental rights in the utmost possible ways. This is the beginning of the end of prejudice.[18] Legislation to legalize betting would reinstate and uplift one’s fundamental rights. Choosing this supposed vice is one’s own discretion and in a society that harbors alcohol, cigarettes and other substances detrimental to the human body, quarantining betting is nonsensical. Regulation is the key to enforcement of one’s rights as well as preserving the people of the nation. Serving both in the most holistic manner.
The provisions of the act could put a lid on the number of transactions of an individual, permit their indulgence based on their financial stature, and one’s not qualifying be debarred from indulging until eligible, taxing each transaction on a special rate corroborating to the earnings pertinent to it in turn generating a substantial amount of income for the government and the other parties involved, traceability of all transactions via linking to individual’s accounts and their central government recorded identity cards such as AADHAR and PAN Card, receipts for the said transactions. A mandate and minimum requirement can be set to permit one to indulge in this activity, for example- An individual filing Income Tax returns of at least 1,00,000 rupees per annum would be eligible to partake in the sports betting, as it would serve as evidentiary proof of financial soundness and backing so as to not have a drastic effect if they incur losses, testamentary of their capabilities to enjoy the luxury of betting, and also ensure someone from a vulnerable class to not run into a self-destructive situation, defying the same would be considered illegal, bringing about repercussions and consequences accordingly. Licensing mechanisms can be installed to a background check as to who can set up the said businesses for betting and periodically keep a record of their practices to keep them in the toe and invalidate licenses if found to be violating and face requisite legal repercussions. Regulating, monitoring, licensing and surveillance mechanisms would ensure a full-proof process of the activity devoid of unscrupulous and corrupt practices.
Foreign direct investment has been pervasive due to globalization, and as per the earlier noted figures, a 3,00,000 crore rupees market goes untapped due to illegality, hindering the companies from setting up shop in India and also denying our nation reserves huge amounts of money, and foreign reserve, and on a remotely effected note, it makes the said companies view the Indian market from a skewed perspective. Last but not the least, isolating Indian fans from thoroughly enjoying every realm of the sport by having a direct attachment to the sport, betting makes the passion official, the fervor intensifies when one has own stakes to lose, and the emotional, as well as enjoyment quotient, spurs upwards.
Betting from the current perspective is analogous to the stock market and dealing in FOREX. One’s skills to study the market and individual product/derivative/player/currency, past records, future prospects of it, the temperament of the same, external factors, and factoring in of the unprecedented, unpredictable nature of the said subject. It weeds out the arbitrary aspect with regards to betting that has been prevalent until modern times, and impermissibility of betting upon including but not limited to frivolous, trivial, unpredictable, the high degree of chance, impossible, unaccountable, unquantifiable, sheer luck, subjunctive nature, butterfly effect, etc. These stipulations would define the scope and circumscribe the possibility of the activity, keeping at bay the illegal and immoral aspects of the activity, and simultaneously capitalizing on the genuinely benefitting aspects of the activity. This would make betting a viable option to put one’s money to use other than the traditional options.
Gaming and sports are those recreational activities that bring about communion, fraternity, and bonhomie. It is rudimentary human behavior that one feels more attached to the same, if they genuinely have something to gain or lose out of the result, and neither does it render a futile time-consuming habit that does not contribute in a quantifiable manner, but via betting one could put to use their years of knowledge, prowess, and love for the sport/game in measurable terms, and enrich from it. It would also give them a sense of belonging and genuine contraction with their revered sport, as it is a mutually existing medium, this would give them a sense of belonging and have a bilateral relationship. This would obviously come across as a utopian vision for the same and that wouldn’t surely be the case. It would have its shortcomings, such as addiction, putting more than one’s means online, hampering their actual personal and work life due to overindulgence, the above-mentioned regulatory mechanism and checks would hinder the overt indulgence attributes, diluting the fervor as and when required. The over-indulgence factor has been a demon for various hobbies but as long as it is maintained as per requisite moderation, awareness and periodical checks, the same can be beaten, and particularly can be suppressed at the very roots by regulatory and licensing mechanisms, leaving little to no room for defying the same. Also, with reference to the aforementioned, the awareness campaigns existent in the world at the moment promote responsible enjoyment of betting, When the fun stops, stop![19]
Prohibition has seldom been effective, dating back to the complete alcohol prohibition in the USA between 1920-1933[20], Gujarat Alcohol Ban, etc have given birth to black markets rather than people quitting alcohol altogether. It is an open secret that despite Gujarat being a dry state boasts a multiple thousand crore alcohol market.[21]Legalization would serve all the stakeholders, the consumer, government and other business entities involved in the production, packaging, sale, etc as it would make the market and product accessible, and the government would rake in revenue on the respective taxes. The recent legalization of cannabis in Canada has led to the expulsion of black marketeers and is steadily shifting towards a legitimate market and sales of the substance in a regulated and organized manner.[22] Although people have not completely deserted black markets due to supply, logistical issues faced by the government to circulate cannabis, but the revamp has begun. Black markets, Illegal dens, and dodgy dealers have run the show with regards to betting since ages in a rampant, unaccountable manner going as much as to the extents of match manipulation, match-fixing to generate desired results and win the bets. This would be a major blow to the founding of their business, as they thrive upon the cloak of illegality and providing the route underneath the cloak, shedding of the cloak of illegality would leave the market open to approach and use, rendering their existence as futile. There are no doubts that these social deviants would thrive upon unethical people who use their black money for the same, but the benefits do outweigh and hurdle above this one scenario. It would take away the major mediocre consumer who they trampled by fear and under criminal acts. The consumers would move to the legal mediums, leaving their market obsolete. This very phenomenon has been observed in instances where prohibition was applied, such as the alcohol prohibition in the USA If one desires to indulge in large volumes, casinos and other licensed outlets can be set up to facilitate for the same, such as the existent casinos in Goa. Licensing mechanisms as aforementioned would prevent unethical, suspicious personalities from setting up such outlets. Assuming, the same are circumvented by corrupting the granting authorities, periodical checks by independent bodies would expose the violations and would hold them accountable and face the music for the same. Auctioning off of licenses for requisite periods with an annual licensing fee, the validity of which would be contingent to them abiding by the norms laid down by the legislation pertaining to it, and non-abiding of which would invalidate their license, and ensure adherence to the stipulations.
Betting and Gambling has been the point of contention and debate over the years for various reasons as discussed above, but despite all the shortcomings and supposed chinks in the industry of betting, it serves to be fruitful in a wholesome manner, and not just capitalistic, numerous examples of countries that serve as a comparison scale for the government and prove that it will not be Frankensteined, rather will just benefit and also win brownie fans of the enthusiasts of sports, gaming and economically inclined voters alike. Legalising betting and creation a framework as per the suggestions of the 276th Law Commission Report, 2018, and factoring the regulatory mechanisms, licensing authorities, skill-centric set up of sports betting as laid down by the judiciary in various cases, would open up India to numerous foreign entities, curb illegal dens, create businesses and boost the economy in the long run. It is now upon the central government to bring about the “fun”. [23]
[1]M.B. Majumdar, Commentary on the Bombay Prevention and Gambling Act, 1887 (Sweden Maxwell).
[2] Online Gaming in India: Reaching a New Pinnacle, A Study by KPMG in India, https://assets.kpmg.com/content/dam/kpmg/in/pdf/2017/05/online-gaming.pdf.
[3]Bryan A. Garner, Black’s Law Dictionary, 46th edn.at 679, 10th Edition ( 2014).
[4]Constitution of India, Seventh Schedule, List II, Entry No. 34
[5] Sikkim Online Gaming (Regulation) Act 2008
[6] 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
[7] State of Andhra Pradesh v. K. Satyanarayana &Ors. – 8AIR 1968 SC 825; K.R. Lakshmanan v. State of Tamil Nadu- AIR 1996 SC 1153.;
[8] Mahalakshmi Cultural Association v. The Director, Inspector General of Police & Ors – Special Leave to Appeal (C) No(s).15371/2012
[9]Gaussian Network Pvt Ltd v. Monica Lakhanpal – Suit No 32 of 2012
[10] Civil Writ Petition No. 7559 of 2017
[11] Fantasy sport is a game which takes place over a number of rounds (i.e. a single match, or an entire league). Participants select players to build virtual teams, and act as managers of their virtual teams. These virtual teams compete against one another to collect points based on the results/achievements of real sportspeople or teams in professional sporting events. The winner is the participant whose virtual team garners the maximum number of points across the rounds
[12] Various national and international leagues of sports such as Cricket, Football, Kabaddi and Basketball.
[13]Regulating Sports Betting in India – Federation of Indian Chamber of Commerce and Industry, 2013
[14]LEGAL FRAMEWORK: GAMBLING AND SPORTS BETTINGINCLUDING IN CRICKET IN INDIA, Report No. 276, Law Commission of India, July,2018.
[15]Editor, Bet365 Reaches the Coveted £2 Billion Revenue Summit, Gambling.Com (November 29th, 2017),https://www.gambling.com/news/bet365-reaches-the-coveted-2-billion-revenue-summit-608800
[16]Gina Clarke, Gaming Giant bet365 Paid over £181 Million in Taxes for 2018, Vegas Slots Online, (January 19th,2019), https://www.vegasslotsonline.com/news/2019/01/29/gaming-giant-bet365-paid-over-181-million-in-taxes-for-2018/
[17]“WHEN THE FUN STOPS, STOP” is a campaign created by The Senet Group, an independent body set up to promote responsible gambling standards.- http://www.whenthefunstops.co.uk/
[18] Navtej Singh Johar & Ors. versus Union of India thr. Secretary Ministry of Law and Justice-Writ Petition (Criminal) No.76 of 2016
[19]“WHEN THE FUN STOPS, STOP” is a campaign created by The Senet Group, an independent body set up to promote responsible gambling standards.- http://www.whenthefunstops.co.uk/
[20]Prohibition in the United States, https://en.wikipedia.org/wiki/Prohibition_in_the_United_States
[21]Chandan Nandy, Gujarat Liquor Ban: A Curse, a Boon and a Sham, the quint (27th November, 2017)https://www.thequint.com/news/india/liquor-ban-gujarat-farce-illicit-liquor-bjp
[22]Brian Huchinson, BLACK MARKET TO GREY, National Post – Postmedia Networks Inc, https://nationalpost.com/features/o-cannabis-black-market-to-grey
[23]“WHEN THE FUN STOPS, STOP” is a campaign created by The Senet Group, an independent body set up to promote responsible gambling standards.- http://www.whenthefunstops.co.uk/