Legality Of Fantasy Betting and Gambling in India: A Comprehensive Overview

Abstract

The sports betting market has developed dramatically over the last two decades & nowadays is valued at a billion dollars. The current legal system in India forbids gambling on sports. The main law that imposes severe restrictions on gambling by excluding specific groups is the Public Gambling Act of 1867. It is effectively a dilemma since it prohibits placing a bet on the racing of horses. Online gambling is also excluded because this is a colonial statute. An urgently expanding issue cannot be illuminated by the current framework. Sports betting must exist, and it appears that legalising gambling is the only option to address this unusual situation. Several panels, including the Lodha Committee and the Mudgal Committee, have firmly backed legalizing sports betting. Sports betting regulation will be financially advantageous towards the govt., contribute to job growth, and lessen the danger posed by the illegal market.

The premise is based on the rule the any game is decided totally upon the chance or else luck, although participating cutting-edge sports necessitates the use of one’s talent and expertise taking part in things. The study paper examines a serious issue of the present day and makes an effort to offer a solution. To arrive at clear conclusions, the authors of the aforementioned paper will compare various scenario and judge the current situation under the current legal aspects and regulations.

Keywords: Fantasy betting, gambling, legality, India, legislation, regulations

Introduction

“To play a game for money or property or to bet on an uncertain outcome”[1] stays one definition of gambling. It has long seen as the favourite time pass for individual watching the games, in addition it continues to have a place in very culture of Indians. Old Texts and manuscript show texts such as the Mahabharata talking about gambling.

“Betting” refers to the action against placing a bet for a particular result of athletic action in sports.[2] Nowadays, betting piques people’s curiosity in sports and turns them into a rich, yet illegal, sector. Sports consist of all out-door activities, cricket betting being one of the most popular among the Indians. When cricket took off in India in the 18th century, gambling reached its peak there, but the “Public Gambling Act of 1867” put restrictions on how often people could visit “Gambling Houses” and operate them.

Despite the fact that bookmaking is illegal in India, a thriving sector with an estimated annual valued at over €240 million has managed toward operate there undetected by home-grown, nationwide, and uniform global authorities.[3] The growth of such a sizable market has resulted in a sharp increase in the amount of criminality and corruption associated with sports betting. While public opinions of bookmaking have changed, with wagering nowadays measured an acceptable kind of entertainment, legislation of India has failed to keep pace with the times.[4]

Research Methodology

This paper’s research was conducted using a thorough methodology that combines qualitative and quantitative techniques. Analysis of statutory provisions, case law, and judicial rulings pertaining to fantasy betting and gambling are among primary sources of information. To get a complete grasp of the topic, secondary sources such scholarly articles, research papers, and reports are also looked at. The research technique comprises a thorough examination of the current legal system, viewpoints from key players, and empirical information about participation patterns and effects.

Literature Review

An overview of the body of knowledge regarding the legitimacy of fantasy betting and gambling in India is provided by the review of the literature. It examines many academic studies, reports, in addition papers that have been written about the topic. The literature review illustrates the various viewpoints and justifications put forth by politicians, business players, and legal professionals. It acts as the starting point for the analysis and arguments that follow in this research article.

India’s current gambling situation

If we consider the existing lawful structure, the Public Gambling Act of 1867 prohibits wagering and betting on sports. Gambling is defined as “wagering or betting, but does not include a lottery” in Section 2(b) of the legislation.[5] The Indian Constitution’s Article 372(1), which states that “Notwithstanding the repeal by this Constitution of the enactments referred to in Article 395 but subject to the other provisions of this Constitution or the law enforced in the territory of India immediately prior to the commencement of this Constitution shall continue in force therein in altered, repealed, or amended by a competent legislature or other competent authority,” provides the legal foundation for the act. As stated in entry 62 on the state’s list contained in the constitution’s seventh schedule,[6] a state’s legislative possesses the jurisdiction for establishing tax and gaming regulations. The primary purpose of engaging in gambling new legislation on all stages want to restrict and limit making a bet in venues known as “Public Gambling.”

Bookmaking on sporting events is a multibillion-dollar illegal industry. Furthermore, the FICCI assessed the worth of the illicit marketplace in 2016 as being roughly $10 lakh crore.[7] Although legalisation does not completely wipe down the gambling sector, requiring providers to retain computer-generated and physical documentation will be extremely beneficial. Despite being uncontrolled, the sector nonetheless gives thousands of young people across the nation a means of support.

India Online Gambling

Around the world there are 2 types of gambling. Casino-style gambling, including rummy and poker, is the earliest sort of gambling. Another reason is that it’s categorised as betting in sports, bets are put on athletic activities when participants are playing in real time. Sikkim, as well as Goa, were the two Indian states that allow casino gambling. Sikkim, on the other hand, remains one of the few states which has legalised online gambling at casinos.

In the second scenario, bets are placed through organisations such as Betfair and Bet365, which exist elsewhere than India and allow customers to gamble on the competitions on the internet in real-time. Nonetheless, betting in sports is not lawful in the Indian sub-continent in India. These internet pages don’t come under the ambit of law in India. In this scenario, any person from India might be eligible to place bets on sites hosted on servers located in countries wherein gambling is legal. This might be carried out by making virtual wagering on these types of sites, paying for it, and then getting the payment through a wire transfer, a bank transfer, or another form of payment. However, since wagering on games apart from racing on horses is illegal in India, the govt. has come up with ways to prohibit gambling online.

The Govt. of India depends on the provisions of section 67 of the IT Act in the absence of particular legislation,[8] this sanctions a penalty of no less than one lakh rupees and a jail term of no more than five years on anyone who discloses, transmits, or forces to be released in digital format any materials comprising objectionable explicit substance, or that negatively contributes to the degradation of already corrupted persons. Because wagering and betting on sports were prohibited in the nation of India, any site that allows customers to take part in these kinds of activities is going to be proclaimed corrupt or wicked as per the previously mentioned regulations.

The Foreign Exchange Management Act of 2000[9] governs exchange rates, and transfers of money between India to other nations, including the flow of capital from abroad into India. Purchase of tickets to lottery draws, illegal periodicals, soccer pools, giveaways, and any other comparable events is forbidden as per the Schedule Financial Exchange Management Act, 2000 under Rule 3. Transactions in action towards gambling will be prohibited under this rule, this opens the door for other kind of betting. As a consequence, nobody would have been allowed to make payments to participate on these kinds of websites. In addition, Section – 3 of the Foreign Exchange Management Regulations (Foreign Currency Amounts), 2000, that restricts any citizen from India from opening their doors, grasping or else keeping an account in foreign currencies despite special permission granted by the RBI, will also be applicable to any Indian resident that tries to participate in gambling online via such websites through a currency in a foreign account within countries where betting on any kind of sports is legitimate.

What Justifies the Legalisation of Betting on Sports in India?

1. Unavoidably existing in some capacity

Undeniably gambling has grown into an important sector within the country of India. A single justification regarding why betting on sports ought to be regulated in the country or anyplace else in the entire world is the effect that it’s having on civilization. Betting in sports has grown to become a simple way to earn income.

A large segment of the Indian population is impoverished. Individuals who lack finances and other amenities are driven to wagering since it appears to be an easy way of earning income. It is widely assumed that wagering can’t be entirely eliminated and will always be present in some form or another.

1. Not Chance it about Skills

With accordance to Section 12 of the PGA of 1867, anything mentioned previously in the sections will be considered to taint a game of simple expertise, anywhere performed. The players betting should have data, application, and logical skills. It is matter of utmost concern to decide whether it is about chance or skill. Rex v. Fortier’s[10] situation was interpreted as a game of chance. Where judgement, practise, expertise, or skilfulness’ truly serve on no account frustrated by chance, it is determined totally or in part by lot or random chance. A “game of skill” contrasts with a “game of chance,” when winning is a detrimental factor by better knowledge, focus, or strength, ability, or practise. Boat racing, horce racing, baseball, and football are all considered to be sports of ability, according to the S.C. mentioned in Dr. KR Lakshmanan v. State of Tamil Nadu.[11] The legal system is odd in that it permits gambling on horse racing but forbids it in other sporting events. The Apex Court’s rulings from the case of State of Bombay v. R.M.D. Chamarbaugwala[12] and State of Andhra Pradesh v. K Satyanarayana[13] clearly establish the following:

1. Competitions where winning requires a high level of skill are not “gambling.”
2. A game would be considered a “game of mere skill” even if there was a significant amount of chance involved.

In all of their rulings, courts have maintained that all sports that fall not under the class of “game of chance” but “game of chance.” Racing of  horse is a “game of skill,” has been permitted. The final result of a race between horses was demonstrated to be determined by a variety of elements, such as the horse’s technique, health, and inherent potential, its jockey’s ability, the amount of weight it was carrying, plus the race’s overall their distance, each of which constitute unbiased information which gamblers would evaluate. Similar to other sports, it is necessary for the person placing the wager to have knowledge of the field conditions, the weather, the team makeup, and the current form. Therefore, it follows that legalising sports betting is a good idea.

1. Fantasy Sports are similar to Gambling.

Online fantasy sports market is been expanded tremendously in the last 10 years. There are many online fantasy sports platforms available in the form of websites and software like Dream11. In online fantasy sports games, the player has to pick a team consisting of each of the individuals participating in a particular game in one of the sports on a particular day in question. Upon forming a team, the individual must participate in a contest provided on these websites by submitting an entry fee. There are various such events, with varying numbers of participants and monetary prizes. The entry fees and rewards differ between contests. Users must normally choose their squads prior to the commencement of the game. Right away as the game starts, each player wins points according to the manner in which he plays. The individual’s overall score is the total of each point earned by each member of his chosen squad. Users are ranked according to their squad’s total score and highest scorer get the money.

This sector had been involved in a major legal conflict of its own. In Humphrey v. Viacom,[14] as complainant claimed that admission fees were a sort of bet or gamble because the points obtained by those who took part were mainly decided by chance, despite possible player hurts as well as other totally unforeseen occurrences. As per the ruling of the court, the petition was dropped since selecting athletes for an online team needs an enormous amount of analytic ability and expertise.

The Nagaland Prohibition of Gambling and Promotion of Online Games of Skill Act, 2005[15] which was introduced in the state of Nagaland, India, that covers fantasy sports as a “game of skill.”[16] In 2017, the Haryana & Punjab High Court determined that Dream11 is essentially a game that relies on skill. The High Court discarded the petition, quoting the R. Lakshman case in the ruling it issued. In addition, it was established that everybody participating in online fantasy sports requires a high level of analytic ability, prudential behavior, and discretion. The court completely supported the respondent Dream11 that taking part in online fantasy team apps necessitates an ability to assess game variables.

To succeed in online fantasy sports, individuals have to utilise their player information, record history, and data, in addition to their abilities in player selecting and speculation. Online fantasy sports and wagering are very comparable as they both demand the same combination of analytic athletic ability. A key difference between the two is that gambling happens instantaneously, as compared to online fantasy sports, in which the squad is constructed by all the player right before the game starts. Furthermore, betting necessitates a greater level of analytical skill in betting on fantasy sports as it necessitates a person studying game circumstances in real-time and adjusting his bets accordingly. The legal structure is unusual in that it allows fantasy betting on sports yet prohibits real betting on sports.

1. Financial gains are huge

The financial advantages that gambling brings to the states are another reason in favour of legalising it. Gambling as a source of income is not new; even during Kautiliya’s reign, the sector was supervised by the govt and subjected to a 5% victory tax. Legalising playing games reduces the illicit market while additionally generating revenue for the government’s budget. Indian engagement in the gambling field is believed to be within sixty billion dollars to eighty billion dollars, although other, latest assessments put a greater value on the industry as a whole. In accordance with the KPMG report from 2010. Even a realistic estimate suggests that legalising betting on sports might generate hundreds of thousands of crores in revenue from taxes for the government of India. The authorities will obviously lose a significant amount of revenue because, if gaming were legalised, licences would be available for a price, and a GST would be applicable to online gambling activities, so profits will be taxed.

• Eradication of black market

In accordance with Law Commission Report No. 276, a comprehensive prohibition against betting on sports wouldn’t abolish it;[17] It would instead push them into a clandestine market. Based on the evaluation, gambling that is unlawful increases the influx of black money entering the economy while causing enormous losses in money to the nation as a whole since earnings aren’t taxed. In a word, such an unlawful company has a negative impact on the national economy.

The study also highlights why there’s presently little oversight on Indian gambling in the sports sector, and it is instead operated as a black market by arranged criminals. A significant amount of the revenue produced by gambling businesses is either shipped away from the country or used for illicit ventures. Because the bulk of purchases is performed in cash, it is hard to maintain meticulous records of them, which means no trace of the funds exchanged exists. Justice Mukul Mudgal in his book discusses the difficulties that investigating organisations face in tracking down bookies who indulge in betting on sports as well as the revenue that they create.  The Mudgal Committee research addressed the question and contends that legalising betting on sports will reduce the number of black funds and its influence on organised criminal organisations while additionally helping authorities in tracing down individuals and restricting their field of investigation.

Conclusion

The legalisation of sports betting has been endorsed by numerous organisations and groups. “That’s been our view, if the industry was regulated you could actually work with them, monitor them better and everything would be legal, so there is reason to go underground,” said Haroon Lorgat, a former chief executive of the International Chamber of Commerce. [18] The Lodha committee supported legalising gambling and suggested including the following protections in the laws governing it:[19]

• In order to ensure that the betting shops and individuals who conduct business there are strictly regulated, regulatory watchdogs would be required; otherwise, their registrations would be revoked.
• They would need to be provided by the Players, Administrators, and others directly connected to the sport. In the interest of openness, it was suggested that the following protections be included in the statute governing betting.
• Additionally, a licence would have to be given to the bettors, including records of their identify and age.
• Those who encroach upon the licence and other circumstances would need to face severe penalties.

Legalising sports betting would aid in controlling this unorganised sector and the dangers that come from clandestine markets. If the industry is legally regulated, the government can gain money in the form of taxes as well. Legalising sports betting in India would improve tourists, tax income, company revenue, and employment. In India, legalising sports betting is unquestionably necessary.

Author :-

-Harshit Pandey

University of Petroleum & Energy Studies, Dehradun.

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[1] MERRIAM WEBSTER, https://www.merriam-webster.com/dictionary/gambling.

[2] mukul mudgal, law and sports in india 165 (Lexis Nexis,2011).

[3] Paul Kelso, Government presses India to legalize gambling and stop spread of ‘cancer’; inside sports, THE DAILY TELEGRAPH (London), June 8, 2023

[4] Jaydev Mody et al., Should gambling be legalized, THE HINDU (June 8, 2023), https://www.thehindu.com/opinion/op-ed/should-gambling-be-legalised/article23385128.ece.

[5] The Public Gambling Act, 1867.

[6] A Barathakur, ‘Lotteries Revenue and social costs: A case for total ban on state sponsored gambling’, 2 SCC 1, (2003).

[7] Bet on legalising gambling: There are big gains – from revenue to bringing down crime, FINANCIAL EXPRESS (June 9, 2023 3:12 AM), https://www.financialexpress.com/opinion/bet-on-legalising-gambling-there-arebig-gains-from-revenue-to-bringing-down-crime/1234567/

[8] Information Technology Act.

[9] Foreign Exchange Management Act.

[10] Rex v. Fortier, 13 Que K.B, 308

[11] Dr. K.R. Lakshmanan v. State of Tamil Nadu (1996) 2 SCC 226.

[12] State of Bombay vs R.M.D. Chamarbaugwala, (1957) 1 SCR 874.

[13] State of Andhra Pradesh v. K. Satyanarayana, (1968) 2 SCR 387).

[14] Humphrey v. Viacom, 2007 BL 38423, (DNJ 2007)

[15] Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, (2016) (India).

[16] Sri Varun Gumber vs The Union Territory of Chandigarh & Ors., (2017), CWP No. 7559.

[17] Dr. Justice. B.S. Chauhan, Legal Framework: Gambling and Sports Betting including in Cricket in India, Law Commission of India, 8th June, 2023.

[18] ICC recommends legal betting in India, HINDUSTAN TIMES (June 9, 2023, 11:49AM), https://www.hindustantimes.com/cricket/icc-recommends-legal-betting-in-india/storyQXXHK5T2MhYE0s1HzV

[19] Justice R.M. Lodha, Report of The Supreme Court Committee on reforms in Cricket, The Supreme Court Committee, 9TH June, 2023.