The Indian Contract Act of 1872, which establishes the foundation for legally binding agreements, is the main piece of legislation governing contract law in India. A contract must satisfy fundamental requirements under this law, including offer, acceptance, legitimate consideration, and free consent. On the other hand, Section 30 of the Indian Contract Act, 1872, declares that wager-related agreements are null and invalid and cannot be enforced in a court of law, making them unenforceable.Despite this, the emergence of regulated betting and internet gambling has complicated the legal system, necessitating the interaction of state-specific gambling laws with contract law.
INDIA’S GAMBLING AND BETTING LAWS
In India, gambling and betting have long been controversial subjects, with ethical and legal challenges surrounding their regulation. The major piece of central law regulating gambling is still the Public Gambling Act of 1867, which forbids games of chance but permits games of skill. However, the rise of sports betting and internet gambling has forced a reexamination of current legislation.
The Law Commission’s Recommendations –
Under the direction of Justice B.S. Chauhan, the Law Commission of India filed a report on July 5, 2018, analysing the viability of gambling and betting regulation. The study came after the Supreme Court ordered in 2016 that legislative options be investigated. The Commission suggested a regulated approach, acknowledging the difficulties of enacting a complete ban on gambling and betting.
Framework for Regulation-
The Commission recommended that states pass legislation to control gaming and betting since these activities are under the purview of state legislatures. It did, however, also suggest that Parliament present a model law that states could follow. Furthermore, under Article 249 (in the national interest) or Article 252 (with the approval of two or more states), Parliament could pass legislation pertaining to gaming. The Commission claimed that Parliament has the power to enact laws pertaining to internet gambling.
Licensing and Transaction Restrictions –
- Gambling and betting operations should only be allowed to be carried out by licensed operators in India.
- Either monthly, half-yearly, or annual transaction cap for each member.
- Cashless transactions must be required in order to improve transparency.
- Linking transactions to PANs or Aadhaar to guarantee taxes and stop illicit activity.
Taxation and Economic Impact –
- Gambling and betting-related income should be subject to taxes under the Goods and Services Tax Act of 2017 and the Income Tax Act of 1961.
- A controlled gambling industry might reduce illegal markets and greatly boost state revenue.
- FEMA, 1999, and the FDI Policy have been amended to promote investment in the casino and online gaming industries.
- Potential to increase employment, hospitality, and tourism.
Categorization of Gambling
To ensure responsible gambling, the Commission recommended:
- Appropriate Gambling: Allowed for affluent individuals, with larger stakes.
- Small gambling: Limited to those with lesser incomes and smaller bets.
Restrictions on Participation
Certain categories of individuals should be prohibited from engaging in gambling and betting, including:
- Minors
- Recipients of government subsidies
- Individuals not in the tax bracket under the Income Tax Act or GST Act
Amendments to IT Rules
- Intermediaries are prohibited from hosting or sending gambling-related content under the Information Technology (Intermediary Guidelines) Rules, 2011. To ensure fairness for platforms operating in jurisdictions with regulated gaming, the Commission suggested restricting this limitation to states where gambling is prohibited.
- Criminalization of Match-Fixing and Sports Fraud.
- To maintain integrity in sports, the Commission suggested that match-fixing and sports fraud be classified as criminal offenses, with stringent penalties to deter unlawful practices in sports betting.
The Public Gambling Act, 1867
1. Definitions & Scope:
- Common gaming-house: Any place where gaming instruments are used for profit.
- Gaming: Includes wagering or betting but excludes lotteries and, in some states, horse racing.
- Instruments of gaming: Articles, documents, records, or securities related to gaming.
2. State-wise Modifications:
- States like Assam, Himachal Pradesh, Madhya Pradesh, Punjab, Haryana, Chandigarh, Uttar Pradesh have amendments expanding definitions, punishments, and enforcement procedures.
- Some states have removed exemptions for lotteries and skill-based games.
3. Penalties & Offences:
- Running a Gaming House (Sec 3): Fine up to ₹200 or imprisonment up to 3 months (higher in some states, e.g., Assam: ₹500, MP: ₹1000).
- Being Found in a Gaming House (Sec 4): Fine up to ₹100 or imprisonment up to 1 month.
- Publishing Gaming-Related Content (Sec 4A): Imprisonment up to 6 months and fine up to ₹1000.
- Gaming in Public Places (Sec 13): Police can arrest without a warrant; fine up to ₹50 or imprisonment up to 1 month.
4. Police Powers:
- Search & Seizure (Sec 5): Magistrates or designated police officers can raid suspected gaming houses.
- Presumption of Guilt (Sec 6): If gaming instruments are found, it is presumed to be a gaming house unless proven otherwise.
5. Judicial Provisions:
- False Information (Sec 7): Fine of ₹500 or imprisonment up to 1 month.
- Confiscation (Sec 8): Seizure of gaming instruments and money upon conviction.
- Witness Examination (Sec 10-11): Courts can compel witnesses to testify and grant immunity for cooperation.
6. Exemptions & Special Provisions:
- Games of Skill (Sec 12): Some states (Himachal, Punjab, UP) have repealed this exemption.
- Enhanced Punishments (Sec 15, 15A, 15B): Repeat offenders face double punishment, up to 1-year imprisonment.
7. Miscellaneous Provisions:
- Informer Rewards (Sec 16): Courts may award part of fines to informers.
- Compounding of Offences (Sec 14A – UP Specific): Settlement by paying a fine before trial.
- Non-Bailable Offences (UP Sec 14): Certain offenses made non-bailable.
8. Repeals & Savings:
- Certain sections repealed or modified in different states.
- Some states (Punjab, HP, Manipur) exempt “games of mere skill.”
Case – Jagjit Singh Chawla vs State of Punjab & Ors (30 September, 2024)
As a corruption whistleblower, the petitioner created a video CD that exposed 14 corrupt Ludhiana police personnel who were being tried under Sections 7, 11, and 12 of the Prevention of Corruption Act, 1988. He claimed that these authorities tried to stifle prosecution evidence by conspiring with their superiors. The petitioner filed CRM-M-15929 of 2014 to seek judicial intervention, and on 05.02.2015, the High Court ordered the trial court to guarantee witness attendance. The petitioner and his family were allegedly harassed in retribution, and Sub Inspector Shiv Kumar falsely accused his son in FIR No.10 of 2012 under the NDPS Act. The son was wrongly implicated because of previous complaints against the police, according to the Special Court in Ludhiana, which acquitted him on August 7, 2015.The petitioner’s son made a representation to the Punjab Director General of Police following the acquittal, but nothing came of it. After that, the petitioner filed CRM-M-36644 of 2015 with the High Court, which ordered the authorities to make a decision regarding the representation on October 28, 2015. The petitioner claimed that police personnel continued to harass him after this ruling, threatening to file bogus cases unless he reached a compromise. In order to obtain a prior notice under Section 160 Cr.P.C. prior to any legal action, he subsequently filed CRM-M-38193 of 2015. On November 6, 2015, the High Court ordered the police to give him a week’s notice before starting any legal action against him.The petitioner asserted that he was compelled to pay bribes in order to avoid wrongful implication in spite of this decision. An FIR No.13 of 2016 was filed against him in response to his resistance, citing Sections 294-A, 420 IPC, and 13-A of the Public Gambling Act, 1867. He said that there was proof of police officers getting unlawful pleasure on a CD. The petitioner went to the High Court to request an independent investigation and inquiry against the implicated police officials due to the persistent police harassment.
Since gambling and betting have become more digitalised, it might not be feasible to completely ban them. The Law Commission’s recommendations support a regulated framework that strikes a balance between social duty, economic advantages, and individual freedom. Within the bounds of contract law, a regulated and legalised gaming ecosystem could improve public welfare, reduce illicit betting markets, and increase governmental revenues.
SOURCE – PRS INDIA
