Is Online Gambling Legal in India?

Are Online Casinos Legal in India?

Everyone loves playing in online casinos in India, but many are still confused about whether they are legal. To put it simply, online gambling in India is a bit of a grey area. Although the law proposes a fine for online gambling, no one has ever been prosecuted for it.

The current gambling laws in India are a bit vague. They mostly cover skill and chance-based games in land-based casinos and ignore the digital revolution. Gambling is a big part of Indian culture and it will never be banished from the country offline or online.

Regulated States

So far, 13 states in India have legalized certain forms of gambling. These include the lottery and some skill-based games. Gambling is fully legalized in Goa and Sikkim. The laws in both states come with restrictions.

For example, gambling is only stipulated in 5-star hotels. This is done to prevent it from being accessible to just about anybody, which we consider discriminating. Think of Goa and Sikkim as India’s Vegas and Jersey. These are the states you go to if you’d rather play offline.

Goa

There’s a total of 10 casinos in Goa. Six of these are land-based and the others are floating casinos on the Mandovi River. According to the Public Gambling Act of 1976, land-based casinos in Goa can either be set-up at 5-star hotels or offshore vessels.

All casinos need special permission from the government to operate.

Sikkim

Sikkim is the second Indian region where gambling is regulated and allowed. Currently, there are only 2 casinos in Sikkim. The state is also the first one that planned to offer online gambling licenses in 2010.

Unfortunately, the proposal failed. Sikkim permits online lottery that accepts bets from players all over the country.

The Public Gambling Act, 1867

The Public Gambling Act of 1867 is still the most relevant act that regulates gambling in India. It is over 150 years old so understandably there’s no mention of online gambling in it. It is the first of its kind, though, that strictly prohibits gambling on chance-based games in the Asian country.

According to the Act, running a casino or any kind of gambling activity is prohibited. Players are also not free to visit it, with penalties set at INR 200 and INR 100 respectively. As all gambling laws in India are still based on the 1867 Act, online gambling is being exploited as a legal loophole.

The Payment and Settlement Act, 2007

The Payment and Settlement Act of 2007 regulates payments online through a variety of payment methods. These include e-wallets. All forms of electronic payments are regulated by the Reserve Bank of India – it is the only institution with the authority to authorize any payment system it sees fit.

The RBI can also make policies on demand in accordance with the Act for everything that involves payment processing including online gambling. This has led to numerous problems such as the PayPal fiasco in India, since the RBI has the right to tell banks to refuse or decline payments or deposits involving a particular method.

The IT Act of 2000

Online gambling in India was restricted further with the IT Act of 2000. It primarily deals with cybercrime and electronic commerce in India. The act allows the Indian government and courts to block websites with unlawful content.

As such, it restricts the creation of online casinos even though pressure is mounting for online gambling to be regulated in India. In order for that to happen, the IT Act must be adjusted since it blocks sites with unlawful content.

Game of chance and game of skill

The legal landscape of gambling in India makes a clear distinction between games of skill and games of chance. To put it simply, India allows betting on certain skill-based games and has banned games of chance.

As you may already know, gambling is strictly prohibited in India except for lotteries and horse racing. The Indian government has also legalized Rummy which it considers a game of skill unlike three-card games known as flush or brag.

The tax landscape

With the gambling laws in India being so vague, interpreting tax procedures is impossible. Of course, this doesn’t apply to Goa and Sikkim where gambling is regulated. Players in these casinos must report winnings which are taxed at around 30%.

When it comes to online gambling, you don’t need to worry about taxes. Since it is unregulated, you’re actually playing outside of the confines of the laws. As such, you get to keep everything you win and shouldn’t report those taxes unless you want to be fined.

Punishment for online gambling

The Public Gambling Act of 1867 mentions penalties for breaking the law – this includes running a gambling facility and playing at one. The fines stand at INR 200 and INR 100 as well as imprisonment of up to one month. As such, they are pretty lenient and not even imposed that often.

The same punishments are stipulated for online gambling yet have never been in effect. There’s still no case of a player being punished for gambling online by the government and there’s a good chance there will never be one due to the outdated laws.

Is anyone being prosecuted

No, no player in India has ever been prosecuted for playing casino games online. You can easily and safely play online without the risk of legal repercussions. As mentioned, the law has fines in place, but they are at the same time so outdated that it’s tough to see anyone getting punished for online gambling (unless you’re running an operation).

Casino License in India

Indian states where gambling is allowed issue licenses to land-based, online or offshore operators. However, the number is pretty limited. Goa, for example, stopped the issue of such licenses in 2018 and has heavily restricted the number of casinos operating in the state.

Gambling has been legalized in parts of India, but it is still a controversial topic for many. Local governments can use powers in order to cap the number of casinos in particular areas and that won’t change anytime soon.

What about the payment options

With the Payment and Settlement Act of 2007, the Reserve Bank of India has the authority to tell banks if they should or should not accept a certain payment method. The RBI has instructed banks not to process gambling transactions which is why Indian players love to use e-wallets.

Since they are not regulated by banks, they can bypass the Act so players can legally receive their winnings. If you use Visa or Mastercard for online gambling, they might sometimes fail because they’re issued by banks.

Outside of Rummy, horse racing, and lotteries, online gambling is illegal in India. The government draws a fine line between games of skill and games of chance. It has prohibited the latter and put online gambling on hold. However, since the law is a bit outdated, you can play casino games online without the fear of repercussions.

Breaking the law is punishable with fines and imprisonment, but to be honest, no one has ever been prosecuted for it.

Yes, you can legally play Rummy in India. The Indian government has deemed Rummy to be a game of skill, not chance. Unlike ‘three card’ games that go under the names of brag or flush, Rummy requires a certain amount of skill.

You must remember the fall of the cards and the building of Rummy hands also requires a bit of skill. Therefore, Rummy is as legal in India as horse racing.

Although there’s no full-blown ban on lotteries in India, they are legal in only 13 states. They are banned in the rest of the states, but where legal, lotteries are immensely popular.

The state of Sikkim also permits online lotteries which accept players from across the country. Other states are still to follow Sikkim’s example with lottery fans hoping that it comes soon.

Regulated Gambling benefits

There are many benefits of regulated gambling in India. The licenses states such as Goa issue ensure that no illegal gambling is taking place which means more money for the state itself. A license also ensures player safety and consistent laws.

In short, the license allows a state to enjoy the benefits of regulated gambling. Without it, online gambling would become a base for corruption and illegal activity.

Conclusion

Online gambling in India may not be completely legal, but it’s not something you should fear. The current legal landscape is based on the outdated Gambling Act of 1867 which many have been rightfully discrediting. India needs new gambling laws that will regulate online gambling that can bring the country billions in revenue each year.

LCG sincerely hopes that a local Indian license that covers all states sees the light of day soon. It’s simply better for everyone and many have been pushing for it. However, the government is still quiet on the matter and we don’t see it happening anytime soon.

Ranjeet Reddy
Last updated on 24th May 2020
by Chief Editor Ranjeet Reddy

Published: 22/05/2020

Categories: Blog