Gambling Laws and Regulations India 2024

ICLG – Gambling Laws and Regulations – India Chapter covers common issues in gambling laws and regulations – including relevant authorities and legislation, application for a licence, licence restrictions, digital media, enforcement and liability.

Chapter Content Free Access

1. 1. Relevant Authorities and Legislation
2. 2. Application for a Licence and Licence Restrictions
3. 3. Online/Mobile/Digital/Electronic Media
4. 4. Enforcement and Liability
5. 5. Anticipated Reforms

1. Relevant Authorities and Legislation

1.1 Which entities regulate what type of gambling and social/skill gaming activity in your jurisdiction?

Relevant Product

Who regulates it in digital form?

Who regulates it in land-based form?

Gaming

Casino gaming (including slots and casino table games such as roulette & blackjack)

Casino games are regulated by state-level laws in India and their digital forms also fall within the ambit of the same laws. Casino games are games of chance and hence are hit by the prohibitions of most state-level anti-gambling laws (“State Gaming Laws”). However, the state of Sikkim permits the offering of casino games such as roulette and blackjack by obtaining a licence under the provisions of the Sikkim Online Gaming (Regulation) Act, 2008 (“Sikkim Act”) and on the condition that the games can only be offered via intranet terminals.

The authority under the Sikkim Act is the Finance, Revenue and Expenditure Department.

The state of Sikkim in the north-east of India, and the state of Goa in the west and the union territory of Daman and Diu in the west regulate casino games in land-based form through state-specific laws. In Goa, Daman and Diu, casinos are regulated under the Goa, Daman and Diu Public Gambling Act, 1976 (“Goa Act”). Casinos in Sikkim are regulated under the Sikkim Casinos (Control and Tax) Act, 2002 (“Sikkim Casino Act”).

The respective authorities for Goa is the Home Department in Goa and for Sikkim, the Tourism Department in Sikkim.

Except in the states of Sikkim and Nagaland which regulate skill gaming through a licensing regime, and in Tamil Nadu (which expressly prohibits real-money poker) the skill variants of poker are not expressly prohibited under any other State Gaming Law. In Nagaland, the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2016 (“Nagaland Act”) identifies poker as a skill game and requires an operator to procure a licence for offering it. For further details, please see question 1.2 below.

For poker played in casinos, please refer to the corresponding cell above on casino gaming. However, certain skill variants of poker (such as Texas Hold’em & Omaha Hold’em) are not hit by the prohibitions under the State Gaming Laws (see the corresponding row below on “Skill games”) and therefore these variants can be played on physical premises too.

Though there can be different formats in which bingo is played, each of these formats (whether played online or land-based) would fall either in the category of lotteries or games of chance. In case of the latter, they would be barred under most State Gaming Laws. For lotteries, only some states permit it under specific conditions, please refer to the corresponding row below on “Lotteries”.

Betting

If the betting is on games of chance, then it would attract the prohibitions under the State Gaming Laws. If it is on casino games, please refer to the corresponding row above. For sports betting and fantasy sports, please refer to their respective rows below.

Sports/horse race betting (if regulated separately to other forms of betting)

Betting on horse races has been judicially recognised as a game of skill and many State Gaming Laws also expressly exclude it from their prohibitions – subject to certain conditions. Since most of the governing statutes are pre-internet, there is no specific regulator or statutory language in most State Gaming Laws for online betting on horse races. However, the race club organising the horse race may impose certain conditions.

The state of Sikkim permits sports betting under a licence through the intranet.

Under the State Gaming Laws, the respective state governments regulate betting on physical horse races. These include states such as Karnataka, Telangana, West Bengal, Maharashtra, Delhi, and Tamil Nadu. Additional conditions may be imposed by the respective race club itself operating under the terms of the licence issued by the state government. Please refer to question 1.2 below.

Fantasy betting (payment to back a ‘league’ or ‘portfolio’ selection over a period of time, for example in relation to sport or shares)

“At the outset, we clarify that fantasy sports are viewed legally as a different category which is constitutionally protected as a legitimate business and de-linked entirely from betting and gambling activities/businesses in India. However, for purposes of this chapter’s format, we have discussed fantasy sports in this section. In most states, fantasy sports are operating within the exemption for games of skill in the State Gaming Laws. There are some exceptions to this. The state of Nagaland has a licensing regime for virtual sports fantasy league games under the Nagaland Act. Rajasthan in 2022 issued a draft bill, namely the Rajasthan Virtual Online Sports (Regulation) Bill 2022 (“Rajasthan Bill”), proposing to regulate fantasy sports in the state under a licensing regime, however the same is not in force yet. In Andhra Pradesh and Telangana, fantasy sports for stakes or winnings are prohibited.”

The contents of the corresponding cell apply except the points on Nagaland and Rajasthan, which apply to online platforms only.

Lotteries

Lotteries have been expressly excluded from the purview of the State Gaming Laws and are regulated by central laws and certain state-level lottery laws (collectively, “Lottery Laws”). Private lotteries, except those permitted under a duly granted licence by the state government, are banned under the Indian Penal Code, 1860 (“IPC”).

In addition to the content in the corresponding cell, states such as Punjab, Kerala, Maharashtra, et al. allow only physical lotteries. Among those state governments that organise lotteries themselves, physical lotteries are conducted by their designated departments or the state finance ministry.

Social/Skill arrangements

“Social” gaming with no prize in money or money’s worth

In the absence of monetary or equivalent stakes, most State Gaming Laws are unlikely to be triggered. Also, as per the content of such games, other laws such as intellectual property laws or laws against obscenity, etc. may be triggered.

The content in the corresponding cell is applicable.

Skill games and competitions with no element of chance

There are specific exemptions for games of skill under most State Gaming Laws and courts have also recognised offering of skill games as a legitimate business activity that is constitutionally protected. No licence is required for offering skill games in most states in India except Sikkim and Nagaland, which have licensing regimes for skill games under the respective Acts.

The content in the corresponding cell applies except the point on Nagaland, which would only apply to online games.

Please note: In addition to the above, it is pertinent to note that with the notification of the Online Gaming Rules (defined below), all “online games” will also be subject to the requirements under the IT Rules 2021 (defined below) issued under the IT Act 2000 (defined below) and all entities classified as an “online gaming intermediary” will need to abide by the obligations under the IT Rules 2021 accordingly. However, whether the Online Gaming Rules apply to a specific “online game” and the nature of the compliance that it needs to meet is a question of fact and needs to be evaluated on a case-by-case basis, depending on the nature of the product and the operator.

1.2 Specify: (i) the law and regulation that applies to the Relevant Products in your jurisdiction; and (ii) – in broad terms – whether it permits or prohibits the offer of Relevant Products to persons located in your jurisdiction.

In India, the legislative powers are divided between the centre and the states under the Constitution of India, 1950 (“Constitution”). Under its Seventh Schedule, the Constitution grants each state (province) of the country the exclusive power to enact its own laws on “betting and gambling” for its own territory. The Public Gambling Act, 1867 (“Public Gambling Act”), a colonial-era statute still in force, has been adopted by several states including Uttar Pradesh, Madhya Pradesh, and Punjab & Haryana, with some states making their state amendments to it too. Other states have enacted their own pieces of legislation to regulate gaming/gambling activities within their territories under their State Gaming Laws. Most of these are broadly modelled on the Public Gambling Act, albeit with suitable modifications.

A majority of the State Gaming Laws are pre-internet statutes and therefore prohibit gambling activities only in physical premises which are referred to as “gaming houses” or “common gaming houses”. The states of Sikkim and Nagaland have contemporary State Gaming Laws and a licensing regime for online games. Sikkim has it for online games and sports games with the conditions that they can be offered only via the intranet and to the exclusion of their state residents. Nagaland has a licensing regime only for online skill games and a prohibition on gambling. The states of Telangana and Andhra Pradesh prohibit all activities in relation to real-money online gaming including skill gaming, whereas the state of Tamil Nadu currently prohibits real-money online rummy and poker.

Most state laws have specific exemptions for games of “mere skill”. “Mere skill” has been judicially interpreted to mean games preponderantly of skill. However, instead of laying down an objective criterion to distinguish games of skill from games of chance, courts in India have arrived at their determination based on the facts and circumstances of each case. The state of Nagaland has a licensing regime for skill games, with the Nagaland Act also including a list of recognised games of skill. Sikkim has a licensing regime for all online games – whether of chance or a combination of skill and chance.

The states of Telangana and Andhra Pradesh in the recent past amended their respective State Gaming Laws by either diluting or removing the express exemption provided to skill games and imposed a blanket prohibition on all games played for stakes, including skill games and online games. Legal challenges to the amendments done to the Andhra Pradesh Gaming Act, 1974 and the Telangana Gaming Act, 1974 are pending before the respective regional High Courts, and now before the Supreme Court.

In April 2023, the state government of Tamil Nadu implemented the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022 (“TN Act”) to ban online gambling and real-money online games of chance in the state of Tamil Nadu. The TN Act prohibits online gambling (which has been defined as online wagering or betting and includes playing of any online game of chance with money or other stakes). An online game is designated as a game of chance if it meets any of the four criteria listed for the latter or is included in the Schedule (as at present, real-money rummy and poker are in the Schedule). The TN Act has also set up a Tamil Nadu Online Gaming Authority for implementing some of its provisions.

In April 2023, the Union Ministry of Electronics and Information Technology (“MeitY”), by virtue of the rule-making powers available to the central government under the Information Technology Act, 2000 (“IT Act 2000”), implemented a new central legal framework for online gaming through amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (“IT Rules 2021”). These amendments (“Online Gaming Rules”) propose a light-touch, co-regulatory regime whereby MeitY-recognised, independent self-regulatory bodies (“SRB”) will verify whether an “online real-money game” is to be made available to the general public or not – in accordance with the baseline criteria prescribed by the Online Gaming Rules.

The Online Gaming Rules attempt to regulate online gaming platforms by treating them as an “online gaming intermediary” (“OGI”) and prescribing intermediary due diligence obligations for them under the IT Rules 2021. An OGI has been defined in the Online Gaming Rules as “any intermediary that enables the users of its computer resource to access one or more online games”. Under the Online Gaming Rules, an online game can be a “permissible online game” if (i) it is not an online real-money game, or (ii) it is an online real-money game but is “verified” by an SRB in accordance with the baseline criteria prescribed by the Online Gaming Rules and any additional criteria prescribed by the SRB itself.

Casino

Casino products (including table games, live dealer and slots) fall within the category of “games preponderantly of chance” and therefore would be hit by the prohibitions under most State Gaming Laws. The following states and union territories are the only exceptions to this general rule as far as the State Gaming Laws are concerned.

• The Goa Act allows the offering of “games of electronic amusement/slot machines” in five-star hotels in the territories of Goa and Daman and Diu under a licensing regime. Table games and gaming can also be offered on board offshore vessels, under the terms of the licence.
• Similarly, in Sikkim, the Sikkim Casino Act read with Sikkim Casino Games Commencement (Control and Tax) Rules, 2007 also prescribe a licence regime for casino games in five-star hotels within the territory of Sikkim. The Sikkim Act covers certain casino games such as roulette, casino brag and blackjack. These games may be offered through the intranet within the state of Sikkim only.

Poker

While certain State Gaming Laws/courts in certain states have specifically recognised poker as a game of skill, a few others have designated it as a “game of chance”. For instance, the West Bengal Gambling and Prize Competitions Act, 1957 specifically excludes poker from the definition of “gaming or gambling”. Judicial pronouncements of the local High Court have also asserted that playing poker cannot attract penalisation or harassment by the police. This, however, is likely to extend to formats such as Texas Hold’em and Omaha Hold’em poker only. The state of Nagaland also expressly categorises poker as a game of skill. On the other hand, the High Court of Gujarat has opined that poker is a game of chance; however, this matter is currently under appeal before a larger bench of the High Court of Gujarat. The TN Act expressly designates poker as an online game of chance and prohibits it for money or other stakes in Tamil Nadu. As far as the Online Gaming Rules are concerned, it may be argued that poker will not be hit by the restrictions thereunder if the OGI is able to make a case for its skill preponderance before the SRB.

Bingo

As stated in the table above, most formats of bingo may fall either in the category of lotteries or games of chance. In case of the latter, they would be barred under most State Gaming Laws. For lotteries, please refer to the respective section below.

Betting

If the betting is on games of chance, then it would attract the prohibitions under the State Gaming Laws. If it is on casino games, please refer to the relevant row at question 1.1 above. For sports betting and fantasy sports, please refer to the relevant section below.

Horse Race Betting

The Supreme Court has held betting on horse racing to be a game of skill and consequently entitled to the skill games exemption under the State Gaming Laws. In addition, there is a specific exemption for betting on horse races in most State Gaming Laws too. The latter is subject to statutory conditions prescribed by the respective State Gaming Law, such as the betting taking place on the day of the race, within the state government-designated enclosures, etc. Also, the club where the race takes place (turf club) may impose additional conditions on betting.

In case of online betting on horse races, not only would the requirements under the State Gaming Laws have to be met but also the conditions imposed by the respective turf club: all of which would be difficult to do. However, one may argue that in light of the Supreme Court’s judgment in Dr. K. R. Lakshmanan v. State of Tamil Nadu (“Lakshmanan Case”), betting on horse races exists independently as a skill game without having to rely on the specific exemption for it within the State Gaming Laws. The state governments of Maharashtra, Telangana, Karnataka and West Bengal have granted permission to the respective turf clubs to offer online betting on horse races. However, the permission granted to the Bangalore Turf Club in July 2020 was withdrawn in December 2020 after a public interest litigation (“PIL”) was filed in the Karnataka High Court questioning the legality of the permission.

During the proceedings, the court sought a response from the state government as to the legal basis on which the said permission was granted. However, instead of giving its response, the state government withdrew the permission and the said PIL was consequently disposed of. On the other hand, the permission granted to the Royal Calcutta Turf Club in West Bengal has not been challenged and the club has also tied up with foreign race operators to offer their races on an online betting platform. Meanwhile in Karnataka, enforcement action has also been reported against those engaging in online betting on horse races.

Sports Betting

As mentioned above, the issue of whether sports betting is a game of skill or not is pending before the Supreme Court in the case of Geeta Rani v. Union of India (“Sports Betting Case”). The petitioner therein has impleaded the central government and almost all state governments as respondents, seeking legalisation and regularisation of sports betting. However, the case is yet to get a proper hearing and was last listed for hearing in October 2019. Notably, while there exist arguments in favour of sports betting being a game of skill, the current perception of most law enforcement authorities in India, the governments across states and at the centre is that sports betting is a prohibited gambling activity, irrespective of the format and medium. However, whether a particular product can be legally offered in India is a question of fact and needs to be assessed on a case-by-case basis depending on the nature of the product and the entity offering it.

Fantasy Sports

The High Courts of Punjab & Haryana, Bombay and Rajasthan, in different cases, have upheld the status of the fantasy sports format offered by leading operator Dream11 (as per the charter of industry body Federation of Indian Fantasy Sports) as a game of skill. Consequently, it was exempted from the prohibitions under the State Gaming Laws and was also protected as a legitimate business activity under the fundamental rights granted by the Constitution. Affirming this in a significant observation, the Supreme Court in Avinash Mehrotra v. State of Rajasthan held that the issue of legality of fantasy sports was no longer res integra and petitions challenging the legality have repeatedly been dismissed by the Supreme Court. However, it also noted that an appeal from the Bombay High Court judgment delivered in the case of Gurdeep Singh Sachar v. Union of India & Ors. was pending before a separate larger bench. The said appeal is still at a preliminary stage, with notices having been issued to the relevant parties and the effect of the impugned Bombay High Court judgment stayed.

The Nagaland Act has enacted a licensing regime for offering skill games, including fantasy sports. The said Act expressly recognises “virtual team selection games” as a game of skill. The Rajasthan Bill proposes to regulate online fantasy sports in the state. If enacted, fantasy sports and their operators would be regulated under a licensing regime. The licensing authority in Nagaland is the Finance Commissioner. If the Rajasthan Bill is introduced, then the licensing authority will be the officers appointed by the state government.

Lotteries

The Lottery Laws permit only certain kinds of licensed private lotteries and authorise the state governments to run lotteries subject to the conditions and regulations prescribed in the Lottery Laws. As per the Constitution, government lotteries fall within the legislative domain of the central government in India, and hence state governments must abide by the conditions prescribed under the Lottery Laws in relation to government lotteries. The state government may appoint private persons or companies to facilitate the conduct of the state-run lottery. Some states such as Madhya Pradesh and Bihar have completely banned lotteries, while some other states have permitted only not-for-profit lotteries under a duly granted licence. Currently, approx. 13 state governments in India offer lotteries.

Social/Casual Gaming

As mentioned above, in the absence of monetary or equivalent stakes, most current State Gaming Laws and the Online Gaming Rules are unlikely to be triggered. However, a platform offering free-to-play games will still have to abide by the due diligence obligations prescribed for an OGI by the Online Gaming Rules. Also, depending upon the content of such games, other laws, such as intellectual property laws, information technology laws, consumer protection laws or laws against obscenity, etc., may be triggered. These include but are not limited to the IPC, the IT Act 2000, and the Indecent Representation of Women (Prohibition) Act, 1986 (“IRWA”).

Skill Games

As mentioned before, most State Gaming Laws have express exemptions for games of skill wherever played (including with monetary or equivalent stakes) and hence such games may be offered in online and land-based modes in such states – but subject to them being duly verified under the Online Gaming Rules in case they are offered for monetary or equivalent stakes. Also, as discussed above, the states of Telangana and Andhra Pradesh have banned skill games by making amendments to their respective State Gaming Laws. Hence, currently, skill games for stakes or winnings in money or otherwise cannot be offered in these states. As discussed above, the states of Sikkim and Nagaland have a licensing regime for skill games. The TN Act designates rummy and poker as online games of chance and prohibits them for money or other stakes in Tamil Nadu. It also prohibits online games that involve the use of cards, dice, wheels or such other device that works on a random outcome or an event generator.

2. Application for a Licence and Licence Restrictions

2.1 What regulatory licences, permits, authorisations or other official approvals (collectively, “Licences”) are required for the lawful offer of the Relevant Products to persons located in your jurisdiction?

The need for licences is dependent on the type of product and the medium through which it is offered. In India, certain Relevant Products require licences which are mentioned below. For brevity, we have covered the key ones only.

• Casino: For the states of Goa and Sikkim and the union territory of Daman and Diu, a licence is required and the same is available for providing casino products in five-star hotels under the Goa Act (which also applies to Daman and Diu) and the Sikkim Casino Act, respectively. For offshore casino products, a licence is required and is available under the Goa Act.
• Skill games, poker and fantasy sports: As mentioned before, games of skill are excluded under most State Gaming Laws. However, a licence is required in the states of Nagaland and Sikkim to provide skill games online, including but not limited to poker, rummy and virtual sports fantasy league games. Under the TN Act, an online game provider based in Tamil Nadu will be required to obtain a “certificate of registration” from the Tamil Nadu Online Gaming Authority. In addition, skill games (including poker and fantasy sports) will require a verification from an SRB under the Online Gaming Rules in order to offer their games to users through online means.
• Bingo: Though there can be different formats in which bingo is played, each of these formats would fall in the category of either lotteries or games of chance. In case of the latter, they would be barred under most State Gaming Laws. However, a licence will be required for operating in the state of Sikkim. For lotteries, please refer to the respective section below.
• Betting: Most Indian states prohibit betting on games preponderantly of chance. With regard to betting in casinos, please refer to the corresponding row on casino gaming at question 1.1 above, and for sports/horse races, please refer to the section below.
• Sports/Horse betting: Betting on physical horse races is subject to the conditions respective race clubs may impose and also subject to the regulations that the club itself is operating under, as per the terms of the licence issued by the respective state government. Apart from a few states, betting on horse races online may be possible without a licence by relying on the Lakshmanan Case. This is also subject to the terms, conditions and permissions applicable vis-à-vis the domestic horse races in specific turf clubs. Creative structurers can be explored to allow operators to provide these games.
• Lotteries: Lotteries are either state organised or permitted under specific conditions by the state governments in India. The Lottery Laws allow state governments to nominate a corporate or an individual through an agreement to function as the “distributor or selling agent” for government lotteries. The said individual or corporate sells lotteries for the organising states. Only state-authorised persons can sell lotteries.
• Social gaming: No licence is required for engaging in free-to-play games in a majority of the states of India. However, such games continue to be subject to the due diligence requirements on an OGI under the Online Gaming Rules. Under the TN Act, an online game provider based in Tamil Nadu will be required to obtain a “certificate of registration” from the Tamil Nadu Online Gaming Authority.

2.2 Where Licences are available, please outline the structure of the relevant licensing regime.

In India, there are only a few states that follow a licensing regime; for brevity, only key points are mentioned below:

Goa, Daman and Diu

• Scope: Casino licences are issued to operators conducting gambling activities in five-star hotels and offshore vessels by the government of Goa. The Goa Act also grants licences to operators offering “games of electronic amusement/slot machines” in five-star hotels in the territories of Goa and Daman and Diu.
• Fees: The annual licence fee for a land-based casino in a five-star hotel ranges from INR 11,00,00,000 (approx. USD 1,329,395) to INR 44,00,00,000 (approx. USD 5,317,611), depending on the area of the casino. The annual licence fee for offshore casinos ranges from INR 27,50,00,000 (approx. USD 3,323,506) to INR 44,00,00,000 (approx. USD 5,317,611), depending on the offshore vessel passenger capacity. These fees are subject to annual increases.

Sikkim

• Scope: Gambling activities are regulated by the Sikkim Casino Act and Rules and the licences are granted to the operators by the Sikkim government under the same Act. It is pertinent to note that the licensees are permitted to conduct their gambling activities only in five-star hotels. The relevant details are enumerated under question 2.4 below. The state of Sikkim offers licences for intranet games under the Sikkim Act and Rules. The intranet games include: (a) super pan 9; (b) roulette; (c) keno; (d) blackjack; (e) backgammon; (f) punto banco; (g) chemin-de-fer; (h) bingo; (i) baccarat; (j) poker dice; (k) casino brag; (l) poker; (m) pontoon; and (n) other sports games that involve prediction of results of sporting events and placing a bet on the outcome, in part or whole, of such sporting event. According to the Sikkim Act and Rules, the operator must only function in Sikkim and can only be a company incorporated in India.
• Fees: The licensees under the Sikkim Act and Rules are required to pay a provisional fee of INR 1,00,000 (approx. USD 1,210) and INR 1,00,00,000 (approx. USD 121,048) as a licence fee for a five-year licence with an online gaming levy at a percentage as may be notified from time to time by the state government.

Nagaland

• Scope: Under the Nagaland Act, the operators need to obtain licences for games of skills conducted through online media: (a) virtual sports fantasy league games; (b) chess; (c) virtual team selection games; (d) sudoku; (e) virtual stock/monopoly games; (f) quizzes; (g) virtual mystery and detective games; (h) binary options; (i) virtual adventure games; (j) bridge; (k) virtual combat games; (l) poker; (m) virtual boxing; (n) rummy; (o) virtual wrestling; (p) nap; (q) virtual fighting; (r) spades; (s) virtual sports (including soccer, cricket, archery, snooker, bridge and pool); (t) virtual racing games (including horse and car racing); (u) solitaire; and (v) virtual golf. A licence shall be issued only to a person or entity that is incorporated in India and has a substantial holding and controlling stake in India. The executive decision-making powers and process would be required to be performed from within the territorial boundaries of India and the technology support provision, including hosting and management of the website, placement of servers, etc., shall remain in India. The licensee must not have a criminal history and the licence is issued to only those entities who have no interest in offline or online gambling activities in India or elsewhere.
• Fees: An annual licence fee for a game for the first three years is INR 10,00,000 (approx. USD 12,085) or INR 25,00,000 (approx. USD 30,212) for a bouquet of games and for the next two years an individual game licence is INR 20,00,000 (approx. USD 24,171) and INR 50,00,000 (approx. USD 60,428) for a bouquet. There is an additional royalty of 0.5% to be paid by licensees. The eligibility enumerated above should be read in conjunction with the criteria covered in question 2.9 below.

Tamil Nadu

• Scope: A “local online games provider” (an online games provider whose central management and control of the service is in Tamil Nadu or whose service that is made available to customers is hosted in Tamil Nadu) whose online games are not hit by the prohibitions under the TN Act can offer such online games only upon the receipt of a “certificate of registration” from the Tamil Nadu Gaming Authority.
• Fees: Every application by a “local online games provider” for grant of the “certificate of registration” shall be accompanied by a fee of INR 1,00,000 (approx. USD 1,200).

Verification Process Under the Online Gaming Rules

While this does not fall within the ambit of a “licence”, an OGI offering an “online real-money game” is required to obtain a verification from an SRB in order to offer its online game to users in India. For this, the OGI first needs to become a member of any SRB registered by the MeitY under the Online Gaming Rules, adhere to the due diligence and other obligations under the Online Gaming Rules, and submit its game format to the relevant committee of the SRB. The process that the SRB will follow to assess and verify the game format will depend on the charter and governing documents of the SRB. At the time of writing, no SRB is registered by the MeitY and hence there is no information available on the exact process of verification.

2.3 What is the process of applying for a Licence for a Relevant Product?

For brevity, only key points are mentioned below:

Sikkim

• Casino: The Indian entity must file a licence application to the state government, which will then examine it and make necessary inquiries. If the government is satisfied that the applicant has the ability to operate a casino in a five-star hotel, the state government will grant the applicant a six-month provisional licence after receiving a fee of INR 1,00,000 (approx. USD 1,258). The provisional licence is granted to give the licensee sufficient time to set up the required equipment and infrastructure and start the casino within the six months. This period can be extended by an additional six months by making a payment of INR 1,00,000 (approx. USD 1, 258). On complying with all the terms and conditions of the licence and after the payment of a fee in the amount of INR 5,00,00,000 (USD 6,29,243), the applicant is granted a regular licence for five years by the state government of Sikkim.
• Online games: The licensee shall apply in the form prescribed under the Sikkim Act and Rules for a licence after payment of an application fee of INR 500 (approx. USD 6.75). On receiving the application, the state government may conduct certain inquiries and, if satisfied, may grant a provisional licence valid for 120 days after receiving a fee of INR 1,00,000 (approx. USD 1,258). The state government may grant the licensee a regular licence if they set up the required equipment as mentioned in the provisional licence and pay a fee of INR 1,00,00,000 (approx. USD 125,000).

West Bengal

• An operator can host games of skill in a public market, fair, carnival, street or in any place where the public has access after obtaining a permit from the Commissioner of Police for Kolkata or the District Magistrate or the Sub-Divisional Magistrate for any other place in the state of West Bengal. While the law does not make a distinction, practically an Indian operator would be in the best position to apply for a permit when taking the different applicable laws into consideration.

Nagaland

• The operator must make an application to the licensing authority, which is the Finance Commissioner (“Nagaland Authority”), identify the games for which the licence is required, and additionally submit documents to support their credentials, audited financials, the software technology platform, a proposed business plan and financial projections. A non-refundable application fee of INR 50,000 (approx. USD 629) is to accompany the application. The Nagaland Authority will then scrutinise the application with the assistance of certain “Empanelled Firms” (lawyer/financial experts, etc.). The Empanelled Firms have 30 days to scrutinise the application and either offer certification or issue certain recommendations to the applicants. The Nagaland Authority can also refer the application to an “Ad Hoc Committee” or “Expert Committee” to ascertain whether the recommendations suggested by the Empanelled Firms are required to be adopted. The recommendations by the Committees must be submitted within two weeks. The licence will be issued by the Nagaland Authority within 14 days from the day it received certification from the Empanelled Firms.

Tamil Nadu

• The grant of the “certificate of registration” by the Tamil Nadu Gaming Authority to a “local online games provider” is subject to certain prescribed requirements being met under the TN Act (including not offering any prohibited online game) and its Rules and the prescribed application form being duly filled and submitted. The Tamil Nadu Gaming Authority may, after making such enquiry as it deems necessary, either issue or refuse to issue the “certificate of registration”. Where an application for issue of “certificate of registration” is refused, a reasonable opportunity of being heard shall be given to the applicant. Every application by a “local online games provider” for grant of the “certificate of registration” shall be accompanied by a fee of INR 1,00,000 (approx. USD 1,200).

2.4 Are any restrictions placed upon licensees in your jurisdiction?

For brevity, only key points are mentioned below:

West Bengal

• While the phraseology of the West Bengal Gambling and Prize Competitions Act, 1957 does not explicitly prevent a foreign operator from applying for a permit, it would be better for an Indian entity to apply for a permit while keeping the other laws described in this chapter into consideration.

Nagaland

• In case a licensee offers the games permitted under the licence in other states where it is banned, it will be a violation of the Nagaland Act and/or their local laws, which could be brought to the attention of the Nagaland Authority.
• The operation and technology support needs to be cont-rolled and maintained in India.
• The games can only be offered to individuals above the age of 18 years.
• The licensee is required to provide the Nagaland Authority with a dashboard along with a username and password to allow them to monitor and supervise the licensee’s activities.

Sikkim – Online

• The Sikkim Act causes a certain amount of confusion due to the terminology used, specifically the use of the terms “intranet” and “internet gaming terminals”. This results in the Sikkim Act restricting “online games and sports” to physical gaming parlours through intranet gaming terminals within the territorial bounds of Sikkim.
• The licensee must provide relevant details pertaining to the licence on the website/online portal.
• The state government shall certify the licensee’s “OGS” or the computer system through which games can be conducted.
• The licensee can only offer the games to those who have attained the age of 18 years and above.

Tamil Nadu

In order for a “local online games provider” to be able to get a “certificate of registration” from the Tamil Nadu Gaming Authority, the following restrictions should be borne in mind:

• It should not offer online games in violation of the prohibitions against gambling and online games of chance under the TN Act.
• It should not provide any online gambling service or allow playing of any online game of chance specified in the Schedule, with money or other stakes.

2.5 Please give a summary of the following features of any Licences: (i) duration; (ii) vulnerability to review, suspension or revocation.

Duration

• Nagaland: The duration of the licence is five years, provided that all the terms and conditions are complied with. After five years, the licence may be renewed yearly subject to the payment of the licence fee. In case there is a delay in the payment of the licence fee, a penalty of 12% per annum will be imposed.
• Sikkim: The duration of the licence is five years unless it is surrendered or cancelled. The licence may be renewed on application for the same.
• West Bengal: The duration of the permit is dependent on the length of the event, as permits are issued for specific events.
• Goa, Daman and Diu: The duration of the licence is five years.
• Tamil Nadu: The duration of the “certificate of registration” for a “local online games provider” is three years from the date of its issuance.

Vulnerability to Review/Suspension/Revocation

The licences provided in the states of West Bengal, Goa, Daman and Diu, Nagaland and Sikkim could be terminated/suspended for a violation of licence terms or any law thereunder under which they were issued. Certain additional pertinent points to note:

• Nagaland: In case of a breach of licence terms, the Nagaland Authority will issue a show cause notice to the licensee, giving the licensee an opportunity to make an oral and written representation. However, the violation will be compounded if the breach is remedied within 30 days.
• Sikkim: The licence may be cancelled or suspended by the state government in case there is a violation of its terms. However, the licence will not be cancelled without giving the licensee an opportunity to be heard.
• Tamil Nadu: The Tamil Nadu Gaming Authority may revoke or suspend the “certificate of registration” granted to a “local online games provider” if:
  • the “certificate of registration” has been obtained by misrepresentation or fraud;
  • the holder of the “certificate of registration” has failed to comply with the conditions, subject to which the certificate had been issued; or
  • the holder of “certificate of registration” has contravened any of the provisions of the TN Act or its rules or the regulations.

  2.6 By Relevant Product, what are the key limits on providing services to customers? Please include in this answer any material promotion and advertising restrictions.

  Adding to our answer to question 2.4, the majority of the State Gaming Laws prohibit the publishing, printing, distributing, selling or circulating of any newspaper, news sheet, or such other similar documents, or any information or news with the intention of facilitating or aiding gambling. However, these limitations are not necessarily applicable to games of skill. Advertisements of lotteries are prohibited under the IPC unless they comply with relevant provisions of the Lottery Laws. Advertisements of online gambling and real-money games of chance (including poker and rummy) are prohibited across all media in Tamil Nadu. Advertising for prize competitions is prohibited unless authorised by the relevant authority. Gaming websites in India and gambling operators’ websites in the state of Sikkim are subject to content-related as well as other laws. For instance:

  • The Consumer Protection Act, 2019 (“CPA”) enumerates the concept of “unfair trade practice” to mean any deceptive practice for promoting goods and services such as, inter alia, the offering of prizes with the intention of not providing them as advertised. The CPA and the guidelines issued under it also provide for certain penalties for “misleading advertisements” created by advertisers, publishers and endorsers.
  • The Central Consumer Protection Authority (“CCPA”) recently notified the Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements 2022 (“Misleading Advertisement Guidelines”) to prevent false or misleading advertisements and protect consumers from being exploited by such advertisements. They ensure that consumers are not being misled with unsubstantiated claims, exaggerated promises, or misinformation by bait advertisements or free claim advertisements and prohibit surrogate advertisements. The Misleading Advertisement Guidelines apply to all advertisements irrespective of form, format or medium, and the conditions therein must be observed by all stakeholders involved in advertising of a product, good or service. Recently, the Union Ministry of Information and Broadcasting (“MIB”) issued advisories (in June and October 2022 and in April and August 2023) to publishers of news and current affairs content on digital media, publishers of online curated content and private satellite television channels to refrain from carrying advertisements of online betting platforms (or their surrogates).
  • The Consumer Protection (E-Commerce) Rules, 2020 are, inter alia, applicable to: (a) all goods and services bought or sold over a digital or electronic network, including digital products; (b) all forms of unfair trade practices across all models of e-commerce; and (c) an e-commerce entity that is not established in India, but systematically offers goods or services to consumers in India. These Rules, inter alia, require setting up an adequate grievance redressal mechanism and appointing a grievance officer for redressal of consumer complaints.
  • IP-related matters regarding gaming are governed by the Copyright Act, 1957, the Trade Marks Act, 1999 and the Patents Act, 1970.
  • Vulgar and obscene content is an offence under the IPC, IRWA and the IT Act 2000.
  • Under the IT Act 2000 and its allied rules, an intermediary is required to comply with certain requirements while hosting content over the internet. These restrictions are also applicable to advertisements hosted on the internet. Please refer to question 3.1 below for a detailed discussion on the IT Act 2000 and its allied rules.

  The Telecom Commercial Communications Customer Preference Regulations, 2018 regulate commercial communications through telecommunication services such as SMS and phone calls. An entity must register as an enterprise and avail services of a telemarketer registered with the Telecom Regulatory Authority of India in order to be able to send any commercial communications to telecom subscribers. However, unsolicited advertisement communications to individuals who have withdrawn from receiving them is prohibited.

  The Advertising Standards Council of India (“ASCI”), a self-regulatory body, has introduced a self-regulatory advertising code that applies to advertisements on cable/satellite television including gambling advertisements. The code prohibits the propagation of products that are banned by law. Specific to the real-money gaming industry, ASCI released the ASCI Guidelines for Online Gaming for Real Money Winnings, which prescribe, inter alia, that advertisements are prohibited from displaying minors (below the age of 18) playing the game and must include a clearly visible disclaimer that the game offered involves an element of financial risk and may be addictive in nature.

  • Sikkim: The state permits licensees to advertise online games, provided they comply with the following:
    • Advertisements must provide the online gaming operator’s website address.
    • Advertisements should not be directed to any individual who is below 18 years of age.
    • Advertisements should not be directed at any jurisdiction where online gaming is prohibited.
    • Advertisements should not be offensive or indecent.
    • Advertisements should be based on facts.

    2.7 What are the tax and other compulsory levies?

    Income Tax

    The key legislation governing the taxation of income in India is contained in the Income Tax Act, 1961 (“ITA”) and the rules, notifications and circulars issued thereunder. Under the ITA, a non-resident (including a foreign company) will be taxed in India on any income that accrues or arises in India or is deemed to accrue or arise in India or is received or deemed to be received in India. On the other hand, a tax resident will be charged to tax in India on his global income, i.e., income earned in India as well as income earned outside India. The tax under the ITA will not be leviable in cases where the income is leviable to Equalisation Levy, as discussed below.

    Where the income of a resident includes income by way of winnings from games of any sort, betting, gambling, etc., such income would be liable to tax in the hands of such taxpayer, at 30% (plus applicable surcharge and cess). As per the ITA, the person responsible for paying to any person any such income for an amount exceeding INR 100 is obliged to withhold the said tax at 30% (plus applicable cess). The term “person” has been defined under the ITA to include, inter alia, an individual, foreign company, etc.

    In case the winnings are wholly in kind or partly in cash and partly in kind and the cash component is insufficient to honour the withholding obligation in respect of the whole of the winnings, the payor is required to ensure that the tax at the above rate is paid before the release of the whole winnings to the payee.

    Equalisation Levy

    A new tax called the Equalisation Levy (“EL”) was introduced by India in 2016, with the intention of taxing those digital transactions that are done through Indian IP addresses and that cause an accrual of income to foreign companies. While it was initially aimed at taxing business-to-business transactions in respect of online advertisements, the said levy was also extended, in 2020, to goods or services supplied through non-resident e-commerce operators.

    EL at 2% is applicable on the amount of consideration received or receivable by an e-commerce operator (subject to a threshold) from e-commerce supplies or services made or provided or facilitated by it:

    • to a person resident in India;
    • to a non-resident in certain specified circumstances; or
    • to a person who buys such goods or services or both using an IP address located in India.

    The question of the applicability of EL to foreign gaming operators may also be an issue and will depend on the facts of a particular business model.

    GST

    Indirect tax in India is levied as a Goods and Services Tax (“GST”), which is leviable on all activities that are covered within the scope of the term “supply” and is levied either on the supply of goods or on the supply of services. In terms of recent amendments (yet to be notified), GST at the rate of 28% is to be levied on the amount deposited with the supplier at the entry stage, which is taxed as supply of actionable claims in online money gaming and casinos (taxed as supply of goods). GST is not levied on re-application of winnings from past bets. Foreign real-money gaming operators have to mandatorily register themselves through a simplified registration process to discharge their GST obligations. Platforms of non-compliant foreign operators will be blocked.

    Also, the services provided through an online platform (over the internet), which are essentially automated, involving minimal human intervention and services that are impossible to ensure in the absence of information technology are covered within the scope of “online information and database access or retrieval services” (“OIDAR”) and include online gaming. The rate of tax is 28% (for games of chance, i.e., betting/gambling) and 18% (for games of skill). The tax is levied on the service fee/commission charged by the gaming operators. Recently, the element relating to “automation” and “human intervention” was removed from the relevant provision, which is set to come into effect from 1 October 2023. Once effective, all services mediated through information technology, over the internet, would attract GST under this category.

    Please note that the precise impact of the taxation structure will depend on the business/gaming model.

    2.8 What are the broad social responsibility requirements?

    The majority of the State Gaming Laws do not impose social responsibility requirements on operators as most of them have been enacted to forbid gambling. Though, under the Nagaland Rules, there are certain social responsibility requirements that the operators must follow when offering games of skill in the state – for instance, games for stakes can only be played by those above the age of 18 years.

    In the absence of any concrete requirements, the Indian gaming industry has started regulating itself and prescribed standards for social responsibility. The guidelines imposed by self-regulatory industry associations, such as the Federation of Indian Fantasy Sports (“FIFS”), the All India Gaming Federation (“AIGF”) and the E-Gaming Federation in their Skill Charters, provide for:

    • Measures for player protection, such as age-gating, self-exclusion, etc.
    • The requirement that operators be transparent; that is, they must always disclose the rules, mechanics of all games and also the terms and conditions of the gaming platform.
    • Provisions to regulate the content, duration, and targeted audience of advertisements.
    • Regulating funds deposited by players, maintaining a record of transactions, etc.

    2.9 How do any AML, financial services regulations or payment restrictions restrict or impact on entities supplying gambling?

    • The Prevention of Money Laundering Act, 2002 (“PMLA”) governs the law relating to prevention of money laundering activities in India. Under the PMLA, there are certain provisions that put the onus on a “reporting entity” to comply with certain obligations of maintaining records of transactions and of reporting the same. A reporting entity includes, inter alia, a person carrying on activities for playing games of chance for cash or in kind, and includes such activities associated with casinos. Presently, the PMLA does not classify an operator offering games of skill as a “reporting entity” and hence obligations under the PMLA currently do not apply to a game of skill operator. However, as per news reports, the central government is seeking to bring online skill gaming operators in India under the purview of the PMLA as “reporting entities”.
    • Under the Foreign Exchange Management Act, 1999 and its rules and regulations made thereunder (“FEMA”) read with the Foreign Exchange Management (Current Account Transaction) Rules (“Current Account Rules”), remittance (i) out of lottery winnings, (ii) for purchase of lottery tickets, banned/prescribed magazines, football pools, sweepstakes, etc., and (iii) of income from racing/riding, etc., or any other hobby, is prohibited. Skill games have the potential of being covered under the above provisions under the word “hobby”, as the same has not been defined or expressly categorised.
    • The Payment and Settlement Systems Act, 2007 (“PSS Act”) mandates that a person desirous of commencing or carrying on a payment system must obtain an authorisation from the RBI. Payment service providers typically provide clearing, payment and settlement functions, which are highly regulated by the RBI. However, payment gateways and closed-loop wallets are not treated as payment systems.
    • Under the Black Money (Undisclosed Foreign Income Assets) and Imposition of Tax Act, 2015 (“Black Money Act”), the Central Board of Direct Taxes (“CBDT”) issued a circular providing clarifications pertaining to the Black Money Act. The circular clarified that if an offshore virtual/e-wallet account is used for playing online games/poker and is funded by income chargeable to tax in India on which tax has not been paid and the person makes profit from the said gaming, the person must disclose the account details to Indian tax authorities. According to the circular, a virtual/e-wallet account is treated like a bank account where inward and outward cash movement takes place from the account. Therefore, the valuation and declaration of an e-wallet account may be made as in the case of a bank account.
    • Under the TN Act, banks, financial institutions, and payment gateways have been prohibited from processing any transfer of funds for online gambling and real-money online games of chance (including online real-money poker and rummy).

    2.10 Does your jurisdiction permit virtual currencies to be used for gambling and are they separately regulated?

    With respect to use of virtual currency, India currently has no specific law governing the regulation of virtual digital assets (“VDAs”), which includes virtual currencies. However, through recent amendments, the ITA has added the definition of VDAs under it and imposed certain income tax obligations for the purchase, sale, and transfer of VDAs in India. Similarly, recent amendments in the PMLA have included VDA businesses within the definition of “reporting entities” and imposed certain KYC, reporting and monitoring obligations. In relation to GST, the definition of VDAs from the ITA has been adopted under the GST laws and payments/deposits through VDAs in online money gaming will be taxed in a similar manner.

    3. Online/Mobile/Digital/Electronic Media

    3.1 How does local law/regulation affect the provision of the Relevant Products in online/mobile/digital/electronic form, both from: (i) operators located inside your jurisdiction; and (ii) operators located outside your jurisdiction?

    We have discussed below only the important laws for the sake of brevity.

    In the Case of Operators Located Within India

    Under State Gaming Laws: As discussed above, most State Gaming Laws are pre-internet statutes and prohibit gambling in brick-and-mortar physical premises, which they refer to as “gaming houses” or “common gaming houses”. Some states, however, have chosen to enact contemporary legislation for online provision of gaming and gambling products and either regulate them under a licencing regime or prohibit them completely. Whether the pre-internet State Gaming Laws apply to online media or not is also not a settled issue. Some regional High Courts have applied the pre-internet statutes to online gaming and gambling cases without specifically delving into the issue of applicability. What prohibitions or regulations, if any, apply to online products will have to be analysed as per the respective State Gaming Laws.

    Under the Prize Competitions Act, 1955 (“PCA”), IPC and Lottery Laws: The PCA, provisions of the Lottery Laws and those of section 294A of the IPC will apply to operators located within India.

    Under the IT Act 2000: The IT Act 2000 is a central law and applies to content on online media. Under the IT Rules 2021, which have been framed under the IT Act 2000, an intermediary over the internet is required to comply with certain due diligence requirements as mandated by the IT Act 2000 and the IT Rules 2021, including prohibition to host certain type of content on the website/platform and requirement to inform its users in relation to such prohibited content. Under Rule 3(1)(b) of the IT Rules 2021, as amended, an intermediary is, inter alia, required to inform its users and also make reasonable efforts by itself to cause them to not host, display, upload, modify, publish, transmit, store, update or share any information that relates to or encourages money laundering or gambling, or violates any law for the time being in force. Under the IT Rules 2021, an intermediary has the right to terminate usage rights of users and/or remove the non-compliant information. The IT Act 2000 also gives the power to the government and the courts to block access to unlawful content on the internet.

    Under FEMA: FEMA applies when there is a remittance overseas. Please see discussion on FEMA and the Current Account Rules at question 2.9 above.

    Under the PMLA: The various requirements under the PMLA (including reporting requirements), discussed in the preceding sections, would apply to operators located within India.

    Under the PSS Act: Since it may be presumed that operators located within India use domestic payment services, the PSS Act discussed above would apply to such payment service providers located within India.

    Under the CPA: The CPA and its accompanying rules and guidelines apply to domestic online operators and prohibit operators from, inter alia, exploiting consumers by engaging in unfair trade practices or misleading advertisements, as stated in question 2.6 above.

    In the Case of Operators Located Outside India

    Under the State Gaming Laws, Lottery Laws and PCA: The extra-territorial applicability and enforcement of these laws against foreign gaming operators is legally debatable and practically difficult. As discussed above, whether the State Gaming Laws themselves apply to online media or not is not a settled issue yet and may vary from state to state, while also depending on judicial pronouncements on a specific State Gaming Law.

    Under the IT Act 2000: As discussed above, internet intermediaries such as third-party web-hosting service providers may be required to remove content violating the IT Act 2000 and/or the IT Rules 2021 on receipt of an order to that effect from a competent government agency or a court having jurisdiction. Websites offered by foreign operators may also be blocked by governmental authorities and courts as per the procedure laid down in the IT Act 2000 and allied regulations.

    Under FEMA: As discussed above, FEMA and the Current Account Rules prohibit foreign outward remittances from India for the purpose of gambling, lotteries, sweepstakes, hobbies, etc. However, compliance with the same is the responsibility of the domestic remitter and not the foreign recipient.

    Under the PMLA: The intent of the PMLA seems to cover only domestic entities as “reporting entities”. However, it is recommended that operators do maintain transaction records as and where possible for any future requirement of sharing such information by a foreign operator too.

    Under the PSS Act: The current framework of the PSS Act does not cover foreign payment service providers when they provide such services in relation to offshore merchants. In case a foreign gaming operator uses the services of a domestic payment services provider, the latter would have to comply with the provisions of the PSS Act.

    Under the CPA: The CPA and its accompanying rules and guidelines have extra-territorial applicability to the extent users of a good/service, provided by the offshore entity, qualify as “consumers” under the CPA and are located in India. In such a scenario, the provisions of the CPA will apply to offshore entities, irrespective of their local presence in India.

    3.2 What other restrictions have an impact on Relevant Products supplied via online/mobile/digital/electronic means?

    Please refer to our response to question 3.1 above – all of the laws mentioned above would be applicable, with the IT Act 2000 being the key legislation for online media.

    Except for the states of Nagaland, Sikkim, Telangana, Andhra Pradesh, Chhattisgarh and Tamil Nadu, all the other State Gaming Laws are pre-internet statutes and have not been amended to suit the changed reality of online gaming and gambling (some recent legislative attempts by southern states to make their State Gaming Laws applicable to the online medium was struck down by the courts owing to the unconstitutionality of the provisions inserted by the state government). Consequently, the pre-internet State Gaming Laws still have prohibitions only for physical gaming and gambling in a gaming house or common gaming house. On this, there are broadly two views:

    1. Since these State Gaming Laws are penal statutes, as per accepted canons of interpretation, they must be interpreted strictly and in the absence of specific provisions, should not be extended to online offerings.
    2. All technological advancements should be read within the scope of the State Gaming Laws since the mischief that was covered by these laws then is applicable to online media today.

    3.3 What terminal/machine-based gaming is permitted and where?

    Please refer to question 1.2 above. Only Goa, Daman and Diu, and Sikkim allow the offering of such games in their respective territories, under a licensing regime.

    4. Enforcement and Liability

    4.1 Who is liable under local law/regulation?

    As mentioned, most of the State Gaming Laws penalise physical gaming houses and impose liabilities accordingly. The liability for offences under the State Gaming Laws usually vests upon:

    • The owner of the gaming/common gaming house.
    • The person keeping or having charge of the gaming/common gaming house.
    • The person gambling or possessing instruments or records of betting or suspected of gambling or possessing such instruments in a common gaming house.
    • Specific to Sikkim, (a) the licensee under the Sikkim Act, (b) any person/operator acting on his behalf, or (c) the operator who has not obtained a licence under the Sikkim Act, but offers online games, sports betting, or both.
    • Specific to the licence issued in Nagaland, the licensee under the Nagaland Act and any operator who has not obtained a licence under the Nagaland Act but offers online skill games in the state.
    • Specific to some states like Telangana, Andhra Pradesh and Karnataka, if the person committing a contravention is a company, every person who, at the time of the contravention was committed, was in charge of, and was responsible to the company, for the conduct of the business of the company as well as the company, its managing directors and other directors, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished, unless they can prove that the contravention took place without his knowledge or that he exercised all due diligence.
    • Specific to Tamil Nadu, the player who indulges in online gambling or an online game of chance for money or other stakes and the online game provider who provides the online gambling service or the online game of chance for money or other stakes.
    • Under the Online Gaming Rules, an intermediary (including an OGI) which provides its users access to an online game in contravention of the said Rules.
    • Under FEMA, the resident Indian party making the payment to the foreign party has to ensure compliance with the law.
    • In certain circumstances and facts, if the IPC provisions are triggered, then liability may also be imposed under the IPC under the provision of “abetment” to any of these offences.

    4.2 What form does enforcement action take in your jurisdiction?

    Most of the State Gaming Laws prescribe either a monetary fine and/or imprisonment for the offences mentioned in them. However, the amount and the term thereof, respectively, vary across states. The states that have amended their State Gaming Laws to make them contemporary have much higher penalties as compared to those states where the original pre-internet statute is still unamended.

    The Public Gambling Act imposes a penalty of INR 200 (approx. USD 2.41) or imprisonment for a term not exceeding three months for owning, keeping or having charge of a gaming house, and a fine of INR 100 (approx. USD 1.20) or imprisonment for a term of one month for being found in a gaming house.

    The Telangana Act (as amended up to date) prescribes a fine, which may extend to INR 5,000 (approx. USD 60.42), and imprisonment, which may extend to one year for the first offence; and may extend to a fine of INR 10,000 (approx. USD 120.85) and imprisonment for two years for the second offence.

    The Andhra Pradesh Act (as amended up to date) prescribes an imprisonment term, which may extend to one year, and a fine, which may extend to INR 5,000 (approx. USD 60.42), for the first offence and cannot be less than three months and the fine less than INR 3,000 (approx. USD 36.25), unless there exist special reasons. For every subsequent offence, the penalties increase significantly.

    In Tamil Nadu, the TN Act prescribes punishment for:

    • Providing online gambling and real-money games of chance (imprisonment for a term which may extend to three years or with a fine which may extend to INR 10,00,000, or with both).
    • Advertising online gambling and real-money games of chance (imprisonment for a term which may extend to one year or with a fine which may extend to INR 1,00,000, or with both).
    • Indulging in online gambling and real-money games of chance as a player/gamer (imprisonment for a term which may extend to three months or with a fine which may extend to INR 5,000 or with both).

    There are also provisions for enhanced punishment on second and subsequent convictions and also provisions for compounding of certain offences.

    In case of any contravention under FEMA, the person could be held liable for a penalty up to thrice the sum involved in such contravention where such amount is quantifiable, or up to INR 2,00,000 (approx. USD 2,416) where the amount is not quantifiable; and where such contravention continues, a further penalty could be imposed, which may extend to INR 5,000 (approx. USD 60.42) for every day after the first day during which the contravention continues.

    In case of the PMLA, contravention or non-compliance entails a monetary penalty of not less than INR 10,000 (approx. USD 120.85) but up to INR 1,00,000 (approx. USD 1,208) for each failure of the reporting entity to comply with its obligations under the PMLA.

    In case of the IPC or the IRWA, the offences may be related to content of the games or its advertisements or violation of any prohibitions imposed by the IPC (such as the one on private lotteries). Penalties under the IPC involve monetary fines and/or an imprisonment term.

    Under the Online Gaming Rules, a general intermediary which provides its users access to an online game in contravention of the said Rules is liable to lose the “safe harbour” protection under the IT Act 2000 in relation to any third-party content on its platform. The OGI, which provides its users access to an online game in contravention of the said Rules and the verification granted under it, is liable to have the verification of such online game(s) revoked and/or the online game(s) or OGI’s platform itself blocked by MeitY, in exercise of its powers under section 69A of the IT Act 2000.

    4.3 Do other non-national laws impact upon liability and enforcement?

    This depends on India’s international treaties, its commitments thereunder and upon the extra-territorial effect of foreign laws and treaties. For example, the government of India presently has bilateral Extradition Treaties with 48 countries and Extradition Arrangements with approx. 12 more countries to quicken and ease the process of extradition of offenders.

    4.4 Are gambling debts enforceable in your jurisdiction?

    The Indian Contracts Act, 1872 governs matters of contract in India. Section 30 of the said Act declares agreements “by way of wager” to be void and also mentions that “no suit shall be brought for recovering anything alleged to be won on any wager”. Consequently, in general, gambling debts cannot be enforced in India.

    4.5 What appetite for and track record of enforcement does your local regulatory authority have? Have fines, licence revocations or other sanctions been enforced in your jurisdiction?

    Under the antiquated State Gaming Laws, the prohibitions of which are in relation to physical gaming houses, there has been constant enforcement action over time by the police and other law enforcement authorities in the respective states. Some states have specific anti-gambling provisions in their police law (such as Karnataka and Tamil Nadu) and hence this gives the local authorities more reasons to be proactive in enforcement.

    In the context of online gaming, states are gradually recognising the need for specific provisions to regulate the field and while some states of north-eastern India have preferred a licensing regime, states of southern India have opted for bans. In most states, since it is difficult for a traditional police force to effectively act against online platforms if they do not have a physical place of business in a particular state, states are looking for ways to block such websites (see question 3.1 above). In other words, though there is appetite for enforcement, there are practical challenges to enforcement.

    There has been a spate of PILs recently that seek directions from courts to instruct the state governments to act against online gaming and gambling. Thus, even if the local authorities had no appetite for enforcement, such litigations force them to act.

    In October 2022, the CCPA issued notices to six offshore betting and gambling websites that were advertising themselves through surrogate advertisements. In October 2022 and in February 2023, MeitY imposed blocking orders against a total of more than 150 mobile apps and websites, including those of foreign betting and gambling operators. The reasons for these blocking orders were not made public officially by MeitY.

    In April 2023, the CCPA took suo moto cognisance of an allegedly misleading advertisement for an offshore gambling platform. Notably, notices were issued to not only the platform but also the three film celebrities who appeared in the advertisement. Through these notices, the CCPA sought the celebrities’ response on what due diligence was undertaken by them to verify the platform’s claims prior to endorsing the same. It is pertinent to note that under the CPA, the CCPA may impose monetary penalties of up to INR 10,00,000 (approx. USD 12,025) to INR 50,00,000 (approx. USD 60,125) (for repeat offences) on endorsers for promoting misleading advertisements. Further, the CCPA is also empowered to prohibit such endorser(s) from endorsing any product or service for a period of up to one to three years (for repeat offences).

    In relation to the Online Gaming Rules, the central government may employ URL/app blocking (through general intermediaries) as a preferred mode of enforcement action for non-compliant online games.

    5. Anticipated Reforms

    5.1 What (if any) intended changes to the gambling law/regulations are being discussed currently?

    This continues to be a time of great flux for gaming laws in India. With increasing penetration of cheap and high-speed mobile data and affordable smartphones, the gaming industry is seeing unprecedented growth. This has prompted governments to consider newer and stricter regulations and even blanket bans. A spate of litigations in courts have seen courts prod state governments to bring in compatible legislation for the evolving landscape of gaming in India. With the Online Gaming Rules also now in place, the next chapter of the evolving gaming law legal landscape in India will consist of how the SRBs verify online real-money games and how MeitY enforces the light-touch mechanism that it has put in place through the Online Gaming Rules.

    Upcoming Laws and Amendments

    • The Rajasthan Bill is proposing to regulate online fantasy sports and esports as Virtual Online Sports under a licensing regime in the state. It has envisaged a state government-led gaming commission and an industry-led self-regulatory organisation to operationalise provisions of the proposed law. In November 2022, a Division Bench of the Rajasthan High Court, while hearing a PIL seeking directions to the state government to frame appropriate regulations to curb online betting and gambling in the state noted the response of the counsel for the state who submitted that the Rajasthan Bill was under consideration before the appropriate authority. However, since then, no developments have been reported on the Rajasthan Bill in the recent past.
    • India’s most populous state, Uttar Pradesh, is considering either amending or repealing its colonial-era gaming statute. The State Law Commission has made recommendations with regard to this and even formulated a draft bill. Whether the state government will adopt the draft bill or formulate a new set of regulations, if at all any, is not yet clear.
    • As per news reports, Madhya Pradesh may soon have a new online gambling law in place. However, the contours of the proposed law or a draft of the same is not available in the public domain yet.
    • In August 2022, the Chief Minister of the state of Kerala, speaking on the floor of the State Legislative Assembly, said that the government is considering a comprehensive amendment to the Kerala Gaming Act, 1960 to strictly regulate online gaming in the state, particularly rummy.
    • In the Union Territory of Puducherry, the main opposition party has demanded that the territorial administration promulgate an ordinance on the lines of the TN Act to prohibit online gambling in the territory.
    • Goa is planning to issue rules under its State Gaming Law. A draft has been finalised by the state government and the same may be enforced soon. As per news reports, the state government is also planning to impose curbs on unlicensed online gambling and casinos being offered in the state.
    • The central government is likely to review the functioning of the new 28% GST levied on supply of actionable claims in online gaming, horse racing and casinos after six months of its implementation.
    • In December 2022, the Union Home Ministry in an official letter sent to states and Union Territories asked them to take steps to repeal the Public Gambling Act for their respective territories and enact a new, contemporary law on the subject.
    • The Minister of State for MeitY, Rajeev Chandrashekhar, in June 2023 stated that MeitY plans to ban three specific types of online games under the Online Gaming Rules viz. online games that involve a) betting, b) are harmful to users and c) are addictive. However, the Minister did not disclose the criteria that will be followed to determine if an online game fell within these three categories.

    Pending Litigation

    • The state of Tamil Nadu’s appeal to the Supreme Court against the state High Court’s judgment of 2021 that had quashed the blanket ban on games played for stakes in the state is pending at the preliminary stage.
    • The state of Karnataka has also filed an appeal before the Supreme Court against the Karnataka High Court judgment that had in 2022 struck down substantial portions of amendments brought to the State Gaming Law. The amendments had sought to prohibit all forms of online gaming when played for stakes, agnostic of the games being of skill or chance. The appeals filed by Tamil Nadu and Karnataka were clubbed by the Supreme Court and are currently pending at the preliminary stage.
    • Recently, the Telangana government has filed a petition before the Supreme Court requesting the transfer of a petition brought by gaming operators before the Telangana High Court challenging the amendments to the Telangana Gaming Act, 1974. The state government has requested the petition to be clubbed with aforesaid appeals filed by the governments of Tamil Nadu and Karnataka.
    • A two-judge bench of the Supreme Court recently imposed an interim stay on the single-judge judgment of the Karnataka High Court, which had quashed an INR 21,000 crores GST show-cause notice against an online skill gaming company. A special leave petition against the judgment was filed by the central government vide the Directorate General of GST Intelligence. In addition to granting a stay on the impugned judgment of the Karnataka High Court, the Supreme Court has also sought a response from the online gaming company on the matter. The case has currently been listed for final hearing.
    • The state government of Kerala has filed an appeal against a September 2021 judgment of a single judge of the High Court of Kerala. The said judgment had quashed a state government notification seeking to ban online rummy for stakes. By the order dated 30 November 2022, a two-judge bench of the High Court of Kerala adjourned the hearings on the appeal till the disposal of cases pending before the Supreme Court pertaining to online rummy.
    • The issue of whether sports betting is a game of skill or not is pending before the Supreme Court in the Sports Betting Case. The petitioner has impleaded the central government and all state governments as respondents, seeking legalisation and regularisation of sports betting. However, no next date has been assigned yet since the last hearing in October 2019. If the Supreme Court holds sports betting to be a game of skill, then it would become legal in those states where skill games continue to be exempted from gambling prohibitions under the State Gaming Laws.
    • Legal challenges to the Andhra Pradesh Act are pending before the Andhra Pradesh High Court. In January 2023, while hearing a bunch of petitions filed by online rummy operators under the State Gaming law, a Division Bench of the High Court directed the state government to set up a committee to determine if online rummy is a game of skill or not. The state government’s appeal against this order was quashed by the Supreme Court in August 2023.
    • A lawyer recently approached the Bombay High Court (Nagpur Bench) to seek a restriction on the availability of online gaming activities during certain time periods. Illustratively, the petition prayed for a complete prohibition on the playing of online games from 20:00 hours to 6/8:00 hours (IST), along with a partial restriction on playing games even during the daytime. While the case is currently at its pre-admission stage, the Bombay High Court has issued notices seeking replies from the central and state government on the matter.
    • An industry body for online skill gaming operators and a few online rummy and poker operators approached the Madras High Court in April 2023 challenging the constitutional validity of the TN Act. Arguments from both sides in the matter have concluded and the court is likely to pronounce its verdict soon. The petitioners have contended that offering of skill games cannot be prohibited by the state as the same is protected under the fundamental rights granted by the Constitution.
    • A PIL has been filed by an NGO named “Social Organization for Creating Humanity” before the Delhi High Court challenging the constitutional validity of the Online Gaming Rules. The petitioner has contended that Online Gaming Rules are beyond the legislative competence of the central government as states have been given the exclusive right to legislate on matters pertaining to “betting and gambling” under Entry 34 of List II of the Seventh Schedule to the Constitution. The matter is currently pending at the preliminary stage.

    Production Editor’s Note

    This chapter has been written by a member of ICLG’s international panel of experts, who has been exclusively appointed for this task as a leading professional in their field by Global Legal Group, ICLG’s publisher. ICLG’s in-house editorial team carefully reviews and edits each chapter, updated annually, and audits each one for originality, relevance and style, including anti-plagiarism and AI-detection tools. This chapter was copy-edited by Oliver Chang , our in-house editor.

    • Buy Chapter in PDF format £100
    • Buy the Book in PDF format £295
    Related Posts:

    1. The Best Football Betting Apps for Android and iOS
    2. Legal Betting Sites
    3. Top 10 IPL Satta Apps in India – Complete Guide (2024)
    4. Best Swedish Betting Sites 2024
    5. India plans crackdown on Illegal betting and gambling apps violating CCPA norms
    6. Mint Explainer: Mahadev app and the alleged money laundering scandal
    7. Best Betting Apps 2024
    8. Cricbet99 – India’s Top Online Cricket Betting & Online Betting App