Opinion: India's confusing egaming laws laid bare

The laws regarding online gambling in India are often confusing, massively outdated and vary from state to state. Slowly these laws are being clarified and this week’s Delhi district court judgement at least gives those thinking of entering the Indian market some guidance of what the judiciary is thinking about online gambling.

The case was brought by Anuj Gupta of the Gaussain Network who wanted to ascertain whether his company could legally offer skill games online to Indian citizens. Skill games they planned to offer included online poker as well as rummy, chess and billiards. Gaussain wanted to find out whether taking a 5% rake from players would break the law.

It is worth noting that Indian gambling law dates back to the 1867 Public Gaming Act which outlaws gambling activity yet makes an exception for games of skill such as rummy, chess and billiards. This was the last piece of federal legislation made on gambling and since then all gambling legislation produced has been done at a state level.

The Judge presiding over the case in the Patalia House Court in Delhi was Ms Ina Malhotra. Her 26 page judgement spends a great deal of time judging whether poker is a game of skill. While noting that the International Mind Sports Association contains the regulatory bodies of chess, bridge and poker and that a New York federal court judge found poker to be a game of skill, she comes down firmly against this view.

Her judgement argues that online gaming sites should be viewed as ‘gaming houses’, which are illegal in India and also claims that because poker is viewed as gambling in most countries then it should be viewed as gambling in India. She also argues that some games that are classified as skilful in the real world should not be classified as involving skill if they are played online. Finally she argues that online betting on skill games is more open to corruption and cheating than live betting.

At IndiaBet.com we find it hard to understand how a judge can consider poker to be less skillful than rummy (or even billiards, although it is obvious this requires a different kind of skill). Judge Malhotra acknowledges the strength of reasoning behind why poker is skilful but effectively dismisses it. As for the idea that online games are more likely to be fixed, we think that all the evidence worldwide suggests that corruption is far more prevalent in the physical world of gambling, where there is not an electronic audit trail on offer to track the culprits. No wonder Gaussain are seeking to have the judgement appealed to the Delhi High Court.

For those hoping to enter the Indian market, not everything in the ruling is bad news. The judge was forced to offer some considerable concessions and concludes by saying that there was “nothing illegal in a gambling portal offering the facility of betting online on games of skill”. In addition to this, she concedes that “legislation in India is silent in respect of online gambling”.

The repercussions of this is that online gambling legislation is still determined by state legislation as the federal legislation is not adequate to deal with online gambling. So unless a state has specifically banned online gambling, as has been done in Maharashtra, then grey market operators such as Bet365 are not committing an offence. This also includes sites that advertise online gambling sites. Despite Judge Malhotra appealing for them to be “curtailed”, once again there was no legal precedent on the matter.

It is also clear that companies that offer betting games in a free-to-play and not for money capacity are also explicitly legal, meaning betting sites such as IndiaBet.com can operate regardless of state laws which outlaw online gambling.

What the ruling really makes clear is the need for a federal law on online gambling in India. Different states seem to be ruling on legal positions in diametrically opposed ways. While both Goa and Sikkim have taken steps towards both legalising and regulating online gambling, states such as Maharashtra have made online gambling explicitly illegal. As a result, for the vast majority of Indians online gambling law remains unclear and confusing; indeed, if judges find it difficult to agree on what the law means then how is the ordinary Indian citizen meant to work it out?

The Indian government now have an excellent opportunity to regulate online gambling; reducing corruption, protecting gamblers and taking money away from the black market and putting it into the government coffers via taxation. Alternatively, by making it concretely illegal the government could work with internet service providers and payment processing firms to properly crack down on online gambling. Either response would be better than the current situation which is so confusing and uncertain that online gambling businesses operating in India can’t be certain which laws ““ if any – they are breaking.