Public Gambling Act, 1867 and State Amendments

The Public Gambling Act, 1867 is a central statute that penalizes public gambling and the operation of common gaming houses in India. Post-independence, the Constitution placed betting and gambling under the State List. As a result, individual states have amended the 1867 statute or enacted independent legislation to prohibit, permit, or regulate physical and digital gaming within their territories.

Legislative Structure of the Public Gambling Act, 1867

The 1867 statute was enacted to curb public disorder, commercial wagering dens, and street gambling.

Definition of Common Gaming House

• A common gaming house is any house, walled enclosure, room, or space where cards, dice, tables, or gaming instruments are kept for the profit or gain of the owner or occupier.
• Profit or gain can arise through direct charges for the use of instruments, entry fees, or a percentage cut from the stakes.

Core Penal Provisions

• Section 3: Penalizes owning, keeping, or having charge of a gaming house with a fine of up to Rs. 200 or imprisonment up to three months.
• Section 4: Penalizes any person found in a gaming house for the purpose of gaming with a fine of up to Rs. 100 or imprisonment up to one month.
• Section 5: Grants powers to District Magistrates and authorized police officials to enter, search, and seize instruments of gaming from suspected premises.
• Section 6: Provides that finding cards, dice, or gaming instruments in a searched place serves as evidence that the premises operate as a common gaming house.
• Section 8: Directs the destruction of seized gaming devices upon conviction of the offender.
• Section 13: Authorizes police officers to arrest individuals found gaming in public streets or open places without a warrant.

Exemption for Games of Skill

• Section 12: Expressly provides that nothing in the Act applies to any game of mere skill, wherever played.
• Competitions where success depends predominantly on knowledge, training, experience, attention, and adroitness do not fall under the statutory definition of gambling.

Constitutional Framework and Division of Powers

The Constitution of India decentralized powers related to wagering, giving state legislatures primary authority.

Constitutional Distribution

• Entry 34, List II (State List): Grants exclusive legislative authority to state assemblies over “Betting and gambling”.
• Entry 62, List II (State List): Empowers states to levy taxes on luxuries, including betting, gambling, and amusements.
• Article 19(1)(g): Protects the fundamental right to practice any trade or business; courts have ruled that games of skill qualify as commercial activity, whereas gambling is treated as res extra commercium (outside trade and commerce).

Milestone Judicial Precedents

State-Level Approaches: Independent Laws and Regimes

States follow divergent policies, ranging from complete prohibition to licensing physical casinos and skill-based games.

States with Regulated Casinos and Licensed Gaming

• Goa, Daman and Diu Public Gambling Act, 1976: Goa amended this statute to permit offshore and onshore casino tables, slot machines, and electronic games in designated five-star hotels and offshore passenger vessels under government licenses.
• Sikkim Regulation of Games of Chance Act, 2004: Authorizes physical casinos in five-star hotels under state permits.
• Sikkim Online Gaming (Regulation) Act, 2008: Created a state licensing framework for intranet-based online sports betting and table games within state borders.
• Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2016: Introduced a licensing system for digital platforms offering recognized skill games like chess, rummy, poker, and fantasy leagues.
• Meghalaya Regulation of Gaming Act, 2021: Established a statutory licensing structure for both land-based casinos and online betting within the state.

States with Strict Prohibition on Online Wagering

• Telangana Gaming Act, 1974 (Amended 2017): Prohibited all online games played for money stakes, removing exemptions for games of skill.
• Andhra Pradesh Gaming Act, 1974 (Amended 2020): Made online gaming and betting for stakes a cognizable and non-bailable offense.
• Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022: Established the Tamil Nadu Online Gaming Authority and prohibited online gambling and real-money online chance games.
• Kerala and Karnataka: Enacted amendments to curb online real-money games, which led to judicial challenges regarding the scope of regulating skill versus chance games.

Central Regulatory and Fiscal Framework

The Union Government addresses online real-money gaming through IT rules and taxation mechanisms.

Information Technology (Intermediary Guidelines) Rules

• The Ministry of Electronics and Information Technology (MeitY) notified rules regulating online gaming intermediaries.
• Online games involving wagering on outcomes are barred from operating as permissible online games.
• Online gaming intermediaries must complete user KYC verification, appoint grievance officers, and adhere to self-regulatory standards.
• Section 69A of the IT Act, 2000 is utilized to issue blocking orders against foreign illegal betting websites.

Direct and Indirect Taxation

• Central GST Act Amendments: A flat 28% Goods and Services Tax (GST) applies to the full face value of bets deposited for online money gaming, casinos, and horse racing.
• Section 115BBJ, Income Tax Act: Imposes a flat 30% tax rate on net winnings earned from online games.
• Section 194BA, Income Tax Act: Mandates 30% Tax Deducted at Source (TDS) on net winnings at the time of withdrawal or at the end of the financial year.

Facts

• The Public Gambling Act, 1867 was originally drafted for the North-Western Provinces, Punjab, Oudh, and the Central Provinces before states adopted it post-1947.
• Section 30 of the Indian Contract Act, 1872 states that agreements by way of wager are void and unenforceable in a court of law.
• The Lotteries (Regulation) Act, 1998 is a central law enacted under Entry 40 of List I (Union List), allowing state governments to organize or ban paper lotteries.
• The Law Commission of India released its 276th Report in 2018, examining legal frameworks for sports betting and gambling in India.
• The Delhi Public Gambling Act, 1955 replaced the application of the 1867 Act in the National Capital Territory of Delhi.
• West Bengal excludes games of cards such as bridge, poker, rummy, and nap from the definition of gaming under the West Bengal Gambling and Prize Competitions Act, 1957.
• A game of chance is one where luck determines the winner, while a game of skill is one where success depends on the player’s knowledge and adroitness.
• The Directorate General of GST Intelligence (DGGI) investigates tax compliance and evasion by unregistered offshore gambling platforms.
• Offshore online betting platforms offering services to Indian residents must appoint a local representative and register under the GST regime.