Introduction
The act of betting or wagering on the results of a game, event, or activity in the hopes of earning cash or other valued prizes is referred to as gambling. Since ancient times, people have enjoyed many types of gambling, including casino games, sports betting, lotteries, horse racing, and online gambling.
With little to no skill required, the outcome of gambling activity is frequently determined by chance. Gambling is thrilling because it is unpredictable, which is what draws individuals to it. Gambling may be dangerous and addictive, though, as people might wind up losing more money than they can afford.
Gambling is completely prohibited in some nations while it is legal but strictly regulated in others. The growth of online gambling in recent years has also sparked fresh worries about addiction and underage gaming.
Overall, gambling is a complex and divisive subject with proponents and opponents. For some people, it can be a fun pass time, but it can also have unfavorable effects like financial difficulty, addiction, and other problems. People must bet sensibly and within their means as with any risky activity.
What is gambling?
Gambling is the risking or staking of money or any other valuable asset that may be referred to as “stakes” on an event that does not have a predictable conclusion with the primary goal of earning more money or the good of a material value. Gambling, therefore, needs to satisfy three requirements: consideration, or money, which is the amount that is put at risk; risk; and pricing, or the result of placing the money at risk. Gambling results are frequently immediate, as in the case of rolling the dice, spinning the roulette wheel, a horse finishing a race, etc. Gambling outcomes could also be long-term, like winning a future sporting event.
Position of gambling in India
The majority of gaming activities in India are strictly regulated. There are a few exceptions to this rule, including lotteries and horse racing. In India, gambling is a state matter, hence only the state governments have the authority to define and regulate such activities for their states.[1] The majority of governments base their determination on whether these games are legal or prohibited on the criteria of skill and chance. Games that need the talent to win money are referred to as games of skill. Card games like poker, bridge, darts, and carom are examples of games of skill, as are sports like chess and golf. Except for a few states in India, most of these games are legal there.
To distinguish the games, India mostly divides them into two big groups. Games fall into one of two categories: they are either games of chance or games of skill.
- All games that are played at random are considered games of chance. These games rely heavily on chance. These games can be played without any prior knowledge or comprehension. Dice games, choosing a number, etc. are a few examples. In India, these games are regarded as unlawful.
- All games that are played depending on a player’s prior knowledge or experience with the game are considered games of skill. A person will need abilities like analytical decision-making, capability, logical thinking, etc. Some games may also need some preliminary training to succeed.
The Supreme Court ruled in State of Andhra Pradesh v. K. Satyanarayana and Others (1968) that success in three-card games like flush is entirely dependent on chance, whereas success in the game of “rummy” involves skill because building up rummy requires competency.[2]
One of the oldest types of gambling is the lottery. Regular lotteries are held by the state governments, and they are essentially all legal in these jurisdictions. The Lotteries (Regulation) Act, of 1998 governs lottery events, and as winning bets in horse racing competitions are regarded as games of skill, they are permitted in India. Horse racing is a well-liked event in numerous states of India, including Bangalore, Hyderabad, Mumbai, etc. It is run by teams that are arranged into clubs.
The issue that emerged in the case of Dr. K.R. Lakshmanan v. State of Tamil Nadu and Anr. (1996) was whether horse racing is a game of chance or a game requiring a significant amount of talent. The Supreme Court concluded that these contests need extensive training and that the horses’ endurance and speed have a significant impact on the likelihood of victory. Only three states in India allow sports betting: Sikkim, Meghalaya, and Nagaland. Separate statutes govern the other gaming laws in these three states.
Operating or managing public gaming establishments is forbidden by the Public Gambling Act, of 1867 a Central statute. Any infraction of the law under this act could result in a fine of 200 rupees or a sentence of up to three months in jail.
Principal violations of this Act include:
- possessing, maintaining, residing in, or having care and administration of a gaming establishment.
- playing in a public casino or watching someone else gamble in a public casino.
- giving or lending money to people who frequent one of these gaming establishments for the gambling house.
Online gambling
There is only one decision that addressed online gambling and made the following ruling: M/s Gaussian Networks Pvt. Ltd. v. Monica Lakhanpal and the State of NCT.
A skill-based game that involves wagering does not qualify as gambling if it is played. It is unlawful if players are drawn to a game solely for the chance to win money. Even though it would be permitted in the actual world, any game of skill played to make money would be illegal on virtual platforms, Because it would encourage online gambling, and gaming websites are unable to join the winning hands.[3] In 2017, Telangana became one of the first states to outlaw internet gambling through legislation. Kerala, Tamil Nadu, Andhra Pradesh, and, most recently, Karnataka were the next states to do so. The most recent state to join the list of those that have outlawed online gambling in Karnataka. It was subsequently made clear to everyone that the Union’s authorities must block gambling websites and portals for the ban to be completely implemented. Rummy and poker portals have long opposed all of these bans, and the Madras High Court was recently compelled to undo the gains made by the amendments. The population that commonly participates in virtual gaming is extremely outraged as a result of this. In five-star hotels in Goa, Sikkim, Daman, Diu, and other tourist destinations, casinos are permitted. The Goa, Daman, and Diu Public Gambling Act of 1976 and the Sikkim Electronic Entertainment Games (Control and Tax) Act of 2002 are two laws that grant licences to casino operators. All of the rules governing the issuance and renewal of licenses, fines, and license suspension are outlined in these Acts. A penalty for violation is also imposed on any licence holder who does not adhere to the terms on which the licence was granted to him or her.[4]
Taxes to be levied on gambling
Gambling-related income is taxed as “income from other sources” because it is included in the annual taxes. The application of income tax to gambling activities is covered by different provisions in the Income Tax Act of 1961.
Income tax on games of chance or crosswords
According to Section 194B of the Income Tax Act, if a lottery or crossword puzzle winner receives more than Rs 10,000 in rewards, income tax must be withheld. Currently, such winnings are subject to a 30% tax deducted at source. However, this rate increases to 31.2% when the surcharge and cess are applied.
Horse race income tax
If the wins exceed Rs 10,000, the payer must deduct income tax from them by Section 194BB. The following types of people fall under this Section’s requirement to deduct income tax:
- A bookmaker,
- a person who has a permit to conduct horse racing at a racecourse, and
- a person who has a licence to organize wagering or betting at a racecourse.
The 30% source-deducted tax plus surcharges and a cess is also applicable to horse racing.
Tax on Goods and Services
All goods and services are subject to the GST, an indirect tax. The entertainment industry includes gambling activities, such as horse races, casinos, and other forms of gambling, hence the GST rate on these activities is 28%. However, there is an 18% GST fee for online skill games.
Levy for equalisation
One of the levies levied on online gaming transactions is the equalisation levy. It is a tax levied on payments made to non-resident online merchants for the provision of products and services by Indian online merchants. Transactions between an individual and a business having an Indian IP address are likewise subject to this tax. The equalisation levy has a set rate of 2%.[5]
Conclusion
Different viewpoints and opinions exist on the advantages and disadvantages of gambling, making it a complex and contentious subject. Gambling can, on the one hand, be an exhilarating activity with the chance to win substantial sums of money. Additionally, it might offer social advantages including chances to interact and connect with others. However, gambling can also have detrimental effects, particularly for individuals who become addicted to it. Gambling addiction can cause people to have problems with their finances, emotions, and social relationships as well as their physical health. Gambling addiction can, in severe situations, even result in suicide. While some individuals may find enjoyment in gambling responsibly as a sort of amusement, it’s critical to be aware of the dangers that could result from this practise.
Author – Kashif humzah
Jamia Millia Islamia
[1] Is Gambling Legal In India? Here’s all you Need to Know, lawrato.com (2022), https://lawrato.com/indian-kanoon/criminal-law/is-gambling-legal-in-india-heres-all-you-need-to-know-2837 (last visited Apr 12, 2023).
[2] Rachit Garg, Is gambling legal in India – iPleaders, iPleaders (2022), https://blog.ipleaders.in/is-gambling-legalinindia/#:~:text=By%20the%20virtue%20of%20Section,hazard%20of%20loss%20by%20chance%E2%80%9D. (last visited Apr 13, 2023).
[3] Laws and Punishment Regarding Online Gambling In India, Legalkart (2023), https://www.legalkart.com/legal-blog/online-gambling-lawsandpunishmentinindia#:~:text=The%20Act%2C%20however%2C%20does%20not,to%20use%20their%20own%20regulations. (last visited Apr 13, 2023).
[4] Brand Post, What’s the legal status of gambling regulations in India in 2021?, Hindustan Times (2021), https://www.hindustantimes.com/brand-post/whats-the-legal-status-of-gambling-regulations-in-india-in-2021-101623671189683.html (last visited Apr 13, 2023).
[5] Rachit Garg, Is gambling legal in India – iPleaders, iPleaders (2022), https://blog.ipleaders.in/is-gambling-legalinindia/#:~:text=By%20the%20virtue%20of%20Section,hazard%20of%20loss%20by%20chance%E2%80%9D. (last visited Apr 13, 2023).