GAMBLING IN INDIA- Imperativeness to come out of colonial beliefs
[Vol 3/ Issue 2/ March 2018] [ISSN 2394-9295]
|Ishana Sidana||Ajith Brar|
|Amity Law School, Noida||Amity Law School, Noida|
|Email Id: Email id: firstname.lastname@example.org|
Gambling is one of the oldest industries in the world. One can trace back different forms of gambling in every age, civilization, religion and culture. In fact gambling halls were legal in India for centuries until the British banned gambling in 1867 by enacting the Public Gaming Act. This Act banned all forms of gambling excluding horse racing, lotteries and certain card games. When India gained independence, states were given the right to authorize and regulate gambling within their state borders. While Goa, Daman and Diu have legalized gambling in 1976 and Sikkim has also notified certain palaces for permitting to open gambling houses for purpose of gambling. The main provision that empowers state to make laws on gambling and betting derives out of Entry 34 of List II of Schedule 7 to Constitution of India wherein subject matters are enumerated on whom the exclusive jurisdiction lies to State to legislate on particular matter. Moreover when countries globally have accepted the notion of gambling in their respective States, India should also move into direction of regulating gambling.
Gambling that counts for 3.5% of Gross Domestic Production (legal and illegal) will doubtlessly makes a reason to think over the profits and benefits that can be raised by legalizing and licensing gambling. Gambling will not only make profits to the government in tax generation but will also provide employment to a varied group of individuals. India is following a law that is around 167 year old based on the colonial British notion of illegality for gambling in that era. However, UK has evolved in 2005 by enacting a new law named as Gambling Act, 2005.This paper discusses not only the possibility of legality of gambling in India but also the various hurdles in that endeavor. Further it also provides certain recommendations for setting up a regulatory body.
Keywords: Gambling, legalization, constitutionality, skill, chance, revenue, employment.
“True luck consists not in holding the best of the cards at the table; luckiest he who knows just when to rise and go home.”
[John Ray (1627-1705)]
Gambling is one of the oldest industries in the world. One can trace back different forms of gambling in every age, civilization, religion and culture. In India remains of dice and gambling boards were traced at Harappan excavations proving its existence since 1000 BC. Even the Rig Veda contains a hymn called “Gambler‘s Lament” showing its popularity during the early Indo- Aryan society. In fact each side of a four-sided dice was named after the four ‘yugas’ of the world as per the Hindu mythology. The famous episode in Mahabharata where the royal king Yuddhirstha lost his kingdom including his brothers and wife in a dice game showed the compulsive gambling behavior. In Manusmriti, Verse 221, Gambling has been strictly forbidden in entirety for its potential to destroy a Kingdom. It also provided for punishment for anyone who either plays or provides an opportunity for it. Punishment could either extend to getting banished from the kingdom or corporal subjugation. Though Manu advised complete ban on gambling, a different strategy was suggested by Kautilya who advocated State control of gambling because of the revenue that the King could earn from it.
In fact, gambling halls were legal in India for centuries until the British banned gambling in 1867 by enacting the Public Gaming Act. This Act banned all forms of gambling excluding horse racing, lotteries and certain card games. When India gained independence, states were given the right to authorize and regulate gambling within their state borders. Therefore, even though from ancient time, gambling was regarded as the destroyer of truth, honesty and wealth, it somehow could not be completely flushed out from the society.
According to Black’s Law Dictionary meaning of gambling is “the Act of practicing or following game of chance and skill with the expectation and purpose of thereby winning money or other property.” Gambling includes basically three types of acts that can be classified into gaming, betting and lottery.
The Public Gambling Act of 1867 prohibits all the gambling activities, which are held in public place in addition to prohibiting charge of any common gaming house. Section 1 of the public Gambling Act, 1867 defined common gaming house as –
“Any house, walled enclosure, room or place in which cards, dice, tables or other instruments of gaming are kept or used for the profit or gain of the person owning, occupying, using or keeping such house, enclosure, room or place, whether by way of charge for the use of the instruments of gaming, or of the house, enclosure, room or place or otherwise howsoever.”
This central act of 1867 have been referred identically by many states leaving exception to Goa, Daman and Diu and Sikkim who have legislated their own legislations astonishingly legalizing the act of gambling in their region. While Goa, Daman and Diu have legalized gambling in 1976 and Sikkim has also notified certain palaces for permitting to open gambling houses for purpose of gambling. There are two main features that appears from constitution regarding power to legislate on various aspects of gambling. In seventh schedule that differentiate various subjects for legislating purpose of Centre, State or both find presence of gambling betting and lotteries therein. Entry 40 of List I that is Union list makes lotteries in the ambit of legislating power of union government even if government of Indian organizes them or other Government of state and therefore the states are devoid of power in making provisions of lotteries. The reason behind inclusion of lotteries as the subject matter to union legislation could be because of popularity of lotteries in India as a source of simple gambling. Even lotteries are used to funding many structures like jail, college etc. and for various other purposes. Moreover it was an instrument to earn revenue for state that made union to keep the legislating power as schedule it in List I of Schedule 7 to Constitution of India.
The main provision that empowers state to make laws on gambling and betting derives out of Entry 34 of List II of Schedule 7 to Constitution of India wherein subject matters are enumerated on whom the exclusive jurisdiction lies to State to legislate on particular matter. This provision can be easily exhausted by all the states to make provision regarding legalization of gambling in their state in accordance with the restrictions thereto. In this way it is contended that legalization of gambling lies within the state of which benefit can be taking by particular state by amending or limiting scope of gambling in accordance with the local customs but conditioned that fundamental structure of all these legislations regarding gambling will have to remain same for proper regularization of the gambling laws in country.
MORAL AND ECONOMIC VIEWPOINT
(i) Moral viewpoint
To start with the moral vies point, it was in starting showed that society has accepted the game of Dice, which is a form of gambling in present days also, and a complete restriction on any act of gambling is not possible. The act of gambling will be still be continued as a large section of society is still involve in gambling activity and therefore the main observation which comes out from the moral view point is to legalize the act of gambling as it doesn’t harm society as whole unlike other crimes. Utilitarian principle of Bentham classifies an act, which satisfies the maximum number of people should be approached and adopted. The act of gambling must not involve any criminal elements into it as would surely attracts the criminal law into motion but individually the punishment for gambling should be made in civil nature after legalizing it. Therefore the moral viewpoint comes out in form that gambling should be first legalized and after that the liability, which arises in default of gambling exercise, should be of civil nature. When countries globally have accepted the notion of gambling in their respective States India should also move into direction of regulating gambling. Morality forms base of law and since an activity being practiced by state and supported by people needs to be regularized rather putting a ban on it.
(ii) Economic viewpoint
Gambling that counts for 3.5% of Gross Domestic Production (legal and illegal) will doubtlessly makes a reason to think over the profits and benefits that can be raised by legalizing and licensing gambling. Gambling market have a great potential in coming future and as the growth rate and standard of living is gets higher. Gambling will not only make profits to the government in tax generation but will also provide employment to a varied group of individuals. Studies have shown that even sometimes the share market is used a gambling spot for individuals, as many a time it is impossible to ascertain the fluctuation in stock prices. Another problem that exists with online gambling is of much of economic relevance as when an Indian customer uses the international gambling sites, the money will be an investment in the economy of respective state where the website is based rather than India. Also there are cyber security issues in which an Indian customer may be trapped like forgery or other illegal activities but the aggrieved person may not redress the problem as gambling is itself an illegal act in India and in this way a two way trapping is encountered by the person aggrieved.
UK AND INDIAN LAWS
India is following a law that is around 167 year old based on the colonial British notion of illegality for gambling in that era. However, UK has evolved in 2005 by enacting a new law named as Gambling Act, 2005. Indian anti-gambling law i.e. The Public Gambling Act of 1867 is a very small piece of legislation onto which two major offences are considered in which the first offence relates to keeping, owning or having in charge of gaming house and the second one relates to person found in gaming house upon which fine of Rs. 200 and Rs.100 is prescribed respectively and also an imprisonment not exceeding there months and one month is prescribed. Section 12 of the act which reads as-‘ Nothing in the foregoing provisions of this Act contained shall be held to apply to any game of mere skill wherever played’ is the main protection clause which protects acts on whose result is based on the skill of person and therefore is exempted from being counted as offence in this act. Although when a game of skill and chance mixes creates an nostalgia to determine the real nature of game and in absence of such provision police uses it in favor to arrest people under this act. Therefore it was proved that the act is not only illegal per se but also have many illegalities inside of which misuse can be easily done by concerned authorities.
Now looking towards the new gambling policy of UK which can clears a path to be sworn by India by giving us some very precise provisions wherein the interest of state and its people are equivocally addressed. Gambling Act, 2005 is made for three objective that find’s their place in section 1 of that act that reads as-
“In this Act a reference to the licensing objectives is a reference to the objectives of—
(a) Preventing gambling from being a source of crime or disorder, being associated with crime or disorder or being used to support crime,
(b) Ensuring that gambling is conducted in a fair and open way, and
(c) Protecting children and other vulnerable persons from being harmed or exploited by gambling”
Therefore the whole basis of the act is to consider these three major principles while acting under this act. Gambling Act, 2005 incorporates a gambling commission to control day-to-day functioning of matters regarding gambling enumerated in act by virtue of Section 20. Section 24 of the act provides code of practice that ensures the arrangement by the service provider of the gambling facility that is also based on the main objective principles adding to provision regarding availability of assistance to persons who are or may be affected by problems related to gambling.
The act is a complete piece of legislation as it does not only regularize the act of gambling but also makes punitive provisions in case of refuting provisions of the Gambling Act, 2005.
According to the Public Gambling Act, 1867, the three necessary and essential elements of gambling are mutual consideration, chance and prize. To be charged for the offence of gambling, a person need not necessarily be an active participant. Thus, even visiting a place where gambling is conducted would be a crime. The only respite for these individuals would be if the games played are of skill and not of chance. Section 12 of the Public Gambling Act states that games of skills are excluded from criminal prosecution. Going by this analysis, it can thereby be implied that participating or indulging in games of skills, where luck or chance has little or no relevance in determining a winner would be deemed to be permissible in law and not punishable, as the individual relies on his own skill rather than leaving things to chance. Therefore, at present, there is no statute, which explicitly prohibits or punishes participating in such games of skill. Under Indian law, for a game to be considered a game of skill, the position has been so far that no game needs to be a skill based game in entirety, but in essence should predominantly be a skill based game, i.e., the element of skill should be more dominant than element of chance. In K.R. Lakshmanan v. State of Tamil Nadu, the Supreme Court of India gave judicial interpretation of this concept:
“There are few games, if any, which consists purely of chance or skill, as such a game of chance is one in which the element of chance predominates over the element of skill, and a game of skill is one in which the element of skill predominates over the element of chance. It is the dominant element- “skill “ or “chance” – which determines the character of the game.”
While interpreting the term ‘skill’ the court has stated its meaning as under-
“We, therefore, hold that the expression ‘mere skill’ would mean substantial degree or preponderance of skill.”
Therefore, the court while expounding skill in terms of superior knowledge experience, training and the like, also declared horse racing as a game of skill. The Supreme Court in K.R Lakshmanan, further elucidated the concept of skill as follows-
“A game of skill, on the other hand – although the element of chance necessarily cannot be entirely eliminated- is one in which success depends principally upon the superior knowledge, training, attention, experience and adroitness of the player.”
The Supreme Court while rendering a decision in State of Andhra Pradesh v K.Satyanarayana, held the 13-card game of rummy as a game of skill and permitted it to be played in clubs or places, provided there were no stakes involved and profits or gains for the organizers. The Court, while arriving at its conclusions observed as follows-
“The game of Rummy is not a game entirely of chance like the ‘three-card’ game mentioned in the Madras case to which we were referred. The ‘three card’ game, which goes under different names such as ‘flush’, brag etc., is a game of pure chance. Rummy, on the other hand, requires a certain amount of skill because the fall of the cards has to be memorized and the building up of Rummy requires considerable skill in holding and discarding cards. We cannot, therefore, say that the game of Rummy is a game of entire chance. It is mainly and preponderantly a game of skill.”
In State of Andhra Pradesh v Satyanarayan, the Supreme Court gave a brief analysis on the term ‘chance’ and critically evaluated it in the context of Rummy and other card games as follows-
“The chance in Rummy is of the same character as the chance in a deal at a game of bridge. In fact, in all games in which cards are shuffled and dealt out, there is an element of chance, because the distribution of the cards is not according to any set pattern but is dependent upon how the cards find their place in the shuffled pack. From this alone it cannot be said that Rummy is a game of chance and there is no skill involved in it.”
It can be noted from the above-mentioned extract that the court has not gone in detail in explaining the elements of chance. In fact, while analyzing whether a particular game is of skill or chance, the Indian Judiciary have not taken the efforts to delve deep into cognitive studies or academic research and provide detailed explanations. For instance, in K.R. Lakshmanan,  the Court relied on the explanation of horse racing under the definition of gambling in the Encyclopedia Britannica, which stated that betting on horse racing involves ‘the assessment of a contestant’s physical capacity and the use of other evaluative skills.’ The court made reference to the American case of People v. Monroe, and held that the winner in a horse race is not determined by chance alone, but by certain other factors such as the endurance, conditions and speed of the horse, and the skill and management of the rider. Therefore the Indian Courts have held gambling in a nutshell as ‘the payment of a price for a chance to win a prize.’
The Public Gambling Act, 1867 specifically exempts application of the Act to games of skill. Hence, games in which only skill is present and in cases where there is no existence of chance or it is there in negligible proportion, then such games are not considered as gambling.
In order to regulate gambling in an efficient manner, it would be necessary to set up and establish an appropriate supervisory body to oversee and regulate the process. This particular body can be vested with certain administrative or quasi-judicial powers and functions such as-
- The most important function of this body would be to review the license of existing operators and filtering out those who do not fit the criteria. The body can give a six month deadline to all those operators and business conducting such common gaming house and make it a mandatory process to submit all their applications which includes information regarding their assets, ownership, structure, tax receipts etc.
- This body will also be vested with the power to receive complaints from the public and thereafter conduct a hearing with the parties involved and issue necessary directions wherever required. Since this body would be performing quasi-judicial functions, it would thereby require adequate representation from the legal fraternity. The body can consist of three members, the presiding member being represented from the judiciary, generally that person being a retired judge of a High Court. The other two members can be represented by an expert in the filed of gambling and betting and the third meter can be an expert in the field of gambling and betting and the third can be an expert in the field of information technology. The powers, functions and duties of tis body will be derived from the enabling Act.
- The body will also be required to do their due diligence by investigating and verifying if there were any serious violations committed by any of the operators either it be reacting to any criminality or indulging in any form of illegal acts such as tax evasion, indulging in the black economy etc. In case of finding of any such wrong doing the body would have the power to direct the representative authority to initiate appropriate action against them.
- The board may also have the power to appoint a team, which will conduct surprise audits and seize any adverse document as evidence.
- The Board will also have the power to create and enforce codes of practice and procedures in relation to betting operators including policies relating to under-age and problem gambling and for remote betting, the technical requirements of the hardware and software systems.[i]
- A Gambling Commission can be constituted in every state to assist to assist the Board in the execution of the functions smoothly. The Commission would help in keeping an overall check on gaming activities and exercise control over those games conducted across various gaming houses and sites along with the power of issuing tourists permits to those interested in entering these gaming areas.
- Any wrong doings noticed by the Commissioner will be reported to the Board in the form of a report, which may have the authority to take appropriate action.
There are few countries where gambling is legalized. Nepal is not only famous for Mount Everest but is also known as the oldest gambling capital in South Asia.[ii]Though Gambling in Nepal has been a contentious issue. In 2014, the government ordered all casinos to be shut down due to vast amount of unpaid taxes owing. But in 2015, government reopened eight casinos and they are only open to tourists now. [iii]Nepalese residents are forbidden to participate in gambling activities including Internet gambling. Any residents caught in Nepalese casinos face heavy fines.[iv]The Nepalese government revived the casino industry to boost tourism.[v]Economists believe that incentives are required for various businesses to boost the fiscal health of the Himalayas.[vi]The types of gambling available in Nepal are casinos and sports betting parlors. The largest gambling city in Nepal is Kathmandu with 7 gambling facilities, 126 tables games, 375 gaming slot and video poker machines. The largest casino in the entire country of Nepal is Tiger Palace Resort Casino Nepal, which is located in Bhairahawa.[vii]
Having noted the above mentioned points, it can be stated that both betting and gambling in have been present from time immemorial and have now become a social constant without which no society in the world today can survive or even with the strictest and harshest of restrictions and prohibitions placed on it. The Indian government should take a cue from its neighboring countries and should legalize gambling in India as it boosts tourism and it creates revenue for the government and this money can be used for buildings schools and hospitals for the citizens. By legalizing gambling, the government won’t lose out on any revenue generated from this dynamic industry, which is generally lost to overseas operators. The Indian Government can also take suggestions from the American Internet Gambling Prohibition Act and can implement specific laws to deal with the issue of Internet Gambling. As most gambling and betting sites are located outside Indian border, it gets difficult for the authorities to monitor and regulate them. Therefore, development of appropriate law is a prerequisite in tackling this issue.
- :Jan McMillen, Understanding Gambling- History, Concept and Theories, 21 September 2017, 11:55 am,http://books.google.co.in/books?id=iekF9X3OwwMC&pg=PA34&dq=gambling+history+in+india&hl=en&sa= X&ei=PwlOVInHCJPf8AXTtIFI&ved=0CCEQ6AEwAQ#v=onepage&q=gambling%20history%20in%20india &f=false ↑
- A Brief History of India, Judith E. Walsh, 18 September 2017, 2:15 pm,http://books.google.co.in/books?id=iekF9X3OwwMC&pg=PA34&dq=gambling+history+in+india&hl=en&sa= X&ei=PwlOVInHCJPf8AXTtIFI&ved=0CCEQ6AEwAQ#v=onepage&q=gambling%20history%20in%20india &f=false ↑
- Mandagadde Rama Jois, Legal and Constitutional History of India: Ancient legal, judicial, and Constitutional System, 28 September, 2017, 4:14pm,http://books.google.co.in/books?id=V552bAz5xFAC&pg=PA219&lpg=PA219&dq=constitutional+provisions+ for+gambling+india&source=bl&ots=G5kwdZupr_&sig=OxxQKV6Dr7VQsDIvNEatiDHONQo&hl=en&sa=X &ei=BRxOVIAGozn8AWfGw&ved=0CCMQ6AEwATgK#v=onepage&q=constitutional%20provisions%20for %20gambling%20india&f=false ↑
- Supra 3 ↑
- Supra 3 ↑
- Blacks Law Dictionary (2nd Edition), P. 534 ↑
- The Goa, Daman and Diu Public Gambling Act 1976. ↑
- The Sikkim Regulation of Gambling (Amendment) Act, 2005, Paragraph 3, 21 September 2017, 6:15pm,<http://districtcourtsnamchi.nic.in/laws/gambling%20act%20(amended).pdf> ↑
- Gerald Willmann, ‘The History of Lotteries’ (1999) , Department of Economics, Stanford University Research Paper,17 September 2017, 5:12pm,<http://willmann.com/~gerald/history.pdf > ↑
- Jay Satya, ‘ Legality of poker and other games of skill: a critical analysis of India’s gaming laws’ (2012) 5 NUJS L. Rev. 93,94 ↑
- Xiaohui Gaoa, Tse-Chun Linb ‘Do Individual Investors Trade Stocks as Gambli ng? Evidence from
Repeated Natural Experiments’ (2011) pg. 23, 12 September 2017, 5:10pm,<http://ssrn.com/abstract=1622184> ↑
- The Public Gambling Act 1867, Section 3, Section 4. ↑
- Gambling Act 2005, Section 20(1) ↑
- Gambling Act 2005, Section 24(2)(c) ↑
- Gambling Act 2005, Part three (general offences) ↑
- The Public Gambling Act, 1867, ↑
- http://lawlex.org/lex-pedia/gambling-laws-in-india/8590, 14 September 2017, 3:15pm ↑
- AIR 1996 SC 1153, 1996 SCC (2) 226, https://indiankanoon.org/doc/1248365/, 2 November 2017, 08:39 pm. ↑
- Supra 18 ↑
- AIR 1968 SC 825, 1968 SCR (2) 387, https://indiankanoon.org/doc/84963/, 2November, 08:42 pm. ↑
- Supra 20 ↑
- Varun Srinivasan, Gambling in India: Journey Ahead, Para 8, 15 September 2017, 4:30 pm ↑
- 349 Ill. 270, 275. ↑
- K.R. Lakshmanan v. State of Tamil Nadu, (1996)2 SCC 226, https://indiankanoon.org/doc/1248365/, 2 November 2017, 08:39 pm. ↑
- Section 12, The Public Gambling Act, 1867 ↑
- Manakad Elalnge. R Nala sports v. State of Tamil Nadu, AIR 2005 Mad 214 ↑
- Supra 26 ↑
- Carl Rohsler, Regulating Sports Betting ↑
- It’s a Gamble, http://nepalitimes.com/news.php?id=2583#.VX5jr_lVhBc, 26 September 2017, 6:30pm ↑
- Nepal Poker Laws , 19 September 2017, 3:30pm, http://www.pokerlaws.org/asia/nepal ↑
- Supra 29 ↑
- Supra 30 ↑
- Jay Sayta, Nepal Government Grants Concessions to Casinos in Bid to Boost Tourism,22 September 2017, 3:30pm https://glaws.in/2014/07/16/nepal-government-grants-concession-to-casinos-in-bid-to-boost-tourism/ ↑
- Supra 33 ↑
- Online Gambling in Thailand, 23 September 2017, 9:15p.m ,https://www.gambling.com/country-overviews/thailand ↑
- Terry Fredrickson, Legal Casinos for Thailand? Police chief says “yes” ,Bangkok Post, 23 September 2017, 10:55pm https://www.bangkokpost.com/learning/learning-news/596544/legal-casinos-for-thailand-national-police-chief-says-yes ↑
- Supra 30 ↑
- https://www.pokernews.com/news/2012/09/summary-text-of-reid-kyl-internet-gambling-bill-13407.htm, September, 2017, 4:30 pm. ↑
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