Are you confused about the status of online gambling in India? You are not alone!
India's myriad patchwork of different laws, interpretations, contradictions, and enforcement around online gambling have left the legal situation in a state of flux.
Here we will break down how the gambling law in India currently stands, what is permitted, and further analysis on regarding taxation and online gambling payments.
The root of all legislation regarding gambling in India comes from the Public Gaming Act of 1867. This piece of British colonial-era law initially applied to 10 Indian states but was later adopted to cover the entire country.
The main target of the Act was venues where gambling took place. The law explicitly prohibits operating a site where gambling takes place and forbids citizens from visiting these places.
The problem with the Act is that it targeted games of chance and luck. Looking at popular gambling games, and we could reasonably claim the likes of Andar Bahar, roulette, slots, craps, and Jhandi Munda are games of chance - there is no skill involved.
The controversy arises from clause 12 in the Act which states: "(The) Act not to apply to certain games. Nothing in the foregoing provisions of this Act contained shall be held to apply to any game of mere skill wherever played."
Claus 12, therefore, suggests this legislation does not cover games that are not solely reliant on chance. And here, the great argument begins. What gambling games are not reliant just on luck, but also skill?
Most people familiar with playing popular games like poker, rummy, and blackjack know there is real strategy and skill involved. What about teen patti? Some would argue yes, and cases have even gone to court.
Similar arguments can be made about sports betting. After all, you wouldn't place a cricket bet unless you felt you had some skill in picking the winner.
Now it gets complicated again! The Indian constitution has a clause stating: "gambling includes any activity or undertaking whose determination is controlled or influenced by chance or accident or any activity or undertaking which is entered into or undertaken with consciousness of the risk of winning or losing (e.g., prize competitions, a wagering contract)"
Many legal experts would argue the constitution overrules the Public Gaming Act. States, including Madras and Tamil Nadu, have resisted any attempts at loosening gambling law in part by pointing to the constitution.
In September 2015, the Supreme Court reaffirmed a 1957 decision that rummy was a game of skill and playing for money didn’t constitute a breach of the law.
The ruling even went further, stating games of skill would be categorised as follows: "Success depends principally upon the superior knowledge, training, attention, experience, and adroitness of the player."
Since then various game operators - most notably of poker, rummy and teen patti - have applied that distinction to their offering to argue offering real money gambling on these games is legal.
That horse racing betting is legal in India further complicates the legal situation, as does the fact many states run lotteries - a clear example of gambling where no skill is involved.
The state of Goa also allows several land-based casinos to operate, and many of you will be familiar with the famous offshore casinos that operate in the Mandovi River.
These are legal, although have long been in dispute with the city authorities, who have for many years tried to move them inland or outlaw them altogether.
Sikkim and Daman also allow casinos. And various other states have made moves to allow and regulate gambling, including online gambling.
Sikkim permits limited online casinos, and made provisions for sports betting, although it appears that no actual licences have been awarded to sports betting sites yet.
Estimates of the size of the Indian gambling market range from $60-100 billion a year, with at least half of that wagered with black market bookmakers and in underground casinos.
Of course, there was no internet back in 1867, or when the major court ruling of 1957 was issued.
But the rise of the internet and online gambling has left a big hole in existing Indian legislation. Proponents of online gambling argue, quite rightly, that existing law doesn't cover gambling online.
On the other hand, opponents contend gambling is gambling, whether it takes place offline at illegal gambling houses or online.
The IT Gaming Act of 2000 has provisions that prohibit publication of information online that can "corrupt" people. This vaguely includes information on gambling online.
And the Act also outlines various offences relating to online activity in India, but crucially makes no mention of online gambling.
The government in the past has used the IT Gaming Act to make (mostly unsuccessful) attempts to block foreign websites offering online gambling.
The Federal Information Technology Act of 2011 intended to restrict online gambling activities in India by holding internet service providers accountable for ensuring that foreign betting sites are blocked.
However, this law doesn't prohibit Indian residents from accessing the services of online betting operators.
And companies not based in India are not subject to Indian law and can choose to accept Indian players.
Unlike neighbouring Pakistan, which enforces similar anti-gambling laws to India and does on occasion apply it to online gamblers, no-one in India has ever been prosecuted for online gambling.
As stated above, many states now permit various types of online gambling and have even opened the market for international operators like poker giant PokerStars to get licences.
Examples of successful companies operating in India and offering real money play with explicit legal permission include PokerStars, Adda52, Spartan Poker, PokerBaazi, Ace2Three, Junglee Rummy, and Rummy Circle.
If the Indian government really wanted to ban online gambling, it could introduce financial legislation as the USA did back in 2006.
The Unlawful Internet Gambling Enforcement Act forbid any gambling businesses from "knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the Internet and that is unlawful under any federal or state law.
The Act was extremely effective in reducing online gambling as no international brand risked doing business in the USA as a result.
In India, you are more likely to find operators voluntarily not accepting Indian players than you are to find a site blocked by the state.
Some Indian payment providers have made it difficult to transfer funds to gambling sites. These usually concern direct bank transfers and Visa and Mastercard cards issued by Indian banks.
Tamil Nadu has blocked Google Pay in the past as a way to restrict people buying online scratch cards. It has argued online games violate the state's lottery ban.
Nonetheless, there is no country-wide law that bans online gambling payments in India. And millions of players successfully use e-wallets to deposit and withdraw gambling funds without issue.
There are many reasons why opposition to gambling exists. Firstly, from a legal perspective, India is a federal country of 28 states and eight union territories.
Permitting gambling in India would likely mean an amendment to the constitution would be required. In practice, this would need the support of both houses of parliament, but its possible state legislatures would also need to approve changes.
With all the opposition at a state level to gambling, this is unlikely to be successful and lengthy legal battles would be fought over the issue. For many in power, keeping things as they are is just easier.
The Public Gaming Act was a piece of puritanical legislation from Victorian England, and many still subscribe to the belief that gambling is immoral and has adverse effects on society. Significant segments of both Hindu and Islam society frown on gambling.
Even in Goa, which has some of the most relaxed gambling laws, the late Manohar Parrikar, former Bharatiya Janata Party Chief Minister in Goa, once called the state's legal gambling venues "dens of vice" and "a social evil". Successive state governments have vowed to shut them down, although they still thrive.
And unfortunately gambling in India has long been associated with crime, and there are fears criminals would exploit legal gambling to launder money.
Neither of these arguments are very strong when looking at the situation in other countries. If democracies like the United Kingdom and most of Europe, plus states in the USA and countries like Australia, can legalise and regulate online gambling successfully then there is no reason India cannot.
Legalising gambling would also allow the government to raise huge funds via taxation - money that could be used for good.
As it stands, the state effectively turns a blind eye to offshore operators allowing Indians to create accounts and gamble, and pay nothing back in tax.
India is not alone in requiring citizens to pay taxes on gambling winnings. This applies to both online and offline winnings.
Gambling winnings sit under extra income tax rules and apply to cash winnings, and the value of other prizes won. The list is pretty exhaustive, covering lottery winnings, prizes won on any game show or by other electronic modes such as internet or radio competitions, gambling winnings won at casinos or race tracks, and even on crossword puzzles and similar contests!
A flat-rate tax of 30% is usually due on winnings worth ₹10,000 or over. Moves have been made by the state to force operators to deduct this tax at source (TDS) under clause 194B of the Income Tax Act.
TDS has caused a lot of issues on Indian online poker rooms with operators using different interpretations of the policy. Some have applied the TDS automatically every time someone's net winnings go above ₹10,000, and they try and withdraw them.
Adda52 changed their policy in early 2020 after a backlash from players, and now calculate net winnings every year, rather than per session. Others refund the TDS in the form of bonus chips.
For players using offshore operators to gamble with, then the responsibility for filing the appropriate taxes lies solely with the player.
While there is no law against online gambling, it is perfectly rational to assume the government will penalise players not declaring their online gambling winnings as a breach of tax law.