Internet gambling in India: Regulation or prohibition?

With the development of technology and mass communications, the internet has opened up many opportunities for online commerce. One such recent development of the internet has been online gambling. Gambling is any gaming behaviour involving the risking of money or valuables on the outcome of a game, contest, or other event for financial gain. The outcome of the event depends partially or totally on chance. The industry of gambling can be categorized into activities which involve random outcomes, such as lotteries and slot machines, and activities which can involve judgement, such as some card games and betting on events.

The online gambling industry is a popular money-yielding industry today. It has the potential to allure the young who happen to be the most active consumers in the consumer market. Gambling through online means gives the joy and relaxation that any person wishes for in a fast-paced world while offering prospects of earning quick money. However, these games are addictive in nature, and the people that are lured into these games become subject to irreversible damage to their physical and mental health while losing money. Hence, governments all over the world, as also in India, are befuddled with whether the online gambling industry must continue to operate with all its consequences.

Need for regulations or prohibitions?

Internet gambling activity has been taken in two different approaches by the people. Many people feel that internet gambling is an immoral activity and is against societal morals as seen in Indian ancient history too. As such, society doesn’t support gambling, and regulating it will induce people to gamble more, which is detrimental to our values. Also, people argue that regulation or legalisation of internet gambling is against public policy and will also lead to many problems like problem gambling, addiction, criminal behaviour, etc.

On the other hand, people who argue for regulating it has stated that it is impossible to completely prohibit internet gambling due to technological development and the vast nature of the internet, which will allow gamblers to access gambling sites online. So, prohibiting such activities would not prove to be effective.

Benefits of regulation of internet gambling

As we have seen that there are a lot of consequences to unregulated gambling, it becomes the need of the hour that such activities should be monitored and regulated as the market for online gambling is increasing day by day. The various benefits of regulating online gambling are:

1. If the government opts to regulate this market of gambling activities, then the fairness of these activities can be ensured, and unethical practises being practised can be curbed too. Also, in the event of a fraud being committed upon the consumers, they can always have recourse to legal action.
2. A proper age identification check can be done in order to ensure that minors are not allowed to gamble online. Security provisions would be there on every gambling website, which means that individuals have to provide documents for age verification while logging in, which will prevent underage individuals from gambling online.
3. Regulation would ensure that all the industries involved in providing online services for gambling would be monitored and, as such, all the revenues generated can be traced by the government and taxed, which will generate revenue for the government and the same can be used for public welfare.
4. Regulating online gambling would also ensure licensing, which will ensure fair practises and also see that consumer’s security and privacy are not jeopardised.

The 276^th Law Commission Report on Legal framework for gambling in India

The law commission recently gave a report on “Legal Framework: Gambling and Sports Betting, including in Cricket in India”, which has been drafted on the direction received by the Supreme Court in Board of Control for Cricket in India v. Cricket Association of Bihar & Ors.

The report recommends the legalization of gambling in India as banning such activities has proved to be futile. The report also suggests that it has become impossible to curb these activities and it is really difficult to monitor them online. Regulating them would ensure curbing illegal activities.

The report provides for certain measures to regulate gambling activities like:

• Gambling services should only be provided by licensed operators after obtaining a license from the game licensing authority.
• The report has also suggested that an upper limit should be decided by the law for the amount that can be wagered while gambling, depending upon the deposits, wins, and losses of an individual.
• The commission has distinguished between proper gambling and small gambling on basis of their income status. People of higher socioeconomic status would be free to gamble as they pleased, whereas those of lower socioeconomic status would be limited in the amount they could stake.
• To ensure transparency in the system and to monitor all such transactions, it is required that both operators and gamblers link their PAN/ Aadhar Cards.
• People living in poverty and other vulnerable groups would not be permitted to gamble online. Also, minor, i.e., children below 18 years of age would not be allowed to gamble online.
• All the transactions should be cashless so that the state can keep a check on it and all the profits made from such activities would be taxable under the tax laws of the country.
• Section 30 of the Indian Contract Act of 1872 has to be amended, which makes all the wagering contracts void.
• The commission has suggested criminalising match fixing and sports fraud.

Future of online gambling in India

With the advancement in technology comes the demands of people. A recent petition in the Delhi High Court sought the government regulation of online gaming, including gambling activities. The Centre’s response to the petition stated that it was the state governments’ responsibility to regulate the same and that the Ministry of Electronics and Information Technology (MeitY) is in no way responsible for regulating it. It is contended that, considering the colossal growth in the online gambling industry, the Constitution must be amended to make regulation of online gambling a subject in the Union List so that central level legislation on online gambling can be enacted.

Also, the income from online gambling is taxed under Section 115BB of the Income Tax Act, 1961, wherein winnings from all sorts of gaming or gambling of any form are taxed at a flat rate of 30% of the winnings. This generates income for the government. The fantasy sports platform Dream11 recently became India’s first unicorn in the online gambling sector. More players are entering the said sector due to the growth prospect, and it generates employment to several people.

Therefore, a strong central-level legislative framework for online gambling that regulates online gambling platforms, and at the same time can guarantee the safety of an individual’s money is a necessity.