Gambling in India has existed since time immemorial. References to gambling are found in some of the country’s most ancient texts, including the Mahabharat, which contains the famous episode where Yudhisthir loses his entire kingdom (and his wife!) in a game of dice.
Under the Constitution of India, state governments are empowered to frame laws in respect of gaming and betting in their respective states. Currently, only horse racing, lotteries conducted by state governments and casinos in certain states are permissible. State governments have declared any activity which involves “gambling” or “gaming” illegal under the Public Gambling Act, 1867.
So, what really is gambling?
The New Encyclopaedia Britannica defines gambling as the betting or staking of something of value with consciousness of risk and hope of gain on the outcome of a game, a contest, or an uncertain event the result of which may be determined by chance. The terms “wager” and “bet” essentially mean money or other consideration being risked on an uncertain event or a promise to pay money or other consideration on the occurrence of an uncertain event.
The above definitions associate gambling with betting on the outcome of a game in which a person may win by chance and not by using skills. Indian law also seems to follow this approach. Accordingly, the Gambling Act, which expressly prohibits gambling and the setting up of gaming houses in India, does not apply to any game of skill, wherever played.
There are various judgements where courts in India, including the Supreme Court, have dealt with the difference between a game of “skill” and a game of “chance”. According to the Supreme Court, a game of chance is one which is determined entirely, or in part, by lot or mere luck. The throw of dice, the turning of the wheel, the shuffling of cards are all modes of chance. A game of skill, however, is one in which success depends principally on the superior knowledge, training, attention, experience and adroitness of the player. The issue could become complex when both “skill” and “chance” are involved.
One of the landmark judgements on the issue regarding a game of chance versus a game of skill was delivered in the case of Lakshmanan vs State of Tamil Nadu, where, among other things, the Supreme Court observed that a game involving both skill and chance would be characterized as a game of chance if the element of chance predominates over the element of skill, and a game of skill if the element of skill predominates over the element of chance.
In this case, betting on horse racing was challenged on the ground of it amounting to gambling. The Supreme Court was of the view that horse racing is a systematic sport, where a participant is supposed to have full knowledge about the horse, jockey, trainer, owner, turf and the composition of the race. It is a sport which depends primarily on a special ability acquired by training. Between two equally fast horses, a better trained jockey can be first past the post. Having stated that horse racing is a game where winning depends substantially and preponderantly on skill, the Supreme Court also concluded that betting in horse racing is not gambling.
The case of Lakshmanan vs State of Tamil Nadu has been the subject matter of various debates and, in fact, seems to have set the benchmark for determining the difference between a game of chance and a game of skill.
Read and applied in its widest context, the judgement may convey an impression that any bet placed on the outcome of a game which is predominantly a game of skill would not be “gambling”. Such a view may suggest that betting on all games other than those in which the outcome is based on the roll of a dice or a similar event of chance would be legal. However, reading the decision of the Supreme Court as suggesting that betting is permitted in India on every event which involves the application of skill may not be the most prudent approach to the issue.
The judgement in the Lakshmanan case was given in the context of races conducted at a race course, where spectators witnessing the event were betting on the game. The Supreme Court considered the persons involved in betting as almost participants in the event—witnessing while using their “expert” knowledge to make a decision.
It is possible that the judgement may not be of support when betting becomes possible in venues other than the venue of the event, such as through online websites. Although information may be made available with respect to horses, jockeys, racing, etc. on the website, given the easy access and the simple participative process involved, a larger number of viewers may be induced to place the bets, though they may have no knowledge of horse racing or the game on whose outcome they are placing a bet, or have no inclination to acquire that knowledge.
There is a difference in participating in a game of skill for money and placing a bet on the outcome of a game of skill. The latter could, under certain circumstances, still be treated as wager. For example, in a game of cricket or basketball, the performance of the players cannot be predicted. Hence, despite the judgement in the Lakshmanan case, determination of whether any betting in question involves skill or chance still requires careful consideration.
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This column is contributed by Meera Singh and Himanshu Rai of AZB & Partners,Advocates & Solicitors.