The legal framework governing gambling in India is primarily based on the Public Gambling Act of 1867. This colonial-era legislation creates a distinction between games of skill and games of chance. Games of skill, such as rummy and fantasy sports, are generally considered legal, while games of chance like roulette are mostly illegal. This differentiation forms the basis for gambling regulations across the country.
In 1957, the Supreme Court of India established the 'preponderance of skill' principle in the State of Bombay vs. R.M.D. Chamarbaugwala case. The ruling declared that only games where skill predominantly determines the outcome are exempt from gambling restrictions. This principle continues to guide judicial interpretations, allowing games like fantasy sports to be classified as legal.
Online gaming platforms have leveraged the 'skill' loophole by promoting games such as poker, ludo, or rummy as skill-based. This branding allows them to sidestep regulations even if these games mimic the betting nature of chance-based games in their design and user experience.
Modern online game designs increasingly incorporate elements such as near-miss scenarios, randomized rewards, and engaging animations. These psychological triggers can make even skill-based games resemble slot machines, potentially leading to addictive behaviors among users.
Unfortunately, the Public Gambling Act of 1867 does not address the nuances of the digital age. It fails to consider online platforms, micro-transactions, or cross-border digital operators, creating a regulatory vacuum that both offshore operators and local startups exploit.
Gambling is covered under Entry 34 of the State List in the Seventh Schedule of the Constitution, giving individual states the authority to enact their own gambling laws. For instance, while states like Goa and Sikkim permit casinos, others like Telangana and Tamil Nadu have banned even online skill games.
These varied responses underscore the lack of uniformity in gambling laws across states.
Multiple legal challenges have reached High Courts and the Supreme Court, questioning bans on skill-based gaming. Courts have generally upheld the legality of games like fantasy sports if they meet the skill-dominance criterion. However, states often reimpose bans, citing issues like addiction and financial exploitation.
These challenges create enforcement gaps that illegal operators exploit.
Legal experts advocate for a comprehensive digital gaming code that clearly defines games of skill, sets licensing norms, and outlines compliance rules. Penalties for misleading users and a uniform classification system with central oversight are also essential components of future regulations.
Indeed, even games featuring skill components can include exploitative elements. For example, an online ludo app might use algorithm-influenced dice rolls, offer "power moves" via in-app purchases, or provide real-money rewards for winners, thus venturing into gambling territory.
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