In India, the central legislation regulating gambling is the Public Gambling Act, 1867 (“PGA”). While the PGA does not expressly define gambling, it prohibits the keeping or owning of a “Common gaming-house,” which is defined 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. Importantly, the PGA exempts games of mere skill from the prohibitions contained in the PGA.

Furthermore, it is to be noted that betting and gambling is a state matter under the Constitution of India, which means each state can independently legislate on gambling. While some states such as Tamil Nadu, Goa, and Sikkim etc. have introduced their own legislations (“State Enactments”) that govern gaming and gambling, other states have adopted the PGA.

Generally, according to most State Enactments, gambling is understood to mean “the act of wagering or betting” for money or its equivalent. Indian courts have judicially interpreted gaming/gambling to mean betting or wagering on games of chance. Typically, under most State Enactments, “gambling” or “gaming” does not encompass: (a) wagering or betting on horse races (or similar competitions) if such wagering or betting occurs under certain prescribed conditions; (b) games of “mere skill”; and (c) lotteries (which are separately regulated).

As noted above in response to Question #1, the primary legislation regulating gambling in India is the PGA. However, under the Constitution of India, betting and gambling are state matters, which means individual states have enacted their own laws governing gambling. Some states have adopted the PGA, while others have introduced their own legislations. It is important to note that both the PGA and most state enactments exempt games of skill from the prohibitions on betting and gambling.

A “game of mere skill” is defined as one in which success primarily depends on the player’s knowledge, attention to detail, experience, and judgment, though some element of chance may still be involved. The distinction between games of chance and games of skill has been extensively addressed by Indian courts on several occasions. The Indian Supreme Court has clarified that such games are those where skill is the predominant factor, in spite of the presence of luck as part of the gameplay process. In State of Andhra Pradesh v. K. Satyanarayana & Ors.,¹ the court ruled that rummy is a game of skill. Further, in R. Lakshmanan v. State of Tamil Nadu & Ors.,² the Court determined that betting on horse races is a game of skill. In both cases, the court applied the “dominant factor test”, similar to the judicial test used in the U.S., to determine whether skill or chance primarily influences the outcome. This test requires the court to decide whether skill or chance is the dominating factor in determining the result of the game. The Karnataka High Court, in All India Gaming Federation v. State of Karnataka,³ upheld this view, stating that games based on skill are permissible and protected under Article 19(1)(g) of the Constitution, extending these protections to online gaming platforms as well.

State-specific practice with respect to games of chance and skill varies widely across India. In Andhra Pradesh, Assam, Odisha, and Telangana, all forms of gaming or gambling, including games of skill, are banned. These states prohibit betting or wagering on games for money, with no exceptions for skill-based games. Some states, like Nagaland and Sikkim, require licenses for operating online skill-based games. Nagaland issues licenses for various skill games, while Sikkim allows online gaming only through intranet terminals and requires specific licenses. Other states like West Bengal and Goa have regulations requiring permits for skill-based games or casinos. Further, Karnataka and Tamil Nadu have introduced laws banning online gambling and skill-based games for money. Some key provisions of the Karnataka’s law have been struck by Karnataka High Court, while Tamil Nadu’s law was recently struck down by the Madras High Court; both states have appealed these decisions in the Supreme Court.

Footnote(s):

¹ AIR 1968 SC 825.

² AIR 1996 SC 1153.

³ 2022 SCC Online Kar 435.

In India, only a few states allow operators to conduct gambling under a licensing system. For instance, the respective licensing authorities in Nagaland and Sikkim are the Finance Commissioner in Nagaland, and the authorized officer of the Finance, Revenue, and Expenditure Department in Sikkim, respectively.

a. What is the duration of a licence?

The duration of license varies from state to state. For instance, In Nagaland, licenses are valid for five years and automatically renew each year as long as the license fee is paid. In Sikkim, licenses are also valid for five years, unless cancelled or surrendered, and can be renewed through an application.

b. What types of licences are available?

In India, casino games, which are considered games of chance, are mostly banned, except in Goa, Daman and Diu, and Sikkim, where licenses are available for operating casinos in five-star hotels and through intranet systems.

Poker, when played as a skill-based game, can typically be offered without a license in most states, although operators in Sikkim, Nagaland, and Tamil Nadu may need one.

A license is typically required for betting on physical horse races, although practice varies from state to state. For instance, Sikkim provides licenses for sports betting, but only through intranet within the state.

Fantasy sports games, if classified as skill-based, usually do not require a license, but operators in Nagaland and Tamil Nadu are subject to restrictions for such games as well.

Private lotteries are generally prohibited, with state-run lotteries being the exclusive form of recognised lottery competitions. State-run lotteries can appoint private distributors or agents to sell tickets, but there is no licensing or permission available for an entirely private lottery setup.

c. Are there different types of licences for B2C and B2B operators?

Yes. In India, there are distinct licenses for Business-to-Consumer (“B2C”) and Business-to-Business (“B2B”) operators. B2C operators are subject to the regulations pertaining to gaming / gambling, so depending on the state in which they operate, they may need licenses to directly engage with consumers through gaming activities, such as operating gaming platforms or casinos. On the other hand, B2B operators, like software providers or technology companies supporting gaming platforms, typically do not need a separate license, as they are not viewed as directly engaged in the operation of a gaming business for regulatory purposes.

d. Do software suppliers need to be licensed?

No, software suppliers offering technology services to gambling operators typically do not need a separate gaming license. However, the party directly operating a gaming platform is subject to applicable gaming regulations. In particular, the operators of online games are subject to rules that were recently issued under the Information Technology Act 2000 (“IT Rules”), which (among other things) prescribe consumer protection and education requirements, and provide for the establishment of self-regulatory bodies (“SRBs”) to certify online games as games of skill and administer rules for online gaming. This new regulatory framework is currently in flux, as they have not yet been fully implemented, and as the SRB system is itself likely to be overhauled in favour of a government-run certification process.

As discussed in questions #1 and #2 above, gambling is generally prohibited under the PGA, which bans public gambling establishments unless they are part of state-approved exceptions. Additionally, games of pure chance, with no element of skill, are often restricted or outright banned in many states. However, some gambling activities are permitted under specific state-sanctioned exceptions as follows:

1. Horse Racing: Betting on horse racing is considered a game of skill rather than chance, a classification supported by the Supreme Court of India. This allows states to legalize betting on horse races under certain conditions, such as only permitting bets on the day of the race and within designated physical areas approved by the state. Various state laws have been enacted to regulate horse racing and allow turf clubs to manage betting within their premises.
2. Lotteries: The Central Lotteries (Regulation) Act, 1998, grants state governments the authority to organize and regulate lotteries. While private lotteries are generally prohibited, state-run lotteries are allowed and must comply with specific regulations. States like Sikkim have established a thriving lottery system under this framework.
3. Casinos: Only a few states, such as Goa and Sikkim, have legalized casinos. In Goa, casinos can operate within five-star hotels and offshore vessels, under the Goa, Daman, and Diu Public Gambling Act, 1976. Sikkim also allows casino operations and has created a regulatory framework that permits both land-based and online gaming.
4. Games of Skill: Certain games, like poker and rummy, are recognized as games of skill and are exempt from gambling bans in some states. For example, the Delhi Gambling Act, 1955 allows card games like rummy to be played in private settings with the appropriate permits. However, not all states acknowledge this distinction, and in places like Assam and Telangana, all forms of real-money gaming are currently prohibited.
5. Fantasy Sports: Fantasy sports have gained popularity in India and are often treated as games of skill. Some states, like Nagaland, have specific laws that require operators to obtain licenses to offer fantasy sports legally.

While many forms of gambling remain prohibited across India, these exceptions provide a legal framework for specific activities like horse race betting, state-run lotteries, casinos in select regions, and skill-based games. The legal landscape remains complex, with varying state-specific interpretations of what constitutes a game of skill versus chance, resulting in different regulatory approaches across the country.

The PGA does not specify any application procedures. However, certain state-specific laws in regions with licensing systems detail the application process, requirements, fees, and other relevant conditions. For instance, to qualify for a license in Nagaland, the applicant must be an entity incorporated in India, with a significant ownership stake in the country and a clean criminal record. The applicant must not have any involvement in gambling activities, whether online or offline, within India or internationally. The controlling interest and decision-making powers must remain within India, and all technological operations, such as website hosting and server management, must be based in India.

No, the individuals within the business need to be personally licensed or authorised.

According to Chapter III of the Advertising Standards Council of India’s (“ASCI”) Code for Self-Regulation of Advertising Content, advertisements should not promote activities that are illegal under Indian law. Similarly, Rule 3(1)(b)(ii) of the Information Technology Rules, 2021 prohibits the publication of content that promotes gambling. In response to the rise in advertisements promoting illegal activities like betting and gambling, the Central Consumer Protection Authority has issued a detailed advisory under the Consumer Protection Act, 2019, emphasising the ban on advertisements by online betting platforms and apps disguised as gaming promotions. Additionally, online advertising intermediaries have been warned against targeting Indian audiences with such advertisements. The advisory also refers to the Guidelines for Prevention of Misleading Advertisements and Endorsements, 2022, which specifically prohibit the promotion of illegal products or services. These guidelines apply to all forms of advertising, and the advisory cautions celebrities and influencers that participating in the promotion of online gambling or betting could make them liable for participating in unlawful activities. As a result, the advertising of gambling is subject to stringent regulatory restrictions in India.

Affiliate marketing in India is regulated under the Information Technology Act, 2000, and the ASCI guidelines. The Information Technology Act, particularly Section 66E, emphasizes ethical online advertising and privacy protection, while the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 require affiliates to avoid misleading content and provide clear user agreements. ASCI’s Code of Ethics require affiliates to disclose their brand relationships with disclaimers like #ad or #sponsored and ensures that all digital advertisements are truthful and not misleading. Although no specific license is required, affiliate marketers must comply with these regulations to maintain transparency, ethical practices, and legal compliance in the digital advertising space.

The PGA stipulates that anyone who opens, keeps, or allows a house, room, or place to be used as a common gaming house can face a fine of up to INR 200 (~USD 2.35) or imprisonment for up to three months. This applies to those who permit others to use the property for gaming, manage such premises, or provide financial support for gaming activities, and also applies to online gaming activity.

Anyone found in a gaming house, whether playing games with cards, dice, or other gaming instruments, or merely present with the intent to gamble, can face a penalty. The punishment may include a fine of up to INR 100 (~USD 1.17) or imprisonment for a term not exceeding one month. Additionally, anyone found in a common gaming house during gaming activities will be presumed to be there for gambling unless proven otherwise. As above, these rules extend analogously to online spaces.

Beyond the PGA, penalties for gambling activity are also applied under individual state-specific legislations, and are typically outlined in a state’s police or gambling statute. Enforcement action is typically pursued vigorously in matters where the authorities believe an illegal gambling space (whether physical or digital) is being operated.

Please refer to our response to question #6.

The Prevention of Money Laundering Act, 2002 (“PMLA”) requires a ‘reporting entity’ to fulfil certain duties, such as maintaining transaction records and reporting relevant information. A reporting entity includes, among others, individuals involved in activities related to games of chance for cash or kind, including those operating casinos.

The PGA, as well as the State Enactments, does not mandate any key responsible gambling requirements. The IT Rules prescribe a range of mandatory practices, but as noted in our response to question #4 above, these requirements are still in the process of being implemented.

State-specific practice can vary. For instance, the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Rules, 2016 set certain requirements for licensed operators in the state of Nagaland, including ensuring that games are not accessible to minors, using recognized payment methods, implementing fraud prevention measures, and displaying a responsible gaming charter on platforms. Additionally, the state of Tamil Nadu has introduced regulations around online gaming, including duration limits, age restrictions, and monetary thresholds.

Under the foreign exchange laws of India, foreign direct investment is prohibited in gambling and betting, including casinos, etc.

As noted in our response to question #10 above, from an enforcement perspective, the authorities mainly may impose fines or imprisonment under the PGA or State Enactments.

The Enforcement Directorate of the Government of India (“ED”) has conducted raids across multiple states, investigating offshore betting companies and illegal online casinos. Both central and state governments have taken action to block offshore online betting and casino sites from time to time. Further, the ED has also made arrests and seized funds related to unlawful betting and the routing of proceeds under the PMLA.

The Finance Act, 2023 introduced significant changes to the tax regime for online game winnings. Section 115BBJ of the Income Tax Act, 1961 (“ITA”) imposes a 30% tax on net winnings from “online games”, which are defined as games accessible via the internet through a computer or telecommunication device. This tax applies to both skill-based and chance-based games. The withholding tax obligation applies to any winnings exceeding INR 10,000, requiring entities to deduct 30% tax at the time of payment. Organizers must also collect the Permanent Account Number (“PAN”) of winners before disbursing payouts. Additionally, Section 194BA mandates withholding tax on income from online game winnings, effective from April 1, 2023.

Furthermore, indirect tax is imposed through the Goods and Services Tax (“GST”), which applies to both goods and services categorized under “supply”. As of 1 October 2023, a 28% GST is applied to the amount deposited with a supplier at the entry stage in online money gaming and casinos, which is considered a supply of actionable claims (classified as goods). However, GST is not applicable on re-investing winnings from previous bets. Foreign real-money gaming operators are required to register under a simplified process to comply with GST obligations. Tax authorities also have the power to block the platforms of non-compliant foreign operators.

Several states in India are considering or have introduced regulations for online gaming. The Rajasthan government is reportedly planning to regulate online fantasy sports and esports under a licensing system, while Uttar Pradesh is reviewing its colonial-era gaming laws. Madhya Pradesh and Kerala are also contemplating new online gambling legislation, and Goa is finalizing rules to regulate online gambling and casinos. In addition, the new GST rules referred to in our response to question #16 above are currently under judicial review pursuant to actions brought by the gaming industry, and may be revised in the foreseeable future.

In addition to the material addressed in our response to question #17 above, we should note that the Online Gaming (Regulation) Bill, 2022, was introduced in the Lok Sabha on April 1, 2022, as a private members’ bill. Its main provisions include the establishment of an “Online Gaming Commission” to regulate the industry and the introduction of a licensing system. The Bill is currently awaiting approval.

Imminent risks to the growth of the gambling market in the jurisdiction include regulatory uncertainty, with potential changes in state and central laws imposing stricter regulations or prohibitions. Pending Supreme Court cases on key issues, such as the classification of sports betting and fantasy sports, also create uncertainty. Further, central government initiatives to modernize laws or impose additional restrictions, such as monetary and time limits on online gaming, could lead to operational challenges. Finally, negative consumer perceptions and legal risks involving minors or misleading advertisements could harm market confidence.

The online gaming market is expanding rapidly in India, fueled by a young, tech-savvy population and increased internet penetration, creating ample opportunities for gambling start-ups. The jurisdiction also provides access to a skilled workforce in tech development, which helps new businesses scale efficiently. Regions such as Goa, Daman and Diu, and Sikkim offer licenses for both land-based and online casino operations, enabling start-ups to enter both physical and virtual gaming sectors. Additionally, the relatively low operational costs, particularly in technology and labor, make this jurisdiction an attractive option for new ventures.