The often unclear and inconsistent laws surrounding land-based gambling and online gambling in India create an enormous amount of uncertainty for those within the industry. We are seeing more states in India creating their own laws to outright ban online gambling, however there are still contradictions with regulating games whether they are skill-based or chance-based.
In addition, the unregulated industry in India poses a huge challenge for the Indian government as many offshore companies are benefitting from the lucrative market potential within India by targeting Indian players. However, not having centralised guidelines or gambling legislations are exactly why this is such an extensive problem.
This article will cover recent changes within the Indian states, the legal loophole that offshore companies take advantage of, and the future of the online casino industry in India.
Recent Contradicting Changes to the Laws in Indian States
Many changes within the last few months have shaken up the grey area online gambling has been in within India. So far, the number of Indian states that have banned online gambling are small, however it begins to pave the way for many more states to join. With each state being free to create their own laws regarding the act of online gambling, this also creates many contradictions and inconsistencies ranging from each state.
Maharashtra, Telangana, and Andhra Pradesh prohibit all forms of online gambling. While Karnataka and Kerala have recently joined this list, the former state has only banned online ‘games of chance’ while the latter state has banned online rummy.
A direct case highlighting the contradictions between state laws can be seen from recent rulings in the last few months. The Andhra Pradesh government banned online betting games this September, with the government citing it is their onus to protect the youth. However, many states are completely contradictory with their stances seen in just the month before where the Madras high court struck down Tamil Nadu banning online betting games in August, declaring the wide-ranging ban as unconstitutional.
The Legal Loophole for Online Casinos in India
While the states are going in different directions on the ruling of online gambling, online casinos still manage to target players in India due to a legal loophole. The aim of the Information Technology Act of 2000 intends to regulate cyber activities within India; however, it fails to mention online gambling at all.
Therefore, as online gambling isn’t specifically mentioned, this creates a grey area in which offshore online casinos can operate legally as long as the company is not registered within the borders of India. As long as Indian residents are not within a state that bans online gambling, they are perfectly within the law to use sites like this example here to find Indian online casinos and play at legally. Many online casinos targeting Indian players offer rupees to not violate the conditions of the Foreign Exchange Management Act of 1999. However, more and more online casinos are not breaching FEMA by offering alternative options for transactions through the use of e-Wallets. Another benefit to using e-Wallets for offshore online casinos is that it avoids any restrictions put in place by the government through traditional banking methods on gambling sites.
Is the industry going to go down, or is regulation inevitable?
The online gambling industry is projected to grow exponentially over the next coming years in India, so a pressing question is whether India will come to regulate it or try to shut it down completely. It’s clear that currently the system in India is in desperate need of an overhaul either way.
On the one hand you have more and more states banning online gambling which could influence other states to follow in their footsteps soon. On the other, the more liberal states such as Sikkim, where land-based casinos are legal, are considering fully legalising online gambling too.
There is no doubt that the online gambling industry in India has a huge potential for revenue and jobs for Indian entrepreneurs, however with gambling and online gambling still seen as a taboo, it could be seen as an uphill struggle to create a centralised and regulated law for India. It will be interesting to see what happens in the future to this industry in India!
