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ONLINE GAMING OR DIGITAL GAMING IN INDIA

Online gaming spans from your simple pre-installed Solitaire to video games like PUBG. Digital gaming/gambling remains a grey area in India as it is yet to be adjudicated by Indian Courts. Indian Law classifies gaming into two broad categories; game of skill and game of chance.

‘Betting and gambling’ are under the State List of the Indian Constitution. However, only few States have taken measures in an attempt to regulate this area. Sikkim is the only State in India which has enacted a law for digital gaming and sports betting.

There are various legislations enacted by Centre as well as State for gaming activities such as the Public Gambling Act, 1867 enacted by the Centre. However, these statutes were enacted prior to the advent of online gaming and therefore these statutes primarily regulate physical gaming and gambling in physical premises defined as “gaming or common gaming houses”.

Sikkim Online Gaming (Regulation) Act, 2008

By this Act, a person can obtain a license from the State to operate a gambling house. Through this enactment, the State issued the Sikkim Online Gaming (Regulation) Rules, 2009 which permits online games after a license has been issued for games such as roulette, black jack, pontoon, punto banco, bingo, casino brag, poker, poker dice, baccarat, chemin-de-for, backgammon, keno, and super pan 9. The Sikkim Rules also ensure that these games are safe, secure and fair.

Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2015

This Act has empowered the State to issue a license for games of skill. The primary objective of the Act is to prohibit gambling and to regulate and promote ‘online games of skill’ within Nagaland after a license has been obtained from the State Government for specific online games that can be played in a legally regulated environment.

Telangana State Gaming (Amendment) Ordinance, 2017

This Ordinance seeks to make significant amendments to the Telangana State Gaming Act, 1974 (Gaming Act) so as to extend its application to the realm of online gaming.

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By the expansion of the scope technology in varied arenas including gaming, the availability of the games has increased on the virtual space as well. In absence of appropriate regulations, online gaming in many States is being controlled by the available respective gaming/ gambling legislations.

Therefore, as of now the subject of gaming in India is governed by the respective state governments as per the respective state legislations enacted by them.

While some States have specifically laid down or are in the process of laying down clear, unambiguous legislations regarding the playing of online games within their premises, some others have explicitly prohibited betting in any form within their boundaries

Online Gaming

In India, online gaming is not prohibited. Online gaming with stakes or real money is allowed in most of the states of India. Therefore, unless specifically prohibited by the state government, it is not prohibited.

Online games with stakes/ real money cannot be played in whole of India as the laws of the states of Assam, Odisha and southern State of Telangana specifically prohibit online games with stakes in India.

Subject to the state laws of the location of the business offering online games with stakes, specific license/ permission may be required.

With regards to taxation on the earnings from the gaming activities, in cases where the winnings/ Prize money by way of gaming activities exceeds the amount of INR 10,000, the TDS provisions are applicable at the rate of 30% without cess.

Indian Judiciary on Online Gaming

Although the courts have observed that the skill based games are exempted from the purview of gambling, the District Court of Delhi opined that when skill based games are played for money in virtual space, the same would be illegal and observed that the degree of skill in games played in a physical form cannot be equated with those played online as the degree of chance substantially increases because various manipulations including the randomness, inside cheating, collusion cannot be ruled out, when the same games are played in the virtual space. [3]

For more information Online Gaming Laws in India, please write to us at info@ssrana.com or submit a query.

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Online Gaming being an upcoming field currently does not have a specific legal framework to regulate their administration. Therefore, it is regulated separately by state legislation. The existence of varied State Legislations sometimes causes difficulty in categorizing and identifying as to which online games are games of skill or acts of gambling, thereby making them legal or illegal. A pertinent point to be mentioned here is that the involvement of stakes by itself does not make a game a gambling activity.

Below mentioned are certain kinds of online games in India and legality surrounding them:

  • Gambling: However, gambling/ online gambling is prohibited in India except in the western State of Goa and union territory of Daman and Diu and north-eastern State of Sikkim.
  • Fantasy sports games: Fantasy sports games are not illegal/ prohibited in India. Fantasy sports games are different from gambling in India as they are considered as games of skill. Subject to the state laws of the location of the business, the online fantasy sports games can be offered by a business through operation of a mobile application/ website
  • Sports Betting: No, sports betting is not legal/ permitted in India.
  • Online Poker: Playing online poker with stakes/ real money is legal/ permitted in most of the states of India. Unless specifically prohibited by the state government, online poker with stakes/ real money is not prohibited.
  • Online Card Games: Unless specifically prohibited by the state government, playing online card games like Poker, Rummy etc. with stakes/ real money legal/ permitted in most states of India.

The following States strictly prohibit betting even though the skill may be involved:

  • Assam  
  • Odisha
  • Telangana

For more information Online Gaming Laws in India, please write to us at info@ssrana.com or submit a query.

To know more about Gaming Laws in India, click on the links below:

Gaming & Sports Law in India

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Gambling Laws in India

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Category: online-game-faq

Subject to the state laws of the location of the business offering online games with stakes, specific license/ permission may be required.

Why License?

The online gaming involving stakes is not per se prohibited in India, therefore the requirement of obtaining license for online skill games is not mandatory. However, it is beneficial in the following terms:

  • Verifies that a game is game of skill.
  • Ensures no gambling activities are carried on by the operator.
  • Skill games shall be allowed throughout all states in India except those prohibiting betting
  • Skill game allowed for playing on web platforms
  • Skill game allowed for playing mobile platforms
  • Higher chances of revenue generation since permission indicates authenticity

Obtaining a License for Online Gaming in India

In order to obtain the license for online skill games, an application is required to be made to the Directorate, Nagaland State Lotteries along with submission of necessary and applicable fees.

The license for online skill games with stakes from Nagaland State Government is valid in all states in India except in those states which have specifically prohibited the activity of online games with stakes. It is valid of a period of 5 years.

The fee structure for obtaining the license for game of skill in Nagaland is stated below:

  • Application fees: INR 50,000/- [One time fees]. This fees is non-refundable.
  • Annual license fees: INR 1,000,000/- p.a. for first 3 years per game and INR 2,000,000/- p.a. for next 2 years. However, for 3 or more games the annual license fee is INR 25,000,000/- p.a. for first 3 years and INR 50,000,000/- p.a. for next 2 years
  • Royalty: 0.5% of the gross revenue (less service tax) generated by the business which has obtained the license.

A point to be noted here is that a foreigner or a foreign company cannot apply for online gaming license issued by Nagaland State Government. Only those entities which have their controlling stakes and executive decisions are taken in India can apply. The license for online skill games issued by the Directorate of Nagaland State Lotteries is valid for a period of 5 years, which can be renewed after a period of 5 years from the date of issue of such license.

For more information Licenses related to online games in India, please write to us at info@ssrana.com or submit a query.

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In order to decide the legality of a game involving stakes whether or not involving sports, the Indian judiciary has primarily based its arguments on whether the game is a game of skill or game of chance. Further, in order to decide the said issue, the judiciary has placed reliance on the “dominant factor test” followed by the courts of U.S.A. which seeks to determine whether “chance” or skill is the dominating factor.

Foreign investment and foreign technology collaboration in any form are completely prohibited in the gambling and betting sector.

View of Law Commission of India on sports betting

 The Law Commission is yet to provide its recommendations on the subject of sports betting in India yet. It is considering the question as to whether to consider sports betting to be a game of skill. However, a report in this regard is expected to be released shortly.

Online sports betting

The State governments are empowered to make laws on the subject of betting activities as per the Seventh Schedule to the Constitution of India (Entries 34 and 62 of List II). Where a specific State legislation on gambling/ betting does not exist, the Public Gambling Act, 1867 is applicable which prohibits gambling and betting activities however, does not include “games of skill” in its ambit.

As per the Sikkim On-line Gaming (Regulation) Amendment Rules, 2009, online sports betting was made legal in the State of Sikkim, however, certain permissions are required for offering the same.

In order to offer online sports betting, a gambling license is required to be obtained from the Government of Sikkim under the provisions of the Sikkim State laws.



For more information Online Gaming Laws in India, please write to us at info@ssrana.com or submit a query.

To know more about Gaming Laws in India, click on the links below:

Gaming & Sports Law in India

Online Gaming in India

Gambling Laws in India

Sports Law in India

Category: online-game-faq

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