Foreign Investment or Foreign Technology Collaboration & Betting Sector


Foreign Investment or Foreign Technology Collaboration & Betting Sector

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

The Supreme Court in Dr. R. K. Lakshmanan (supra) held that horse racing is a game of mere skill within the meaning envisaged under the Madras City Police Act, 1888 and Tamil Nadu Gaming Act, 1930. The Court explained through various instances how horse racing can be considered a game of skill as the betting in horse races are based on evaluative skills and various other factors like skill and management of the jockey.

On 1 August 2009 the State of Sikkim Government posted the Sikkim On-line Gaming (Regulation) Amendment Rules, 2009, which makes changes to the Sikkim On-line Gaming (Regulation) Rules, 2009

In short, this act made online sports betting in the state of Sikkim legal. However to offer sports betting a gambling license is required under the terms presented in various Acts, amendments and memorandums issued by the Government of Sikkim

1 August 2009 – In addition to adding sports betting the Sikkim On-line Gaming (Regulation) Amendment Rules, 2009 made several other changes. The one worth noting is the licensing period became 5-years requiring a 5 lakh payment for approved applicants (about $10,000 US).

20 August 2009 – The original Sikkim On-line Gaming (Regulation) Act, 2008 itself was amended to add Sport Gaming to the text. A separate memorandum was also issued to clarify all gaming laws in order to make it clear sport betting is now legal in the state. Once again however a license is required to offer “sport gaming”.

Sports betting is also on the roadmap in India, pending the report of the Law Commission of India, due to be released shortly.

The Law Commission is currently studying sports betting with a view recommending whether or not to regulate. According to lawyers speaking at the conference, legal interpretations of current court rulings related to horse race betting could mean sports betting coming under the definition of games of skill.

An early ruling came in 1957 where Horse Race Betting was determined a skill:

“The expression “gaming” in the two Acts has to be interpreted in the light of the law laid-down by this Court in the two1957 cases, wherein it has been authoritatively held that a competition which substantially depends on skill is not gambling. Gaming is the act or practice of gambling on a game of chance. It is staking on chance where chance is the controlling factor. “Gaming” in the two Acts would, therefore, mean wagering or betting on games of chance. It would not include games of skill like horse racing”.

Rule 4 of these rules says

“The intermediary, on whose computer system the information is stored or hosted or published, upon obtaining knowledge by itself or been brought to actual knowledge by an affected person in writing or through email signed with electronic signature about any such information as mentioned in sub-rule (2) above, shall act within thirty six hours and where applicable, work with user or owner of such information to disable such information that is in contravention of sub-rule (2). Further the intermediary shall preserve such information and associated records for at least ninety days for investigation purposes…”

Rules 3 (b) and 4 make it abundantly clear that any gaming website is illegal and would have to be shut down. Thus, websites based out of Sikkim or any other part of the world can be disabled/made inaccessible to Indians when the names of such websites come to the knowledge of Indian authorities.

Thus, as such even though the State of Sikkim as a separate state of India has the Constitutional right to regulate aspects relating to betting and gambling (as per entry No. 34 of List II of the Seventh Schedule of the Constitution), the pan- India and also extra-territorial applicability of the Information Technology Act, 2000 (as per Section 1 of the Act) and the rules created thereafter; make these rules applicable across India, including Sikkim.

You might also run into problems trying to use PayPal, Entropay or even Neteller, all of which have had problems with India.

And you can thank the Payment and Settlement Act, 2007 for that. This was signed into law on December 20th, 2007 by Madame President Patil.

This law gives the Reserve Bank of India the ability to regulate all forms of electronic payments. The most important part of the law states that:

Payment system not to operate without authorisation : (1) No person, other than the Reserve Bank, shall commence or operate a payment system except under and in accordance with an authorisation issued by the Reserve Bank under the provisions of this Act

For more information Gambling Laws in India, please write to us at 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

For more information please contact us at :