The Law Behind Online Casino

The Law Behind Online Casino


This Blog is written by Nikhil Mishra from Central University of South Bihar, GayaEdited by Ravikiran Shukre.



We are living in modern age, also known as the information age where most of things are based on technology. We are so busy in online things that we usually forget small things and issues that what contents on online platforms are illegal and even if we come to know, we overlook it. Technology has changed the way we, human beings used to live and interact with people.

Today, everyone is globally connected and the credit for the same goes to the advancement of information technology which can be considered as one of the great feats achieved by us humans. Such advancement has given humans tremendous advantage but as another side of the coin, it too has various downsides. Video game industry is one of the field which really got benefitted by the advancement in information technology field. Today, it is one of top industries of the world with worldwide connectivity through the means of internet. As per speculations, by 2025, the business of this industry will cross 300 billion dollars. Earlier, it was considered as the free time activity but now it has taken the shape of a proper profession. It has become so big industry with the ever-increasing number of players, the developers are always working on finding new ways to attract users and make more profit than ever.

Online casinos are a part of this e-game industry. Basically, it is a form of betting which takes place completely in the virtual world.


The Constitution of India has given power and authority to individual states to make their own specific laws regarding gambling and betting. For example, Goa which is the favourite place of gamblers has its own law, Goa, Daman and Diu Public Gambling Act, 1976 whereas Assam too has its own law, Assam Gaming and Betting Act, 1970. Each state of India has their own rules and laws regarding betting and gambling. These laws were enacted when there was not internet connectivity among public. So, they were enacted before the arrival of online gambling services. There are only two states, Nagaland and Sikkim, which have specific regulations and permits on online gambling. State of Telangana, later on amended its laws and made provisions on online gambling. Online casino, for the first time, was established on August 18, 1995. There was only one casino at that time, but now whole market of online gambling can be seen in almost all corners of the world. Gambling industry is considered as one of the highest revenue generating industries, and Asia makes 30% of them.

Gone are the days when only traditional form of gambling prevailed, the modern era has been overtaken by the online industry. Now, one can play teen patti, poker and rummy, online. Sports betting is too common in online industry. There are many websites which provides the services of online betting while sitting at office chair or resting in bed room.


It is the sole responsibility of Indian states to make laws regarding gambling activities within their territory. Running and being in charge of public gambling houses is prohibited an act called The Public Gambling Act, 1867, which has been made and controlled by central laws. In violation of this law, a penalty is imposed in the form of fine of ₹200 or imprisonment of up to 3 months. Not only this, but the Act also prohibits from visiting gambling houses as well, in violation of which ₹100 as fine or imprisonment of up to a month, will be imposed.


Gambling has been allowed in some parts of India. The State of Goa has amended its laws of Gambling Act in Goa, Daman and Diu Public Gambling Act, 1976. [1] There were seven offshore and land-based casinos in the state of Goa. Sikkim became the second state to legalise gambling. [2] Operation of casino business has been permitted and licensed in Sikkim through The Sikkim Casino Games (Control and tax Rules) 2002. Besides this, The Sikkim Regulation Act 2005 provide authority to allow gambling on certain days and to prohibit the same on certain days. The central government has no jurisdiction over online gambling services. [3] The UK licensed bookmakers provides license for online gambling which is legal under European and International laws, but it’s very difficult to reach the gambling sites because of action taken by Indian laws over this.


Though online casinos are not completely established in India but online gambling in different forms has now become a large market in India. Sikkim, the least populous state of India provides online lotteries and horse betting. In 2010, the state planned to provide three online gambling licenses. After the move of Sikkim, it was expected that other states too would offer online gambling services like Sikkim which would lead to opening of an online gambling market in India. But the expectations remained expectations and even after being the most sought out country for online gambling, India is yet to legalise online gambling throughout the country.

As per Indian law, it is illegal to fund online gambling sites in India by using any other currency other than rupees. [4] This law is known as Foreign Exchange Management Act. According to this law, if one wants to place an online betting on gaming sites or bookmaker, then one needs to do it in rupees. There are very few sites which provides betting in Indian currency, so most of the Indian gamblers use the e-wallet to send and receive the bet amount. Paypal and Moneybookers are two most popular e-wallet services for such purposes.

As per The Public Gambling Act, 1867, online casinos are not allowed to be operated so far, but there exist loop holes too in betting laws of Indian Constitution. In a country with such a huge population, casino giants are looking for opportunities to operate their business in India.


• The tax on the income earned through gambling (casino) is thirty percent along with a surcharge of ten per cent on the above tax. So, no deductions and exemption are available against such income under the income tax act. [5]

• If gambling or casino house has not deducted tax at thirty percent before handing over the won amount to winner, he is liable to pay the same when he files his income tax return. The said tax on “winnings from gambling” is covered under Section 194 B of the Income Tax Act. [6]

• The host country will usually deduct tax on the winnings if an Indian earns the amount outside India, before handing over his balance amount. The said amount can be deposited in his local account in India provided he transfers the same through banking channels otherwise, it is illegal to carry huge amount of cash across international borders. Usually, an amount of USD 5000 is allowed as foreign currency into India if it exceeds the limit. The same has to be reported to customs. [7]

• If a person transfers the winnings from abroad the said amount will attract tax, as he is a resident of India. For a resident of India, his global income is taxable in India so he will be required to pay a tax locally in India in addition to the tax he pays in the foreign country. [8]


The law commission recently gave a report on “Legal Framework: Gambling and Sports Betting including in Cricket in India” which has been drafted on the direction received by Supreme Court in Board of Control for Cricket in India v. Cricket Association of Bihar & Ors. [9] The report recommends for legalization of gambling in India as banning such activities have proved to be futile. There certain measures to regulate gambling activities which has been provided in the report. They are as follow:

1. Gambling services should only be provided by licensed operators by obtaining a license from game licensing authority.

2. The report has also suggested that an upper limit should be decided by the law for the amount that can be wagered while gambling depending upon the deposits, wins, and losses of an individual.

3. The commission has distinguished between proper gambling and small gambling on basis of their income status. People belonging to higher class would be allowed to gamble according to their own desires whereas people belonging to lower income group would have a restriction on the amount which they can stake.

4. In order to ensure transparency in the system and to monitor all such transactions, it is required that both operators and gamblers should link their PAN/Aadhaar Card.

5. People belonging to Below Poverty Line and from other vulnerable sections would not be allowed to gamble online. Also minor i.e. children below 18 years won’t be allowed to gamble online.

6. The commission has strictly stated that no pornographic content should be there on the websites.

7. All the transaction should be cashless so that the state can keep a check on it and also all the profits made out of such activities would be taxable under the tax laws of the country.

8.Section 30 of the Indian Contract Act 1872 has to be amended which makes all the wagering contracts void.

9. The commission has suggested criminalising match fixing and sports fraud.


Activities which were considered to be immoral some decades back are not so immoral anymore like gambling. Earlier, gambling was considered as a social evil, but so is not the situation now. So, law needs to be changed as society changes. The argument that gambling is an immoral activity and should be banned completely lacks enforceability due to the transnational character of the internet which will continue to provide opportunities to people for gambling online. The size of the market for online gambling is increasing rapidly and its high time that the government should take steps to regulate it. A comprehensive legislation should be bought which is the need of the hour to regulate such activities on the internet. The legislation would aim to protect the interest of the gamblers by protecting them from fraudulent players in the market and would also take steps to curb problems like problem gambling, youth addiction, criminal behaviour, and money laundering activities.

On the other hand, the government would also be able to keep a check on such transactions and can tax profits made out of them which will serve as a good source of revenue for the government. It will also help in reducing the scope of the illegal market and circulation of the black market in the economy as regulation will ensure transparency which will curb underground activities. I also recommend that a Gambling Commission should be set up in India which will be given the task to issues licenses to the relevant players in the market and ensure that such operators link up their Aadhaar Card/ Pan card in order to ensure a free and fair market. No one should be allowed to provide gambling services online without having a license and the same should be made a punishable offence. Also, the recommendations made by the law commission in its 276th report should be kept in mind while framing a legislative framework. So, the only solution to the problem of internet gambling is to regulate it and provide for a proper legislative framework.


[1] A Walk Through The Gambling Laws In India, available at:

[2] Gambling in India Legal or Illegal, available at:

[3] Gambling in India Legal or Illegal, available at:

[4] Is it Legal to Wager in India? available at:

[5] Are Casinos Legal in India, available at:

[6] Are Casinos Legal in India, available at:

[7] Are Casinos Legal in India, available at:

[8] Are Casinos Legal in India, available at:

[9 Board of Control for Cricket in India v. Cricket Association of Bihar & Ors [(2014) 7 SCC 383.]

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