Legal & Regulatory
Is Poker gambling?
An issue that has been a matter of considerable debate in the West, is whether one of the most popular card games in the world, poker can be construed to be gambling.
For an activity to be construed as gambling, each of the following three elements has to be proved in most cases: skill, uncertainty and consideration.
Skill or chance?
Gaming laws in India exempt games of a substantial degree of skill from the purview of gambling acts which impose criminal liability on those organizing/managing and participating in gambling activities. While there is always a sort of uncertainty in any sport or game, be it cricket or chess (since one cannot predict the winner and certain external possibilities always cast aspersions on who the winner might be) and in most poker games there is staking of money to create an incentive for players (some kind of registration fee is also not uncommon for other sports) the only issue that needs to be considered is whether there is a substantial degree of skill required for playing poker.
There have been some one-off judgments abroad (some Danish, Russian and U.S. state courts have recognized poker as a skill-based sport), where poker has been construed as a game involving a substantial degree of skill and hence excluded from the ambit of gambling, the prevailing mood globally is to brand all card games as gambling.
While various mathematical and legal experts have used a great deal of statistical data to prove that poker is a game based on a substantial degree of skill and hence be excluded from other forms of gambling; most people still wince at the idea of comparing poker with intellectual games like chess and believe that luck plays a major role in determining the winner of a poker game.
Indian judicial decisions
I will now examine various Indian judicial decisions on games of skill (there has been no specific Supreme Court decision on poker) and explore the possibility of having the judiciary recognize poker as a game of expertise, differentiating it from other forms of gambling.
The Supreme Court in the landmark case State of Andhra Pradesh v. K. Satyanarayana and others (1968 AIR 825 1968 SCR (2) 387) while looking into whether playing rummy in clubs charging fee for the same can be construed as gambling observed:
The game of Rummy is not a game entirely of chance like the ‘three-card’ game mentioned in the Madras case to which we were referred. The ‘three card’ game which goes under different names such as ‘flush’, ‘brag’ etc. is a game of pure chance. Rummy, on the other hand, requires certain amount of skill because the fall of the cards has to be memorised and the building up of Rummy requires considerable skill in holding and discarding cards. We cannot, therefore, say that the game of Rummy is a game of entire chance. It is mainly and preponderantly a game of skill.
Again, in Dr. K.R. Lakshmanan v. State of Tamil Nadu and Another (1996 AIR 1153), the Supreme Court while deciding on the degree of skill required in betting on horse-races observed:
Horse racing has been universally recognised as a sport. Horsemanship involves considerable skill, technique and knowledge and jockeys have to be specially trained over a period of years. Whether a particular horse wins at the race or not, is not dependent on mere chance or accident but is determined by numerous factors, such as the pedigree of the animal, the training given to it as well as the rider, its current form, the nature of the race, etc. Horse racing has been held judicially to be a game of skill unlike pure games of chance like Roulette or a Lottery.”
Extending the arguments used by the Honble Supreme Court in these two decisions and using statistical analysis by various poker experts including David Sklansky (the author of the bestselling book “The Theory of Poker”) and others, it can be appropriate to say that no game of poker can be won without a certain degree of intellect, analytical skills and understanding of the game and thus requires a very high degree of skill. Those amateurs who are of the opinion that poker is a game of luck can try and play some games with experienced professionals and lose their stakes.
This degree of intellect and skill will not be required in roulette, lottery or other slot games and everyone (experienced or not) would stand an equal chance of winning.
So, is poker and cricket the same?
If one has already established that playing poker requires a lot of skill and talent, can the argument be extended further to say that playing poker is akin to playing some other sport like cricket?
Arguably so. While the opening of certain cards from a pack of shuffled cards clearly brings an element of chance or probability, it can even be argued that there is certain luck involved in the game of cricket. For example, even though Sachin Tendulkar is one of the worlds greatest cricketers, there is a possibility that he may be bowled by a novice bowler if there is uneven bounce on the wicket.
Thus, even in an India-Bangaladesh match, there is a fair chance that some Indian batsmen may get out for no-fault of theirs; but overall it is the better team that wins.
Similarly, even if a good poker player loses a hand to a novice even after getting good cards, it is the better player that generally wins the pot.
Note: In subsequent posts, I would be examining the recognition of poker as a skill-based game in other countries of the world and also the possibility of legally holding poker tournaments in India.
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JB
February 22, 2011 at 11:45 am
Hi,
Great post. However, the problem is that the courts in UK have said that poker is a game of chance..due to that, if a court case ever happens in India, it will be similarly viewed that due to the UK precedent, poker is also a game of chance. However, if you were to compare it to rummy, you can clearly see that poker is also a game of skill. I however doubt that the Indian Courts will view it similarly. Furthermore, there are huge risks in running a poker tournament without a clear court ruling in India. Is there any way to get the court to decide on whether it is a game of skill or no?
Jay Sayta
February 22, 2011 at 2:30 pm
Even though courts in U.K. have proclaimed poker to be a game of chance, but priority will be given to Indian precedents in any case. And yes, i would not recommend holding poker tournaments in any state where it is explicitly banned in the absence of any clear judicial decision in Indian on poker. However, poker tournaments may be held in certain parts of India where statutes expressly permit the same.
There are ways to argue the case for poker before Courts like filing writ petitions citing various research and case laws. Poker tournaments may also be held in certain parts of India where statutes have explicitly permitted the same.
I would be covering all of this in detail, in subsequent posts.
Rob C
February 22, 2011 at 8:41 pm
Great to see there are other countries going through the same discussion over poker as we are in the US. Keep it up and thanks for the updates.
Jay Sayta
February 22, 2011 at 9:23 pm
Yes, people are increasingly becoming aware about the skill-based element in poker as the popularity of has grown among the youth and there is increasing clamour to allow many forms of gaming-specially poker.
saurabh mishra
February 23, 2011 at 8:11 pm
i just want to conduct a small poker tournament in which i will take 500Rs as registration fee.
i just want to is dis allowed in india or not…
we will play in a group of some people
Jay Sayta
February 23, 2011 at 9:00 pm
In general, you cannot hold poker tournaments (since poker is generally considered to be gambling even though there are some who say it is a skill-based game) anywhere in India. If it comes to the notice of any law enforcement agency there may be a problem. But if it is discreet, not made public and the law enforcement agencies do not come to know about it then go ahead. People already play card games with family/friends….no issue with that…
saurabh mishra
February 24, 2011 at 12:00 am
if am taking an entry fee and the final winner gets the award……
in this the person in only loosng the money he gave fr registration….he cannt invest any further…….gambling is considered when a person keeps on loosing loosing and he is left with nothng dis is what a gambling means…..
i just want to organise a small event……can i get permission frm any high officer plezz do tel me its really imp…….if any officer allows fr dis so plezzz do tel……
saurabh mishra
February 24, 2011 at 12:00 am
thnks fr replyng…..
Jay Sayta
February 24, 2011 at 12:17 am
It may still not be legal for you to conduct the tournament as there is staking of money involved. it doesn’t matter whether the participants lose once or not. You may use the skill argument and decisions on rummy etc. to convince the officers but still permission may be rejected after which you may be able to argue in court on certain merits. But still depends on the state where you are trying to conduct such a tournament.
saurabh mishra
February 24, 2011 at 7:23 pm
i am tryng to conduct it in kanpur UP…..
SIR TEL ME IF THERE IS A SINGLE POSSIBILITY OF CHANCE………I WILL BE RELLY GREATFUL TO……
IS DERE ANY CHANCE OF IMPRISONMENT…..OR HIGH PENAALTY CHARGES
saurabh mishra
February 24, 2011 at 7:28 pm
SIR EVEN THUMBOLA WHICH PEOPLE PLAY CAN BE COSIDERD AS ILLEGAL….BECAUSE IT ALSO INVOLVES MONEY….AND THIS THUMBOLA EVEN A 4 YEAR CHILD OR BEGGAR WHO KNWS LITTLE BIT ABOUT NUMBERS CAN PLAY THUMBOLA…….NO SKILL REQUIRED NTHNG IS DERE TO UNDERSTAND…….WE SHOULD TAKE STEPS FORWARD ABOUT DIS AND TALK 2 THE GOVERNMENT…….
saurabh mishra
February 24, 2011 at 7:29 pm
SIR PLEZZZ DO TEL IF DERE IS ANY CHANCE…..
Jay Sayta
February 25, 2011 at 9:54 pm
I would like to reiterate that there may be punishment of upto 2 years and/or fine of few thousand rupees for any form of unauthorised gambling, including card games where there is skill (poker etc.) Even if certain forms of gambling are prevalent does not mean that you may escape liabilty if it comes to the notice of the authorities.
However, it may be possible to ask governments/ courts to delink poker from gambling and recognise/allow it as a skill based game. Such form of action would take a lot of time and efforts.
Anish H. Lakhani
February 26, 2011 at 10:21 pm
The Anti Gambling laws in India are state-wise – to the best of my knowledge there is no federal law. Generally the law is Public Gambling Act of various states. Gambling is not listed in Top 50 crimes according to Indian Penal Code. It is listed 52nd or 53rd.
It is the most easily bailable offense, and any gambling case will take over 10 years to conclude since it is in the lowest priority of the courts.
If convicted the maximum jail is for 6 months of odinary imprisonment (not severe imprisonment) but generally the Judge do not jail since they are not allowed to apply severe imprisonment and in odinary imprisonment it works out very costly for jail since jail has to feed the criminal two times and cannot make him work !!
Generally judge shall give financial penalty ranging from Rs. 1000 to 20000 depending on the amount involved in gambling
Jay Sayta
February 27, 2011 at 12:04 pm
Thank you Anish, for the useful bit of info!!! You are right when you say that there is no Central legislation for gambling (I have reiterated that on a numerous occasions in my previous posts) and that the fine/imprisonment might be a minor one, but few people might be willing to risk it. And there are harsher punishments for repeat offenders.
saurabh mishra
March 1, 2011 at 12:40 am
tel me 1 thng that if am nt takng any registration fee…..only am making profit through sponsers and food materials and giving dem prize…..this is legal or illegal….??????
can i organise through dis technique…..
Jay Sayta
March 1, 2011 at 9:54 am
The fact that you are earning money out of sponsors and food would make it possible for the authorities to construe as “profit or gain” from the common gaming house and it may still be possible to penalise you.
Jack the Ripper
March 30, 2011 at 8:59 am
Poker is gambling, and it cannot be denied the same.
Tournaments are also illegal even if the holder of it (organiser) does it for no personal gains. Pls observe that the winners are gaining out of it so it would be part of an act of gambling.
Jay Sayta
April 1, 2011 at 5:41 pm
I am just giving a perspective which many gaming experts across the world believe in. The Courts of Sweden, Russia and certain U.S. states have endorsed this proposal. Prize, mutual consideration and uncertainty are equally important for a game to be considered to be gambling. A game may not be gambling even if one element is missing. The same has been discussed by me in this article in the context of poker keeping in mind the Indian perspective on games of skill as laid down in the Satyanarayana judgment.
Jay Sayta
April 1, 2011 at 5:57 pm
My aim in this article was to try and compare poker with other analytical games like chess and see whether there is a possibility of having poker recognised as such game of skill akin to chess, carrom etc. in the light of various International studies showing that poker is a game of skill. There would be no violation of any law if a tournament of a game of skill for stakes or money. This has been reiterated by the Supreme Court in Manakadu Elainger Nala Sports v. State of Tamil Nadu (2005) where taking money and giving cash for games of skill like chess or carrom has not been held illegal.
AKD
January 12, 2012 at 11:35 pm
One question: Is buying stocks of a company an act of gambling?
You stake on something which you believe can be profitable. At any point of time you can decide either to continue or withdraw.
Jay Sayta
January 13, 2012 at 12:02 am
Buying stocks of a company is not gambling. It is investing in a company in which you believe in for creating a productive economy and there are legislations allowing buying/selling of stocks. Of course there are uncertainties associated with every decision but they cannot be termed as gambling.
However, if you speculate on the price of stocks without buying or selling stocks, it is different and certainly has a gambling element.
venkat
March 31, 2011 at 11:36 pm
hello,i have read all the notes off yours its great ,
Jay Sayta
April 1, 2011 at 5:39 am
You may not be able to get license for poker rooms as it is generally considered to be gambling and there is no judicial precedent/law exempting it from gambling, unless you can prove that poker is a game of substantial degree of skill to be exempted from gambling, in front of courts to get permission. On the other hand, there is a Supreme Court decision for rummy which declares it to be a game of substantial degree of skill and hence not gambling. Thus you may be able to get license to hold rummy games by simply applying for permission to the police authorities.
venkat
March 31, 2011 at 11:51 pm
hello,i have read all the notes off yours its great ,can i know the procedure , how to approach in getting poker club licence and how did they get the rummy licence in andhrapradesh,even how whom to approach. thankyou
darkmatter
May 2, 2011 at 10:29 pm
Hi,
First of all congrats on giving such useful information about gambling laws..
My question is that i play online poker for quite a sometime now.Is it legal in India to play at “online poker” at foreign sites?
Also, can you guide me in the tax structure of India regarding winnings in online poker.
Many thanks,
darkmatter
Jay Sayta
May 3, 2011 at 10:35 am
Hi,
Thanks for the comment. As far as online poker is concerned, in the absence of any clear law, it is ambiguous whether online poker is legal or not. However, the Foreign Exchange Management Act (FEMA) prohibits remittances outside India for any kind of gaming activity. Also RBI does not permit payment gateways for gaming, which means that online gaming from India is not clearly legal. The experience of the crackdown of poker players in USA indicates that it is almost impossible to impose a crackdown on mere participants/players of online gaming websites (even if Indian authorities try and be as proactive as their American counterparts). Thus, if you can make payments to these sites and encash winnings; there is little reason for you to be worried. As far as the tax structure is concerned, I cannot comment on it until you give me further information as to the nature of winnings, how you encash it etc.
darkmatter
May 3, 2011 at 10:24 pm
Thanks for the reply. I am earning about 700-800$ a month playing online and planning to do it full time.
I am successfully depositing/withdrawing money through e-wallets like moneybookers right now.
I would be happy to pay all the taxes and continue in India as long as it is legal.
Please guide me through the process. Many thanks in advance!!
Jay Sayta
May 4, 2011 at 11:31 am
Hi,
Kindly write to me by email jay [at] glaws.in with full details about yourself and we will see what can be done. Anonymous requests are not entertained.
Sunny
January 17, 2014 at 4:32 pm
please drop me an email, I am unable to send u an email on the address that u mentioned. Thank you
Alok Dhodapkar
May 6, 2011 at 2:18 pm
Hi Jay,
I have mailed you the details of me and my friend’s (darkmatter’s ) case. Please look it up.
alok
Jay Sayta
May 6, 2011 at 2:21 pm
Hi Alok,
I had sent you a reply by email yesterday. Have you not received it?
saif
May 14, 2011 at 12:30 pm
i want to remit funds to a uk based broker online, is internet gambling illegal ?? what are the chances i will get caught?
Jay Sayta
May 14, 2011 at 1:46 pm
Foreign Exchange Management Act (FEMA) rules prevent remittance from India for that purpose, but these rules are not strictly implemented.
Pingback: Nationwide movement for recognition of poker beigns, Indian Poker Federation formed
JB
February 2, 2012 at 6:42 am
Have any of the legal arguments around chance/ skill noted that larger sample sizes (multiple hands in poker, multiple bowls in cricket) tend to reduce the role of chance and improve the role of skill? If I place a bet on a single poker hand, for example, I am very much at the mercy of the cards dealt to me. if I play 100 hands for a pot of money, skills takes on a much more meaningful role. So, (for example) while poker games with less than 30 hands might be classified as games of chance, those requiring more than 30 hands (or 20, or 10, or 50… really, whatever the actual cutoff is)should be classified as games of skill?
Jay Sayta
February 2, 2012 at 10:23 am
Yes such arguments that when a large number of hands are played in a competition, the element of skill increases have been used. This is the precise reason why tournament style poker (where a person has to compete aqgainst others over a large period of time) has been held to be a game of skill in Sweden as opposed to cash games (where a person can lose all his money) in a single hand.
soumya boral
April 28, 2012 at 11:40 pm
just want to know a fact..
lets assume someone from india wins 30000 dollars in a wsop event in usa.
He is likely to get 20000 dollars after tax deducted in usa.
will he be chargeable 30 percent again on the 30000 in india???? ..
leaving him with only 11000 dollars as his net winnings???
Jay Sayta
April 29, 2012 at 2:02 pm
Firstly under FEMA rules, gambling income may not be remitted to India. Secondly depending on the Double Tax Avoidance Agreement (DTAA) between India and USA, some activities may be exempt from double taxation. However since gambling does not figure in the DTAA, it may be taxed in both countries.
soumya boral
April 29, 2012 at 10:27 pm
thanks for replying
another thing…
The Supreme Court has stated that rummy and bridge to be “games of skill”.
A cricketer or a footballer[who is playing a game of skill] is taxable under the head “income from business and profession” and pays taxes at normal income tax rates but a professional rummy/bridge player[who is also playing a game of skill]gets his gross earnings taxed at 30 percent and does not get the benefit of the exemption slab.
my question–HOW CAN THERE BE DIFFERENTIATION AMONG “GAMES OF SKILL”???ISNT CRICKET AND RUMMY THE SAME THING A “GAME OF SKILL”????
thanks in advance
Jay Sayta
April 30, 2012 at 10:46 am
For the purpose of tax statutes, it is immaterial whether a particular game is one involving skill or chance. All winnings on card games and other such games are taxed at the rate of 30%. No distinction has been made for skilled games or other games as it is the prerogative of the government to decide for the purpose of tax laws what income should be taxed. Little can be done about that .
Income by way of playing sports may be taxed differently as there may be different provisions for such gains.
MONICA
March 7, 2013 at 12:24 pm
I wish to open a club for bridge and rummy for senior citizen. No cash only membership amount will be involved. Do I need a license? From whom?
Jay Sayta
March 7, 2013 at 12:31 pm
No special permissions in this case except regular permissions from local authorities for opening of a recreational club will be required.
Siddharth
October 10, 2013 at 12:04 am
Hi Jay,
It would be really helpful if you could elaborate the legality of playing poker online on foreign sites and remittance of winnings through net teller.
Jay Sayta
October 14, 2013 at 5:48 pm
There may be no criminal liability for participating online but remittances in foreign exchange could potentially result in FEMA violations and penalties.
Siddharth
October 16, 2013 at 3:57 am
Is there any channel through which the winnings can be remitted without getting on radar of FEMA?
Siddharth
October 16, 2013 at 4:00 am
In near future can the remittance of winnings from online poker be legalised?
Jay Sayta
October 16, 2013 at 10:34 am
Unlikely that there would be a change in the FEMA policy, no direct route to bring in gaming winnings received in foreign currency.
Vikram
October 22, 2013 at 3:26 pm
How about this, I am an Italian citizen of Indian roots, and I have been betting on various UK/European book makers from last many years as I have worked in many countries in Europe, now I am in India for couple of years but still hold my Italian bank cards and betting accounts, If I bet on UK bookmaker like ladbrokes when residing in India,Is it an offence/unlawful activity?
Jay Sayta
October 22, 2013 at 3:47 pm
If you are dealing in foreign exchange in your foreign bank account then it is unlikely to incur any criminal, FEMA or tax liability.
Vikram
October 23, 2013 at 8:44 am
Thanks for reply Jay, but what does that really mean, I am still accessing gambling website from India (Yes, I do not use Indian bank account/cards for any kind of transaction), Is it legal to access it or place a bet on line when you are physically in Indian land using Indian Internet service provider? And if I make any profits, I will withdraw it to my Italian Bank and I might as well remit it to my Indian bank account and spend it? Is it all ok? I know there is no way government can track it but still trying to understand it
Jay Sayta
October 23, 2013 at 10:25 am
I don’t think there is any liability for merely physically accessing a gambling website from India- at best the ISPs can be asked to block the website. There is nothing illegal in remitting money from Italian to Indian bank account subject to compliance of FEMA provisions.
Abhishek Tripathi
February 21, 2015 at 5:27 pm
If we are having Poker as a college Event without having any registration fee and sponsors and having some prizes( Excluding money). For instance, Having a mobile phone or something for the prize. So in this case still it will be illegal. Websites like Adda52 is having tournaments like this, So if they can organize why cant we.
Please Reply asap
Pokabunga
June 1, 2015 at 1:08 pm
This really very interesting information… Keep posting.
I really enjoyed this post. However, poker is a sport and it doesn’t comes under gambling.