Legal & Regulatory

Will a 2010 CERT decision to not block Betfair aid Delhi HC in the anti-betting PIL?

A Public Interest Litigation (PIL) filed in the Delhi High Court by social activist Avinash Mehrotra last month, seeking banning of offshore online betting and Indian online poker websites has lead to much debate and speculation about whether the Indian government will crackdown on offshore betting websites that are available to Indian citizens.

The Delhi High Court in its order on 29th May issued notice to the central government and RBI, and listed the matter for hearing on 31st July, by which time it ordered that all counter-affidavits and rejoinders are to be filed.

Mehrotra in his petition has stated that the respondent (Ministry of Electronics and Information Technology)t should block illegal gambling websites, including BetRally, Betway and Dafabet from being accessed in India under Sections 67 and 69A of the Information Technology Act, 2000.

Interestingly however, the Bombay High Court addressed the issue of online betting website Betfair being available in India in its order in Abbas Shaikh v. Union of India & Others in 2010.

The court in its order dated 10th March, 2010, noted that the state of Maharashtra had written to the Director of the Computer Emergency Response Team (CERT), Ministry of Electronics and Information Technology, seeking blocking of and asked the CERT to take action in accordance with law within three months.

As per a response given by the IT Ministry to a Right to Information (RTI) query filed by activist Pranesh Prakash, the CERT-IN did meet on 24th August, 2010 to discuss blocking of the website Betfair on grounds of public order, but noted that no details suggesting the impact of the website on public order has been given by the state of Maharashtra.

The CERT-IN consequently rejected the demand to direct blocking of Betfair. (Interestingly though Betfair ceased accepting customers from India earlier this year and the website is no longer accessible from Indian IP addresses).

It remains to be seen whether the Information Technology Ministry and CERT-IN will also state in the Delhi High Court like it did in its 2010 meeting that online betting websites cannot be blocked under the grounds of ‘public order’.

The CERT and IT ministry could however react differently in 2019 due to the provision in the Information Technology (Intermediaries Guidelines) Rules, 2011 (these rules had not come into force when the CERT decided the Betfair issue in 2010), which require intermediaries like ISPs, search engines and hosting providers to not transmit any content, inter alia, ‘relating to or encouraging gambling’ and disable such content within 36 hours of it being brought to their notice.

Read more about gambling laws in India.

Legal & Regulatory

GST Council seeks Attorney General’s opinion on dual tax rate for lotteries

The Goods and Services Tax Council (GST) in its 35th meeting held on 21st June, 2019 once again failed to arrive at a consensus on whether a standard rate of GST should be charged on state-run and state-sponsored lotteries and it was decided that the Attorney General of India should give his opinion on whether a dual tax structure for lotteries can be continued.

An official press release issued by the government about the GST council meeting states that the ‘Group of Ministers (GoM) on Lottery submitted report to the Council. After deliberations on the various issues on rate of lottery, the Council recommended that certain issues relating to taxation (rates and destination principle) would require legal opinion of Learned Attorney General.’

The timelines by which the Attorney General will submit his opinion and whether the issue will be decided in the next GST Council meeting remains to be seen.

Currently, 12% GST is being charged on lotteries sold by state governments directly, while a 28% tax rate is being levied on the face value of lottery tickets authorised by state governments but sold through private lottery distributors.

The Kerala legislative assembly and state finance minister TM Thomas Isaac have staunchly opposed any move to reduce the 28% tax currently applicable on lotteries sold by the private distributors on behalf of the state government, claiming that any move to reduce taxes on private companies would encourage ‘lottery mafia’ in Kerala.

Read more about taxes and laws on gambling in India.

Legal & Regulatory

Bombay HC rules fantasy sports to be a game of skill, approves Dream11’s format and manner of payment of GST

A division bench of the Bombay High Court comprising of Justices Bharati H. Dangre and Ranjit More in a recent Public Interest Litigation (PIL) filed by one Gurdeep Singh Sachar, ruled that the daily fantasy sports games offered by Dream11 depends upon the user’s skill and judgment and is undoubtedly a game of skill.

The PIL was filed by Sachar, a Mumbai-based resident, who claimed that fantasy games are luring people to play games of chance through their hard earned money and are amount to different forms of gambling.

Sachar further contended that Dream11 was allegedly evading Goods & Services Tax (GST) by violating Rule 31A of the Central GST Rules and not paying 28% GST on the total value of deposits.

The court in its judgment dated 30th April, 2019 rejected both the contentions made by Singh.

In its order in Gurdeep Singh Sachar v. Union of India & Others, Justice Ranjit More, speaking on behalf of the bench noted that the Punjab and Haryana High Court in its 2017 order of Varun Gumber v. Union Territory of Chandigarh has already held, after detailed examination, that activities conducted by Dream11 do not amount to gambling.

The court also referred to the fact that Gumber filed a Special Leave Petition (SLP) in the Supreme Court against the order of the Punjab and Haryana High Court which was dismissed.

The order further mentions that the Supreme Court order of Dr. KR Lakshmanan v. State of Tamil Nadu & Another, which held that games involving a substantial degree of skill fall outside the definition of gaming and gambling, has been relied upon by the Punjab and Haryana High Court in its 2017 order.

The Bombay High Court subsequently notes that the view it has taken is not different from the reasoning of the Punjab and Haryana High Court. The court observed:

There is no merit in the submission that the result of their fantasy game/contest shall be considered as merely by chance or accident notwithstanding involvement of substantial skill. The petitioner claims that the result would depend largely on extraneous factors such as, who amongst the players actually play better in the real game on a particular day, which according to the petitioner would be a matter of chance, howsoever skillful a participant player in the online fantasy game may be. The petitioner has lost sight of the fact that the result of the fantasy game contest on the platform of respondent No.3, is not at all dependent on winning or losing of any particular team in the real world game. Thus, no betting or gambling is involved in their fantasy games. Their result is not dependent upon winning or losing of any particular team in real world on any given day.

On the issue of alleged GST evasion, the court noted that Rule31A of the Central GST rules applied only to ‘gambling’ or ‘betting’ services, where 28% GST is payable on the face value of the bets.

The court referred to Schedule III of the Central Goods and Services Act, 2017 which states that ‘actionable claims, other than lottery, gambling and betting’ are excluded from the scope of supply.

The court reasoned that the amounts pooled by the players for entering a contest in the escrow account of the company is an actionable claim that is to be distributed to the winning players and consequently can neither be considered as supply of goods or supply or services and is thus excluded from the definition of supply.

On the issue of rate at which the GST has to be charged, the court noted that under entry code 998439 (other online content n.e.c.), explanatory notes suggest that role-playing games, strategy games, action games, card games and children’s games etc. are covered under this category, which would also cover Dream11’s format and fantasy sports gaming, for which 18% GST is applicable.

The court in its concluding remarks while dismissing Sachar’s PIL observed:

It is seen that the entire case of the Petitioner is wholly untenable, misconceived and without any merit. It can be seen that success in Dream11’s fantasy sports depends upon user’s exercise of skill based on superior knowledge, judgment and attention, and the result thereof is not dependent on the winning or losing of a particular team in the real world game on any particular day. It is undoubtedly a game of skill and not a game of chance. The attempt to reopen the issues decided by the Punjab and Haryana High Court in respect of the same online gaming activities, which are backed by a judgment of the three judges bench of the Apex Court in K. R. Lakshmanan (supra), that too, after dismissal of SLP by the Apex Court is wholly misconceived.

Read more about betting and gambling laws in India.

Legal & Regulatory

Deciphering games of skill: An MPL story

This is a guest post by Dibyojyoti Mainak, Consultant General Counsel of esports and online skill gaming company Mobile Premier League (MPL).

Operating an online games of skill platform for esports and digital sports gaming (hereafter DSG) in India can be interesting. The archaic laws, undefined legal parameters, multiple state specific legislations, conflicting judicial interpretations, and lack of competent regulatory supervision make it extremely challenging for anyone to operate an online skill gaming portal.

Under Indian law, games (online or otherwise) involving transaction of money (for entry; and if successful, as reward or prize) are potentially hit by anti-gambling laws (which are in most states, a century old) if it appears that these are ‘games of chance’. These laws have not been updated and the legislature could not have (at least, arguably) intended to make such provisions applicable to online platforms as they exist today.

The Indian online gaming space clearly highlights an area of concern where law fails to keep up with the developments in technology. This at a time, when esports and DSG is making waves internationally (esports were a part of the Asian Games 2018). India’s tech talent pool is renowned worldwide and yet, potential criminal action is a strong deterrent against any entrepreneur looking to innovate in this rapidly growing space.

Anti-gambling laws classify games as ‘games of skill’ and ‘games of chance’. These laws, as interpreted by various courts, outlaw games of chance; and make an exception for games of skill which involve substantial degree of skill over chance, or where skill plays a predominant role in the outcome of the game.

In this background, let me explain the systems put in place by MPL (Mobile Premier League), one of the leading online esports and skill gaming platforms in the country, to ensure that the 20+ online skill games, including games like fruit chop, Runner No. 1, Super Team, pool and carrom offered on MPL’s platform qualify as games involving substantial degree of skill over chance.

Games of skill, as noted by courts, are those where the success of the players depends on their knowledge, training, experience, practice, attention, familiarity with rules and strategies, and consequently their overall performance.

Adopting these parameters to an online platform we, at MPL, have put in place certain systems which help us show that all the games offered are games of skill. Good hand-eye coordination, muscle memory, reaction time (all of which can be improved by practicing) play a vital role in determining the success of a player on the MPL platform. One can generally observe that their score is improving over time as they keep practicing and their hand-eye coordination, muscle memory and reaction time keep getting better.

To demonstrate this mathematically, let us take an example of a specific game on the MPL platform – If we: (i) take a random sample set of 100 new users who have played the game more than 100 times; (ii) retrieve their scores of their first 100 games and sort them in the order of time; (iii) group the scores on counts of five and take their average (to remove the noise in the scores); (iv) plot the values (which is a set of 20 showing the average score in every five attempts) on a graph; and (v) a logarithmic scale is used on the game score axis (to make the difference in scores visible), we get the following graph:

Sample graph of 100 users gradually improving their performance in a MPL game

A line is plotted on the graph through the mean of the game scores of all the sample set users. This line shows a positive slope, which shows that the average game score of a new user has been continuously improving as the user makes more attempts at the game. As the games are predominantly based on skills like hand-eye coordination, muscle memory and reaction time of the user, the positive slope on the graph indicates that the user is improving these skills over time which is demonstrated by their increasing scores.

Put another way (a negative definition), a game of skill is one where it is possible to deliberately lose/play badly. In a game of chance, where luck is predominant, it is possible to win despite the player trying his best to lose. In other words, there is no bad way of playing at slot machines and you might win despite trying your best to lose, but there is a way to play badly at a racing game and lose. We call this the ‘Choose to Lose’ standard of skill gaming.

We, at MPL, use methods like these to constantly ensure that the games offered on our platform are games of skill under Indian law. We constantly repeat such calculations for every game, with different sample sets to ensure that we are always in compliance with the law.

We hope and trust (for the benefit of the Indian gaming community – which is one of the largest online gaming communities in the world) that the legislature enacts suitable new laws, with well-defined parameters for classification of games of skill, keeping in mind technological developments and evolution. Better and efficient legislation will encourage more players to enter this space of online gaming in India – which will not only help India emerge as a hub for the online gaming and esports industry but also help the large player community by improving their gaming experience.  

Till such that happens though, we hope self-regulation holds the key in this emerging industry and more platforms become part of a larger conversation and help us and the industry refine our understanding of what constitutes ‘skill’.

The views expressed in this article are that of the author alone and are not necessarily endorsed by this website.

Legal & Regulatory

Delhi HC declines interim blocking of poker & betting websites, next hearing on 31st July

A division bench of the Delhi High Court comprising of Chief Justice Rajendra Menon and Justice Brijesh Sethi declined to issue an order directing interim blocking of online gambling, betting and poker websites in the PIL filed by social activist Avinash Mehrotra.

“No interim relief. Let it go on,” the bench stated when advocates Prashant Kumar, Siddhartha Iyer, Saurabh Suman Sinha, Awantika Manohar and M/s AP&J Chambers, appearing on behalf of Mehrotra, pressed for blocking of online gambling, betting and poker websites due to possibility of heavy betting on the portals on account of the upcoming cricket world cup.

The court however issued notice to the centre and the Reserve Bank of India (RBI) and sought their response on Mehrotra’s petition which has alleged that illegal and illicit gambling, betting and poker portals are soliciting bets from India in violation of foreign exchange laws, tax laws and existing gambling legislation.

Meanwhile, senior counsel Sandeep Sethi along with law firm Nishith Desai Associates and Gaggar & Partners’ managing partner Vaibhav Gaggar, acting on behalf of the All India Gaming Federation (AIGF) sought to bring to the attention of the court that some online India-based poker portals including Adda52 and are wrongly included in the petition.

Sethi argued that online poker portals operating in the country are ‘games of skill’ and poker has been wrongly classified as a ‘game of chance’ in the petition.

AIGF has sought to formally intervene as a party in the matter before the matter is heard again on 31st July, 2019.

Read more about gambling laws in India.

Business Legal & Regulatory

Decoding the valuation of services provided by casinos under GST law

This is a guest post by Pallav Pradyumn Narang, a New Delhi-based Tax and Regulatory Partner at CNK, an accounting, tax and advisory firm.

Recent actions of the department against one of the larger entities in the casino space have brought the issue of valuation of services under the Goods and Services Tax (GST) regime in the gambling industry to the forefront.

If you have been to a casino, you know how the drill works. You buy chips and use them to place bets and play in the casino against other players. The casino on its end takes a small commission from the winnings as its charges for providing the facilities that allow players to play against each other. This commission also called a rake is the main source of revenue for the casino and the casino operator pays GST at the rate of 28% on such rake made.

The department on the other hand has contends that GST ought to be paid on the total value of bets placed by the players and not on the net commission earned by the operator.

The law on taxable value of services is well defined. As per the law, the taxable element for services provided is the “Consideration” charged by the service provider. Consideration is in turn defined as in simple terms as:

  • Any payment made, or to be made
  • In money or otherwise
  • In respect of, in response to or for the inducement of supply of goods or services

Therefore, as per our interpretation of the law tax ought to be payable only on the amount charged by the operator to provide the said service. In this instance the casino charges a small rake to provide gaming services and therefore the rake is the sole consideration.

On the other hand, the GST department seems to believe that the entire bet placed should be taxable. This opinion is no doubt bolstered by a provision of the valuation rules (Rule 31A of the Central GST Rules) which defines consideration in the case of actionable claims in the form of chance to win in betting, gambling or horse racing in a race club shall be 100% of the face value of the bet or the amount paid into the totalizator.

Many practitioners interpret this section to apply only to betting in the form of lottery purchase and gambling in race clubs and is not applicable to casinos.

An interesting dimension is lent to this debate by way of another clarificatory circular issued by the GST department which specifies amongst other things that 28% GST would be payable on total bet value. Since circulars are only persuasive in nature being binding on the department and not upon the taxpayers, the controversy remains unabated.

An examination of facts and the economics of the casino industry is in merit to dispel this cloud of uncertainty, since the operator earns only a fraction of the bet placed, it is needless to add the department’s contention has been and will continue to be vigorously contested by operators.

The department and lawmakers represented in GST council can take a leaf from the books of European countries who have much greater experience and clarity as far as taxation of gaming revenues is concerned. Many European countries have excluded gaming services from VAT entirely and rely only on direct tax revenues from the industry.

With respect to valuation, countries like Malta have clear guidelines that define consideration as:

(i) Where the supplier receives a commission or participation fee (typically referred to as the ‘rake’), the said commission or fee (including when the commission/fee is settled using bonus credit) shall be regarded as the consideration for the service, which shall be deemed to be inclusive of VAT.

(ii) In all other cases, the consideration received by the operator shall, for the purposes of determining the taxable value, be an amount equivalent to the revenue of the supplier, i.e. the total stakes/bets placed by players (including bets placed using bonus credit) less the winnings and other amounts paid out to players in connection with that bet (including bonus credit comprised within the bets placed). The consideration shall be deemed to be inclusive of the VAT. 

The definition clearly specifies that the taxable component shall be:

  1. The commission or rake charged by the supplier of services or
  2. For all other purposes (where rake is not available) the difference between the bets placed and the winnings paid to the players.

This exhaustive definition seems like breath of fresh air and I am certain operators and their tax advisors would love to have this included within the realm of Indian regulations just as well, given that it also perhaps allows for deductions of losses made on tournaments etc.

In the absence of this clarity, the industry will have to fight against departmental action based on logic and facts which are not bad allies in any case.

The views expressed in this article are that of the author alone and are not necessarily endorsed by this website.

Read more about the gaming industry and gambling laws in India.

Legal & Regulatory

PIL filed in Delhi HC to stop online poker & betting websites

Exclusive A Public Interest Litigation (PIL) has been filed by social activist and chartered accountant Avinash Mehrotra in the Delhi High Court seeking directions to the Union Ministry of Information Technology and the Reserve Bank of India (RBI) ‘to bring illegal and illicit online gambling/betting/wagering/gaming to an end.’

Mehrotra in his petition states that the problem of illegal and illicit online gambling is a rising menace that has ruined the lives and financial security of several persons.

He states that several websites are encouraging the country’s working population to part with their hard earned money on games of chance such as poker, teenpatti, sports betting, election betting etc.

The petitioner contends that some of the websites offering such games are based in India while others are based abroad. The websites named in the petition include offshore betting websites such as Betway, BetRally India, 1xBet, Royal Panda, Dafabet etc. and domestic poker websites such as Adda52, and Khelo365.

The petition contends that ‘these websites seem to encourage the horrible habit of gambling amongst youngsters, and are doing so solely with a view of making large amounts of profits at the cost of these unsuspecting citizens of our great nation.’

It further avers that the popularity of fantasy sports is rising, where unsuspecting players are betting large quantities of money on the individual performance of players.

The petition further submits that while games of skill are exempted from the ambit of gambling under the Public Gambling Act and state laws, in card games such as blackjack, poker, teenpatti the success demands solely on the turn of cards and no skill is involved.

Similarly, it states that sports betting is dependent on the performance of individual players and there is no skill involved on part of the person placing the bet.

The petition also challenges the provisions in the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2016, contending that ‘the State Legislature has permitted people to lay waste to their fortune, hard earned money, and possible inheritance, by permitting them to play games of pure chance, under the garb of calling them games of skill.’

Mehrotra states that the Nagaland online skill gaming law cannot have a pan-India operation and that these activities remain illegal in the rest of the country.

The petition also alleges that large sums of money are being placed using foreign currency on offshore betting websites leading to exodus of foreign exchange leaving India, which amounts to a violation of the Foreign Exchange Management Act and rules.

It also points out that many of the online gaming websites do not appropriately deduct tax at source and neither do the players pay taxes on winnings from such websites, leading to loss of tax revenue under the Income Tax Act.

Mehrotra also submits the behavioural and psychological risks associated with gambling, and online gambling/betting in particular.

The petition finally asks for a direction from the Delhi High Court to ask the Union Ministry of Information Technology to ban/prevent online gaming websites under Sections 67 and 69 of the Information Technology Act, 2000.

It also urges the court to issue direction to the RBI to check the exodus of foreign exchange on online gambling websites. It further asks for a direction to the Ministry of Finance to recover taxes due from players and operators as well as prosecution of operators and promoters of online gaming websites.

The matter is scheduled to come up for hearing before a division bench of the Delhi High Court comprising of Chief Justice Rajendra Menon and Justice Anup Bhambhani on 29th May, 2019.

Read more about gambling laws in India.

Legal & Regulatory

Tax issues for skill-based gaming companies

This is a guest post by Pallav Pradyumn Narang, a Delhi-based Tax and Regulatory Partner at CNK, an accounting, tax and advisory firm.

That skill-based gaming companies have regulatory challenges every now and then is not a new story. There are however persistent issues and new developments with respect to the tax landscape that governs all businesses in India, including online games of skill.

In the recent past the sector has attracted investments, players, and with that even more regulatory scrutiny. We have tried to address some of the more burning issues in this article.

Indirect Taxes

Classification issues

Unfortunately, despite the size of the skill-based gaming industry in India, skill based games do not have their own SAC (Services Accounting Codes) allocated to them.

The department on its part has made several attempts to classify online skill based games under the bracket of this effort has been aided by the SAC description for Gambling and betting services which says , “Gambling and betting services including similar online services” not keeping in mind clear cut precedents set by the courts which have clearly excluded skill based games from the domain of gambling.

The result of tax officers trying to throw everything at the wall and seeing what sticks and using “similar online services” is a needless controversy over the classification of skill-based games and the rate applicable to such games. Thankfully, thanks to settled cases, better sense has prevailed in recent times and cases of such mis-interpretation have all but disappeared.

Related posts:
May 20, 2017 – GST council announces 28% tax on casinos and betting; 18% tax likely on skill games; lottery tax yet to be announced

Taxability of Advances

The moment in time at which GST on revenues earned by the operator has to be paid by the operator is determined by what is called the time of supply. Under the current provisions of the GST law time of supply of services shall be either of:

  • Date of issue of invoice
  • Date of receipt of payment
  • Date of provision of service

Whichever is earlier.

Online real money skill-based games work by allowing their customers to deposit money upfront which the players can then utilize to them play games on the platform.  Treating this money as an advance can have the adverse impact of subjecting the entire amount received as taxable at the time of receipt of such payments.

A view has also been taken by the department to allege that since the advances received from players will all result in eventual income for the operator the operator should discharge liability at the time of receipt of such advances. Careful structuring of flows within the operator’s system and an understanding of the relevant provisions is critical to avoid unnecessary tax litigation on this matter.

Value of Services subject to tax

The taxable component under GST is the consideration received by the service provider, in this case the operator of the skill-based games. Consideration can be defined as in simple terms as:

  • Any payment made, or to be made
  • In money or otherwise
  • In respect of, in response to or for the inducement of supply of goods or services

Consideration for services, particularly in the case of skill-based games that require an entry fee, ticket, or upfront payment of a similar nature, represents a significant grey area where there is enormous potential for tax disputes and prolonged litigation if preventive measures are not taken. This is because the definition includes all payments made or to be made for the inducement of supply of goods or services.

With this definition, a view can be taken to impose taxes upon the entire payment received regardless of the eventual sums charged by the operator and therefore presents a huge challenge to for money gaming operators.

To give you an example, if an online IPL fantasy game requires the player to pay 500 rupees to enter a prize game then as per the provisions the entire sum can be subjected to GST even though the monies may in fact be flowing into the prize pool.  Given that operators earn only a small margin of entry fee, subjecting the entire amount to GST eviscerates the revenue model.

Under the service tax regime, a stand could have been taken that the entry fee charged in the example above was analogous to an actionable claim in the manner of lotteries etc. and therefore was out of the purview of taxation under the previous regime. Under GST however lotteries, betting, and gambling are not only subject to GST but as discussed earlier they are subject to the highest possible rate of 28%. The challenges therefore for this nascent but emerging industry are not likely to end soon.

Further, non -resident operators of skill-based games have to contend with registration and payment of GST under the rules for Nonresident registered taxpayers which carry with them a different set of issues such as pre-payment of taxes, interplay with direct taxes etc.

Related posts:
April 29, 2019 – Online skill gaming companies face questions about manner of GST payments

In the realm of Direct taxes

Issues raised under GST are now also going to give sleepless nights to operators under the direct taxation realm. Due to exchange of information by the GST and direct tax departments what is reported to peter also gets known to Paul and therefore if lets say GST were to be imposed on the full entry fee then not reporting the same revenues under direct taxes could land the operator in the regulatory spotlight.

The biggest challenge from a direct tax perspective is posed by the nuances of Section 194B of the Income Tax Act, 1961 prescribes the method and quantum of tax deduction on winnings from skill-based games.

Since key terms such as “winnings” and “game” have not been defined in the charging law there exist many opinions as well as judicial decisions pointing in differing directions with respect to the correct application of the law on withholding of taxes on winnings from such skill-based games.

In the absence of any clarifications from the government this regulatory fog will continue to hang around the entire skill-based gaming industry for a while.

The views expressed in this article are that of the author alone and are not necessarily endorsed by this website.

Related posts:
March 30, 2013 – FAQ on taxes and gambling winnings

Read more about gambling laws in India.

Gaming Legal & Regulatory

Jaipur police arrests bookies facilitating bets through Betfair

The Jaipur crime branch has arrested two betting kingpins having links with the underworld and international betting syndicates for taking bets worth over Rs. 3,000 crores during the ongoing season of the Indian Premier League (IPL), as per news reports.

Top bookies Ramesh Kumar Gangwal and Deepak Maheshwari were arrested by the crime branch after tracing their footprints online. The duo allegedly ran their betting network through international betting website Betfair and its skins.

Although the Betfair website cannot be be accessed through Indian IP addresses after the company took a decision in January this year to discontinue accepting bets from India, Gangwal and Maheshwari used virtual private networks (VPNs) to circumvent the ban placed by Betfair.

According to the police, Gangwal is one of the top persons involved in the betting mafia in India and has links to the underworld in Dubai and Pakistan. Gangwal was allegedly in touch with a Punjab-based ‘super boss’ who used to provide lines and franchisees to other smaller bookies or agents to accept bets and retain a commission or share of profit based on the amounts bet.

To curb the menace of illegal gambling and betting, the All India Gaming Federation (AIGF) had written a letter to Prime Minister Narendra Modi in November 2018 stating that several offshore betting websites, including Betfair, are illegally accepting players and deposits from India in contravention of the Foreign Exchange Management Act, Prevention of Money Laundering Act and other laws.

AIGF had urged the PM to block illegal gambling and betting websites that are not complying with Indian laws and urged the Enforcement Directorate (ED) to investigate the matter.

Read more on gambling laws in India.

Gaming Legal & Regulatory

Gujarat may introduce new law to ban online gambling

The Gujarat government has initiated preliminary discussions to explore the possibility of amending the existing gambling legislation, i.e. the Gujarat Prevention of Gambling Act to cover online gambling and betting, as per a report in the Times of India.

The proposed changes to the existing laws are being discussed at the request of the Ahmedabad police department officials who felt that the current laws mainly cover gambling and betting in physical locations and are not stringent enough.

Ahmedabad police commissioner AK Singh confirmed that the Gujarat home department and officials of the CID crime branch have held a meeting to discuss changes to the existing gambling laws. Singh added that the state government is working on the issue so as to ensure that people indulging in online gambling are dealt in accordance with law.

The police commissioner added that the current gambling act does not give the department enough power and also discussed about banning the game of poker.

Various police commissionaires in cities of Gujarat such as Rajkot, Surat, Gir Somnath, Bhavnagar etc. recently issued orders under Section 144 of the Code of Criminal Procedure and Section 37(3) of the Gujarat Police Act to ban the game of PlayUnknowns’ Battlegrounds (PUBG) within their respective jurisdictions citing adverse impact of the game on the health of children and youth.

In December 2017, a single bench of the Gujarat High Court had ruled that the game of poker was one which involved chance and consequently playing the game amounted to an offence under the Gujarat Prevention of Gambling Act. A challenge to the order is pending before the division bench of the High Court which is expected to hear the matter on 20th June.

Is gambling legal in India?