How Indian States Regulate Gambling Differently

In 2021, an estimated 40% of internet users in India gambled online in some capacity. Four years later, it’s safe to assume that this number has only grown based on the industry’s increasing presence and immense global growth. But tracking gambling in India, particularly online gambling, isn’t straightforward.

The country’s gambling laws comprise a patchwork of regulations that can vary drastically from one state to the next. While estimates have placed India’s gambling revenue somewhere between $5 and $90 billion a year, the fragmented legality and grey-area operations make pinpointing the real figure impossible.

What exactly do we mean when we say ‘fragmented legality’ and ‘grey-area operations’? To answer that, we must explore the legal framework for gambling in India at the state and federal levels and, more importantly, what each does differently. In this article, we’ll aim to do just that, beginning with a brief overview of gambling in India, setting the tone for understanding the varying state regulations.

History of Gambling in India

India has a long-standing and complex relationship with gambling. It has ancient roots, with mentions of gambling practices found in ancient writings, including the Rigveda, Katyayana Smriti, and Mahabharata. These scriptures explore fate and chance with tales involving the rolling of dice, indicating a long-standing connection between India and gambling. Throughout the country’s history, gambling has been an accepted activity, with people from all ranks engaging in chance- and skill-based gambling pastimes.

Under British rule, this acceptance was altered with the Public Gambling Act of 1867, which prohibited most gambling activities. The main acceptable forms of gambling under the act were skill-based games such as horse race betting, rummy, and poker. Gambling houses, however, were prohibited. The effects of this are still felt today, with most states continuing to ban gambling houses like casinos.

Federal vs State Gambling Laws

In 1867, the Public Gambling Act was the only regulatory law impacting gambling in the country, and it existed solely at the federal level—meaning it applies across the country regardless of the state you might reside in or visit. However, the laws in India have evolved since the act came into effect, creating a split between federal and state regulations and giving more complexity to the state of gaming in India.

Adding to this complexity are the additional laws that have emerged at the federal level, which have had impacts across the country, including the constitutional shift of regulatory power and the 21st-century Information Technology Act.

Constitutional Regulatory Shift, 1949

In 1949, the Constitution shifted gambling regulations from federal control to individual states. This is the key reason behind India’s fragmented gambling laws. Gambling went from being a federally regulated activity to each state choosing how it regulated it within its borders.

Several states have leveraged this authority, modifying their laws as attitudes and technology have changed the gambling landscape. For instance, some states permitted gambling houses by allowing casinos to operate within their borders. Goa was the first state to do this, legalising casinos in select hotels and ships in 1976.

The Lotteries (Regulation) Act, 1998

1998 marked another major regulatory shift to India’s gambling laws, the legalisation of lotteries. The Lotteries (Regulation) Act was enacted at the federal level, allowing lotteries to be regulated at both the federal and state level.

Information Technology Act, 2000

Lotteries and casinos haven’t been the only developments in the gambling industry. As the internet has developed and become more widely adopted, online gambling websites and apps have been developing alongside it. However, laws developed previously had no framework for regulating these and other online activities. This led to the passing of the Information Technology Act in 2000. Though it wasn’t created to address online gambling, it has influenced its legal status.

Online gambling exists in a legal grey area, as the act does not explicitly regulate it. The final decision about whether online gambling is legal falls on the state rather than the federal government. The majority of states have no legislation banning or allowing the activity—which means most of the country can visit Indiacasinos.com for leading gambling sites that align with local rules and offer greater transparency. However, there are exceptions to this, as some states, like Andhra Pradesh, Telangana, and Tamil Nadu, have banned the activity.

Central Goods and Services Tax (Amendment Act), 2023

In 2023, an update to the country’s Goods and Services Tax (GST) saw the taxation on gambling activities reach 28%, an intentionally large amount that was in part to support government initiatives as gambling has grown in popularity in recent years. This applies particularly to online gambling, which saw a compound annual growth rate of 28% between 2020 and 2023. Another reason behind the hefty tax penalty is thought to be discouraging gambling altogether.

State-Specific Gambling Regulations

Now that we’ve examined how federal and state governments regulate gambling and created patchwork laws, we can better understand the huge variance in state regulations. It’s much easier to understand why some states have embraced gambling while others have restricted it.

From Goa to Nagaland, these are the most notable state-specific regulations that can help us understand the differences between states and how each jurisdiction perceives gambling—whether as a social ill or an ingrained part of the culture.

Goa, Daman, and Sikkim

Only three Indian states—Goa, Daman, and Sikkim—allow physical casinos, and only Goa and Daman have casino boats. Goa and Daman are regulated under the same act, the Goa Act. Sikkim, however, has its own act, the Sikkim Casino Act, which came into effect in 2002.

Sikkim’s Licensing Model

Sikkim’s casino act isn’t the only unique gambling legislation in the state. In 2008, the state developed the Sikkim Online Gaming (Regulation) Act. This act legalises online gambling, including casinos, sports betting, and games of chance like roulette, as long as operators adhere to their licensing and regulatory model.

Nagaland’s Skill-Based Gaming

Nagaland allows lotteries and some forms of online gambling, though it restricts gambling options to skill-based games such as rummy and poker.

Telangana’s Ban

While most parts of India allow gambling activities based on skill, Telangana is an exception. It has banned all forms of gambling, excluding physical horse race betting, within its borders and enforces strict penalties for infractions.

Tamil Nadu’s Restrictions

Tamil Nadu has redeveloped its regulatory framework in response to a legal dispute involving the state and game operator Junglee Games India Private Limited that resulted in its previous online gaming prohibition being overturned as unconstitutional. The state still restricts online gaming, but it is now banning games of chance and gambling where real money is wagered instead of a blanket ban. Tamil Nadu also has strict regulations for gaming operators, requiring them to take steps to prevent underage gambling and to mitigate the concern of problem gambling—which is why the state set out a prohibitive stance in the first place.

Challenges and Future Trends

From India’s long history with gambling to its varying laws and regulations, it’s unsurprising that gambling regulation is met with many challenges that impact lawmakers, gaming operators, and individuals. The different regulations have led to calls for a more unified stance and legal framework for addressing gambling to deliver clarity to operators and players alike.

Adding to this challenge are the growing trends in the gambling industry, most notably the growth of online gambling activities. For instance, major sporting events like the World Cup and Indian Premier League see increases in sports and fantasy sports betting nationwide. As more people participate in the activity, it creates more pressure for lawmakers to take action and to do so swiftly to protect players by ensuring things like fair play and mitigating risks relating to the security of online gambling platforms and problem gambling.

In the coming years, many anticipate seeing a more unified approach to gambling regulation in India, with the federal government opening up discussions on the topic. These discussions aim to address these challenges and emerging trends—hopefully shaping a landscape where gambling operators and players can enjoy more clarity and security.