India has been struggling hard to deal with issues of online gambling, online gaming and online lotteries for long. Till now we have no dedicated online gambling and gaming laws in India. This position has become more complicated since the Supreme Court of India has refused to decide about legality of online poker, online rummy and online card games in India.
Recently the Indian government has clarified about the Foreign Direct Investment (FDI) in E-Commerce Sector of India. As per the “Consolidated FDI Policy Circular 2015” (pdf) (FDI Policy), FDI is prohibited in lottery business including Government/private lottery, online lotteries, etc and gambling and betting including casinos etc. Recently the Crime Investigation Department (CID) of the Andhra Pradesh police had sought a ban on the website of “Playwin” which had allegedly been selling online lotteries banned in the state.
This episode has also proved that online gaming, online gambling and lotteries websites are not complying with the internet intermediary compliances and cyber law due diligence (pdf) requirements prescribed under the Information Technology Act 2000. Similarly, almost all of the online poker websites in India are violating one or other laws of India. Although online gaming market in India is booming yet regulatory compliances cannot be ignored. It seems online gaming and online gambling industry of India is not considering regulations while conducting their businesses in India.
A disturbing trend of “legal violations” is fast dominating the online gaming industry of India. For instance, the fine line and distinction between online gambling and online gaming in India is not appreciated and understood by online gambling and gaming enthusiastics of India. As a result they are frequently prosecuted in India for violating online gaming and online gambling laws of India. Even technical mechanisms are also used to curb such activities in restricted territories or zones so that activities of one state may not violate the laws of other state of India.
In the past, Kerala refused permission to Future Gaming Solutions India Private Ltd to sell Nagaland lotteries in the state. Now a social worker had knocked judiciary’s doors praying for immediate ban on unauthorized and alluring online lotteries. Promoted by other states within Maharashtra, he contended that over 1,300 bogus online lotteries under various strange names are operating here and ruining lives of millions. A division bench comprising justice Bhushan Gavai and justice Swapna Joshi issued notices to central and state governments seeking their reply before court resumes after summer vacations.
Petitioner Chandan Trivedi through his counsel Shrirang Bhandarkar has urged the court to direct authorities to take stern action against lottery operators. The PIL stated that state government has permitted only 13 online lotteries. But operators with permissions from states like Mizoram, Arunachal Pradesh, Sikkim, and Meghalaya, are conducting online lotteries where results are announced in every 15 minutes on single-digit. The petitioner termed the entire activity as totally illegal.
The petitioner contended that under guise of online lotteries, open gambling is on in brazen violation of Lottery Regulations. So far, these operators have caused a loss of Rs933 crore to state exchequer. Many lottery operators on the lines of ‘matka’ have developed software which gives hand written receipts to circumvent tax payable to state exchequer and transactions remain unaccounted. The PIL also quoted state finance minister Sudhir Mungantiwar’s statement in legislature in which he had promised to seek legal opinion to ban online lottery companies of other states, which have duped the exchequer crores of rupees. The government was also trying to trace owners of these companies and probe was handed over to Economic Offence Wing (EOW), the minister had informed. Trivedi claimed that he brought patent illegality to the notice of all authorities, including top political executives, but nobody paid any heed and millions of people are addicted to it.
According to lottery rules framed by Maharashtra government, it’s mandatory for operators to pay advance tax on all types of online lotteries in the state. But, the lottery companies challenged legality of rules and the high court had given an interim stay on it. Taking advantage of it, the online lottery companies from outside states avoided payment of tax to the tune of Rs933.14 crore during 2007-09. In 2009, the high court lifted the interim stay and allowed the state government to collect the tax, but no recovery has been made, the PIL mentioned.