Indian Gambling Laws and Foreign Online Sports Betting Companies

The recently retired Punjab and Haryana High Court Chief Justice Mukul Mudgal has recently published ‘Law & Sports in India’, an insightful guide to Indian gambling laws.

The book provides a detailed analysis of the present Indian gambling laws and makes some very insightful comments, opinions and forecasts about legality of foreign based sportsbooks.

Placing wagers on sporting events is forbidden in India. However, millions of Indians place wagers on sporting events or gamble at foreign based online casinos in India without anyone being prosecuted.

The Chief Justice is uncertain about the direction the Indian government will chose. The available options are regulating, taxing and controlling foreign based online casinos or prosecuting their owners as is the case in the United States.

An example the Chief Justice provides is that of foreign based online sportsbooks in India which are owned and operated by foreign citizens.

If the physical location of the servers of the online casinos or sportsbooks is in a country which allows such gambling activities and licenses them, the Chief Justice opines that there are currently no Indian criminal or gambling laws which can be used to prosecute such cases. The lack of law is even more evident when modern banking transaction such as bank wires, western union or PayPal is involved.

The Chief Justice answers his own example by stating that Rule 3 of the Foreign Exchange Management Rules of 2000 could be used to prosecute overseas online betting companies in India.

Rule 3 deals with the currency account transitions, specifically forbidding “transactions such as commissions, fees or payments out of lottery winnings and sweepstakes.” Thus, when a foreign bookmaker takes a commission from a winning bet, they are breaking Rule 3 and could be charged and tried in absentia.

So in essence, foreign based online sports betting companies which operate outside India could be prosecuted under an 11 year old sweepstakes law. This however does not apply to online punters since the law makes the acceptance of payments from the winner illegal and not from a bookie.