A brief on online sports betting laws in India and how betrallyIndia operates in India.

Introduction

In India, sports betting/ gambling is regulated by a central act called “Public Gambling Act, 1867”, the said act distinguishes games into “Game of Chance” and “Game of Skill”. As per the said act, indulging into any form of betting activities with regard to “Game of Skill” i.e. game and / or sports activities where the outcome and result requires skill and talent of the player is legal whereas indulging into any form of betting activities with regard to “Game of Chance” i.e. game and/ or sports activities where the outcome and result is not dependant on the skill of the player but is based merely on chance is illegal.

INDIAN CONSTITUTION AND STATE LEGISLATIONS

The Indian Constitution, in List – II (State List), Seventh Schedule, grants individual state governments the power to enact its legislations to govern gambling and such other rules and regulations as are necessary for regulations on gambling activities. Consequently, different states have enacted different legislations with regard to gambling activities. Certain states like Assam, Odisha, Telangana have placed a blanket ban on skill and chance based gaming, whether for profit or gain. However, states like Goa, Daman, Nagaland, Sikkim took a liberal view towards gambling activities for persons to conduct certain gambling activities in certain places, and under a license specifically issued for this purpose. Gambling activities are regulated in these states under the following enactments:

a.         Goa, Daman & Diu Public Gambling Act, 1976 and certain notifications issued by the   

government of Goa, Daman and Diu (hereinafter referred collectively as “GDD Rules”)

b.        Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2015 and Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Rules 2016 (hereinafter referred to as “Nagaland Rules”)

c.         Sikkim Online Gaming (Regulation) Act, 2008 and Sikkim Online Gaming (Regulation) Rules, 2009 (hereinafter referred to as “Sikkim Gaming Laws”)

d.        West Bengal Gambling & Prize Competition Act, 1957 (hereinafter referred to as  “WB Gaming Laws”)

It is noteworthy to mention out of 29 states and 7 union territories only two States i.e. Nagaland and Sikkim have legislated on online betting/gambling activities.

    Sikkim Legislation

In the state of Sikkim, licences are issued for offering

1.      Roulette

2.      Blackjack

3.      Pontoon

4.      Punto banco

5.      Bingo

6.      Casino brag

7.      Poker

8.      Poker dice

9.      Baccarat

10.  Chemin de fer

11.  Backgammon

12.  Keno

13.  Super pan9

14.  Other sports games which involve prediction of results of sporting events and placing a bet on the outcome, in part or whole, of such sporting event.

Sikkim Gambling laws do not expressly contain any restriction on the residential status of the licences. Further, under the Sikkim Gambling Laws, individuals, companies, and partnership firms can seek a licence. A licence issued under the Sikkim Gambling Laws is valid for a period of five years and can be renewed upon the payment of a renewal fee. The licences offered under the above legislation are personal in nature and are not for specific premises. However, the licences typically mention the premises on which facilities can be provided. The Annual licence fee is INR 10 million (GBP 112,000). Additionally, a licensee is required to pay a 10 percent of (a). the yearly gross gaming yield (i.e. the total of (1) all bets or stakes made, and (2) the price of all chances sold, less (3) the value of all winnings and prizes due); or (b) INR 50 million (GBP 573,000), whichever is higher. Further, the licensee is required to furnish a bank guarantee of INR 50 million (GBP 573,000) in favour of the state government every year, at the time of issue and renewal of the licence.

The Sikkim Gambling Laws require the licensee to

i.                    Operate only in Sikkim;

ii.                  Provide certain details on the website or online portal, including licence details and hyperlinks to websites of the state government and “players anonymous”; and

iii.                Ensure that only persons the above the age of 18 can play on their website or online portal.

iv.                On 17^th July, 2018, the Sikkim Government issued a notification amending the Sikkim Gambling Laws, mandating the requirement of having a photo identity card issued from outside the state of Sikkim for entry into gaming zones. Therefore, entry of locals belonging to the state of Sikkim, to both online gaming and betting kiosks as well as casinos in five stars hotels, stands as banned in the state of Sikkim

        State of Nagaland,

Licences are issued for offering:

i.                    Chess

ii.                  Sudoku

iii.                Quizzes

iv.                Binary options

v.                  Bridge

vi.                Poker

vii.              Rummy

viii.            Nap

ix.                Spades

x.                  Auction

xi.                Solitaire

xii.              Virtual golf

xiii.            Virtual racing games (including horse and car racing)

xiv.            Virtual sports (including soccer, cricket, archery, snooker, bridge, and pool)

xv.              Virtual fighting

xvi.            Virtual wrestling

xvii.          Virtual boxing

xviii.        Virtual combat games

xix.            Virtual adventure games

xx.              Virtual mystery and detective games

xxi.            Virtual stock/monopoly games

xxii.          Virtual team selection games and

xxiii.        Virtual sport fantasy league games.

A licensee should be established under the laws of India and controlled by resident Indians but should not be engaged in gambling (defined as “wagering or betting on games of chance, bit does not include betting or wagering on games of skill”)

As per the Nagaland gambling Laws, individuals, partnership firms and other legal entities can seek a licence.  A Licence issued under a Nagaland Gambling laws is for a period of five years and is deemed to be renewed each year as long as the yearly licence fee is duly paid and licence is not revoked. Further, the licence fee is INR 1 million (GBP 11,200) per game or INR 2.5 million (GBP 28,000) for a bouquet of games (three or more games), each year for the three years, and INR 2 million (GBP 22,500) per game, or INR 5 million (GBP 56,100) for a bouquet of games, each year for the next two years. In addition to the annual licence fee 0.5 percent of the yearly gross revenue generated (less service tax) is payable as royalty.

Further, under the Nagaland Gambling Laws (a) licensee should not have any criminal history; (b) executive decision of the licensee should be taken in India; and (c) operations and technology support (platform, software and services, etc) should be controlled, maintained and operated in India.

Points to Remember

A.     Customers typically use cash or bank transfer to fund gambling activities. Prepaid instruments (or e-wallets) may be used and are popular with Indian players gambling on foreign portals. India enacted legislation in 2015 that seeks to tax undisclosed foreign income and assets. Prepaid instruments are treated as bank accounts under the legislation. Income earned and deposited in foreign prepaid instruments are liable to tax as a result.

B.     Foreign direct investment (FDI) and foreign technology collaboration in gambling activities are prohibited under Exchange Control Regulations. A contravention of Exchange Control Regulations entails penalties of (a) three times the sum involved in such contravention, where such amount is quantifiable; or (b) INR 200,000 (GBP 2300) where the amount is not quantifiable; and (c) INR 5,000 (GBP 57) for every day during which the contravention continues, in case of a continuing default. Additional penalties may be levied upon a failure to pay the penalty in full. In addition to the levy of the above penalties, the relevant authorities may require the foreign investment or foreign technology collaboration to be unwound. Further, the FDI policy also expressly prohibits foreign technology collaboration in any form including licensing for a franchise, trademark, brand name, management contract; in lottery business, gambling and betting activities.

C.     The Income Tax Act, 1961, The Finance Act, 1994, the Central Goods and Services Act, 2017, the respective State Goods and Services Act, 2017, the Union Territory Goods and Services tax Act, 2017, and the integrated Goods and Services Act, 2017 (together “Tax Laws”) impose certain taxes in relations to gambling services. Tax laws levy a direct tax of 30 percent (exclusive of surcharge and cess) on income from winning from lotteries, crossword puzzles, races (including horse races), card games and other games of any sort, or from gambling or betting of any form or nature whatsoever. Service providers making payments to winners are required to withhold tax of 30 percent (exclusive of surcharge and cess) at the time of making payment to winners if the winnings exceed INR 10000 (GBP 113). If the winnings are wholly in kind, or partly in kind and partly in cash and the cash component is insufficient to meet the withholding obligations in respect of the whole winnings, service providers are required to ensure that tax at the above rate has been paid in respect of whole winning (and not just the cash component) before they are released.

D.    The Central and state governments implemented a uniform goods and service tax (“GST”) with effect from 1^st July, 2017. The rate of taxation on casinos, lotteries and betting activities, including any admission or access to facilities for the aforesaid activities, is upto 28 percent (exclusive off cess and surcharge). However, online games of skill and other gaming activities could potentially be regarded as other recreational services and be subject to the rate of taxation of upto 18 percent (exclusive of cess and surcharge). These rates of taxation may vary based on the exact nature of each game offering. 

1.      How betrally operates in India

a.      Betrally, is an international betting company and is registered in Curacao and is part of Comfortlink N.V. group, owned by ZAPZAP Marketing Limited.

b.     Betrally operates in India through its exclusive website i.e. betrallyindia.com. Betrally through this website accepts Indian players to register as members and to place and deposit their bets in INR.

c.     Interesting fact about the website is that the deposit is to be made via IMPS, Neteller, Skrill, credit card etc. Payment deposited through IMPS goes directly into an ICICI account having account number 037705002869 having IFSC code of ICIC 0000377 which is located in Mumbai, India and the name of the account holder is “Nitesh Gopal Shigvan”. Once a small amount of money is deposited within 4-8 hours that amount is credited into the online account of the player. Also, all the winnings are transferred via IMPS to the shared account through this ICICI bank account. Further, this account is changed after every now and then.