Should an International Online Gambling Project Enter the Indian Market? Legal Aspect

Today, India is one of the fastest-growing economies in the world, and its potential is just beginning to unfold. Speaking about the most popular business niche to which development India offers loyalty at the state level is the online gambling industry. What is the reason for such loyalty? First off, the absence of strict legislative regulation of online gambling means almost complete freedom of action. Today, thousands of online casinos and bookmakers operate in the country.

What about international gambling operators with iGaming licenses, for example, in Curacao or Malta, which plan to cover this target market? It is so attractive in terms of the industry's popularity among citizens who like to play casinos or place bets on their favorite sports teams. Is this legal or even possible to operate in India?

Let's look at it through the prism of how online gambling is generally regulated in India.

In India, the online gambling industry is not as strictly regulated as it might seem. There are no federal laws in the state that prohibit the online industry. To date, except for the precedent ruling of the Supreme Court regarding skill-based gambling, no federal act directly regulates the online gambling industry, and each state takes its position on this issue. Accordingly, online gambling in India is regulated at the level of each state.

Today in India, there are only a few states where iGaming is regulated (or prohibited) by modern, somewhat understandable legislation. However, even if gambling is only allowed in a few states (Goa, Daman, and Sikkim, for example), the rest of the country can still play online casino games and bet on sports.

Except in the states of Nagaland, Sikkim, Meghalaya, Telangana, Andhra Pradesh, and Tamil Nadu, all other gambling laws were enacted before the advent of the Internet and have not been amended to fit the changed reality of online gaming and gambling. But there is simply no law that directly states that online gambling is illegal today. And although the Indian Gambling Act of 1867 tries to ban all types of gambling completely, it, in turn, does not sufficiently explain what gambling is in general. The interpretation of what iGaming is, of course, is out of the question.

Since 2022, online gambling has been officially legal only in Goa, Daman, and Sikkim states. Sikkim also allows an online lottery in which players from all over India accept bets. In addition, West Bengal, Nagaland, and Sikkim allow poker to be played online and offline after obtaining a license from a government agency along with Goa, which enables the casino to conduct gambling.

Indian online casinos cannot promote or have websites that advertise online gambling, such as casinos, sports betting, and bingo. However, it is not illegal for non-Indian casino companies (so-called offshore companies) to have sites targeting Indian players. The only legal requirement is that offshore casinos must offer Indian Rupees as a payment method for Indian players.

Advertising of online gambling in India is honestly a crucial point, with which international online operators should be cautious, especially in those states where there is a ban on the online gambling industry (Nagaland, Karnataka, Tamil Nadu, Telangana, and Andhra Pradesh) and where there is a local online gambling regulation (Goa, Daman, Diu, Sikkim, Nagaland, Meghalaya). As a general rule, it is recommended not to run aggressive advertising, as this may be fraught with excessive attention from local regulators, site blocking, etc. The IT and Indian Consumer Protection Legislation prohibits misleading advertising and bans content violating legislative rules of fundamental Indian laws.

In recent years, online gambling has become a hot topic in India. In July 2018, the Law Commission of India urged the government to legalize online gambling. The commission released a detailed report recommending India legalize gambling to generate industry revenue.

The government is trying to pass a new law regulating gambling because it will prevent people from losing money and bring income to the economy if it is taxed properly and legally. In 2022, the Government of India announced its plan to create a new gambling law to replace the Gambling Act of 1867. In May, the Indian government set up an interministerial commission amid calls for a federal law on online gaming. The commission group comprises representatives from various government ministries who plan to further develop the online gaming industry in India.

Movement of a new bill regulating the online gambling industry in India at the federal level

On January 2023, the Indian government published new rules to regulate online gambling, creating a series of "self-regulatory" bodies to oversee the sector.

The Ministry of Electronics and Information Technology of India has published amendments to its Information Technology Regulations regarding online gambling. According to the rules, an online game is any game played over the Internet in which the player "deposits with the expectation of winning".

If necessary, the Government of India may declare that certain games are subject to the new regulations. The amendments note that any online game offered must not violate existing laws, such as the statewide gambling prohibition.

Instead of creating a state regulator, the amendments would allow for "self-regulatory bodies" consisting of online gaming companies that would set the rules for online gambling. The board of such a body should include an independent eminent person from the field of online gaming, sports or entertainment, or such other relevant area, an individual who represents online gambling players, an expert in psychology or consumer education public policy, and an expert appointed by the central government of India.

These bodies should create rules "to protect users from harm" such as gambling addiction, as well as to protect children and prevent financial crime. They should also require members to verify their users, conduct KYC checks, implement a complaints process, and have a contact address in India. If the self-regulatory body does not create sufficient standards, the central government can "direct it to undertake measures to rectify the non-compliance". If necessary, it may suspend the powers of such a body.

So, the answer to whether it is currently legal for an international online casino to operate in India today is yes. It is not illegal for non-Indian casino companies (so-called offshore companies) to have sites targeting Indian players. The only legal requirement is that offshore casinos must offer Indian Rupees as a payment method for Indian players and must not violate laws that directly or indirectly govern the industry (IT Law, Money Laundering Prevention Law, Foreign Exchange Management Law, consumer protection, Cable Television Network regulations, and so on).

But it is possible that already this year, we can see changes that will give specifics to regulating gambling on the Internet, including international operators. It is still unclear whether this will create any problems for the current regulatory regime of the industry. However, India's trend toward regulating online gambling is still of interest to the country's authorities.