A Public Interest Litigation (PIL) has been filed in the Delhi High Court seeking directions to the Union Ministry of Information Technology and the Reserve Bank of India (RBI) ‘to bring illegal and illicit online gambling/betting/wagering/gaming to an end.’
Filed by Avinash Mehrotra, a social activist and chartered accountant, the petition says that the problem of illegal and illicit online gambling is a rising menace that has ruined the lives and financial security of several persons.
According to Mehrotra, several websites are encouraging the country’s working population to part with their hard earned money on games of chance such as poker, teenpatti, sports betting, election betting, Indiafreespins.com etc. He also asserts that the popularity of fantasy sports is rising, where unsuspecting players are betting large quantities of money on the individual performance of players.
Interestingly, India has an online pocker startup founded by IIT & IIM alumni called 9stacks, which is owned operated by New Delhi-based SparSkills Technologies Pvt Ltd. Touted as India’s fastest growing online poker platform 9Stacks had raised ₹28 crore in a funding from WaterBridge Ventures, an early stage venture fund, and claimed to have become first Indian online poker company to raise an institutional Series A round.
Mehrortra, in his petition, further says that some of the websites offering games are based in India while others are based abroad, says the petitioner. The websites named in the petition include both offshore as well as local India-based betting websites including Betway, BetRally India, 1xBet, Royal Panda, Dafabet etc. and domestic poker websites such as Adda52, PokerStars.in and Khelo365.
The petition contends that ‘these websites seem to encourage the horrible habit of gambling amongst youngsters, and are doing so solely with a view of making large amounts of profits at the cost of these unsuspecting citizens of our great nation.’
“while games of skill are exempted from the ambit of gambling under the Public Gambling Act and state laws, in card games such as blackjack, poker, teenpatti the success demands solely on the turn of cards and no skill is involved,” says the petition submitted in Delhi HC.
It further states that sports betting is dependent on the performance of individual players and there is no skill involved on part of the person placing the bet.
To recall, recently in last month, India’s biggest sports gaming platform, Dream11, which is “Official Fantasy Game Partner” of International Council of Cricket (ICC) till 2023, become a billion-dollar startup after raising about $60 million from Steadview Capital, Kalaari Capital, Think Investments and others.
The petition also challenges the provisions in the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2016, contending that “the State Legislature has permitted people to lay waste to their fortune, hard earned money, and possible inheritance, by permitting them to play games of pure chance, under the garb of calling them games of skill”.
It was in October 2017 when the Government of Nagaland started issuing online skill games license under the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2016. According to this, for a company in order to obtain a license with respect to online skill based games the certain pre-requisites are to be fulfilled.
It is to be noted that these licenses are granted to the applicant by the Nagaland State lotteries and a license obtained from one state can not be legitimate across the country.
Mehrotra states that the Nagaland online skill gaming law cannot have a pan-India operation and that these activities remain illegal in the rest of the country.
Further, the PIL alleges that large sums of money are being placed using foreign currency on offshore betting websites leading to exodus of foreign exchange leaving India, which amounts to a violation of the Foreign Exchange Management Act (FEMA) and rules.
With the PIL, Mehrotra also points out that many of the online gaming websites do not deduct tax at source (TDS) in appropriate manner and neither do the players pay taxes on winnings from such websites, leading to loss of tax revenue under the Income Tax Act.
Additionally, Mehrotra has also submitted the behavioural and psychological risks associated with gambling, and online gambling/betting in particular.
The PIL has asked for a direction from the Delhi High Court to ask the Union Ministry of Information Technology to ban/prevent online gaming websites under Sections 67 and 69 of the Information Technology Act, 2000.
It also urges the court to issue direction to the RBI to check the exodus of foreign exchange on online gambling websites. It further asks for a direction to the Ministry of Finance to recover taxes due from players and operators as well as prosecution of operators and promoters of online gaming websites.
The matter is scheduled to come up for hearing before a division bench of the Delhi High Court comprising of Chief Justice Rajendra Menon and Justice Anup Bhambhani on 29th May, 2019.
Meanwhile, just a couple of months back a Daily Fantasy Sports (DFS) platform based out of Bangalore, HalaPlay Technologies, had raised ₹ 40 crore (~US$5.79 million) in a Series-A round of funding from its existing investor Nazara Technologies, a Mumbai-based mobile gaming startup, and India-listed casino gaming company Delta Corp.
Source – GLAWS