Unraveling Legal Loopholes And Challenges For Indian Online Casinos - Insights For Operators And Players

One central law regulating gambling in India is the Public Gambling Act of 1867, which does not cover online gambling. However, the present regulations stated by the Income Tax Act state that casinos need to cut the TDS on players' winnings.

Whereas the punishment and legalities related to online gambling, there are no proper punishment procedures. A few legal acts state it as a non-bailable offense but a few more state it as a bailable offense. One has to pay a fine of INR 200/- only or serve up to three months in imprisonment. Most experts cite it as a mockery of the law with the loopholes of paying this minimal amount for defying the laws. 

A few cases in the past cited that no fine will be imposed on the games of skill. The players with the required skills in horse betting or Poker can exercise their skills to play the games and earn winning amounts. However, the new laws enacted in 2023 allow the taxation and cutting of TDS on the wins. The casino operator will deduct 30% of the player's winnings at the source. A few tax brackets are provided by the government under Section 194BA too. 

The government makes it difficult for punters to fund offshore accounts through new laws. However, gamblers always have ways to escape the government's wrath. The big thing is nothing under the new gambling laws. The players can get bail if they play the games of skill, lottery, poker, rummy, and horse betting.

The onset of the pandemic and digitization of the gambling industry has attracted Indian players to many offshore gambling sites that allow regulated gambling. However, the increasing addiction and the greed to make more money are landing players in the loop of expenditure. It is growing over its basic spending limit.

The foremost challenge the licensed operators face is operating in the country. The players are unable to get out of the loop of addictive gambling. Moreover, a few players have lost their money to unlicensed casino operators. For them, the challenge is to find the right operator. A few Indian players want to play anonymously, but the new cryptocurrency gambling is unavailable. Even a few offshore accounts offer net or debit/credit banking for Indian players. 

However, recent regulatory developments have made it difficult for the casino operators to regulate their business in the country. Certain reforms and 72 action points in starting or setting up any new business in India are becoming challenging. MeitY, on the other hand, has appointed the nodal committee to check the steps taken by the Ministry to keep a check on the illegitimate operation of the casino industry.

Another challenge that the Indian casino industry is facing is that the Indian 'indirect' tax authorities are issuing notices to the legit operators in the country. It poses a direct challenge to casino operators with a legit license from the jurisdictions like Malta Gaming Authority, Curacao Gambling Authority, Alderley Gaming Authority, UKGC, etc. 

Moreover, the government of India has now started to tax the games of skill too. Most top-tier states like Maharashtra, Tamil Nadu, Karnataka, and Telangana do not allow gambling. So, the players from these states will face heavy penalties and jail terms for gambling activities. The states like Sikkim, Nagaland, Goa, etc., allow land-based and online gambling, but punters playing at land-based casinos are covered under the legal standards. It leaves the licensed online casino operators in the lurch sometimes.