Karnataka Betting Laws and Industry

Casino legislation at KarnatakaThe Karnataka state government has not been one to take kindly to gambling with the Karnataka Police Act, 1963 [1] the applicable law to prevent gambling in the state. Several portions of this Act are similar to the archaic Public Gambling Act, 1867 [2].

Chapter VII of the Karnataka Police Act 1963 [3] deals with the prevention of gaming and operation of gaming houses where those found guilty face a prison term ranging from three months to a year.

For the most part, the Pubic Gambling Act, 1867 states that all forms of gambling are illegal in India except for horse racing.

In 2007, the government cracked down on lottery and also sought to ban horse racing although that did not happen. Horse racing and off course betting offices are still legal [4].

According to a KPMG study, India’s betting market is worth over $60 billion [5] . The Prevention of Gaming chapter in the Karnataka Police Act 1963 [6] dictates that all games of change except betting on horse racing is punishable. Games of chance include a combination of games of chance and skill.

According to KPA 1963 (ii) “‘game of chance’ includes a game of chance and skill combined and a pretended game of chance or of chance and skill combined, but does not include any athletic game or sport;”

There is an enormous amount of funds pumped into illegal betting while law enforcement have failed have any impact on the illegal betting market even in Karnataka. Those who get caught are only the small fry while the kingpins go about their business with gay abandon. In rural areas, people are often arrested for wagering on cockfights under the provisions of Prevention of Gaming while millions of dollars continue to roll in cricket betting.

Horse Race Betting in Karnataka

Betting on horse racing has been ruled as a game of skill by the Honorable Supreme Court of India [7] since it involves judging the breed and form of the horse and the jockey’s form and ability, in addition to other actors.

Horse race betting is a thriving business in Karnataka with the Bangalore Turf Club (BTC) hosting a full season of thoroughbred racing. The BTC has the requisite licensing under the Mysore Race Course, Licensing Act, 1952 [8] to operate totalisators while the government collects a tidy sum in taxes. Bookmakers are also licensed to operate by the BTC and accept wagers in cash or credit from their customers. They are directly responsible for paying taxes due to the government.

According to The Mysore Betting Tax And Race Courses Licensing (Karnataka  Amendment) Act, 1974, the Government of Karnataka permitted the BTC to conduct off course betting under a mutual arrangement with the RWITC or Royal Western India Turf Club Limited, Bombay from May 1973. The objective of this was to prevent illegal betting and help the state government and the BTC earn revenue and create employment for a large number of people. A full-fledged off course betting center also exists at Mangalore.

The Bangalore race course is one of the finest in the country that hosts a number of Grade 1 races including classic races such as the Kingfisher Derby, Colts Championship Stakes, Fillies Championship Stakes, and Bangalore St. Leger. It also hosts a number of sweepstakes races that includes the Chief Minister’s Cup and Governor’s Cup.

The other prestigious club in Karnataka is the Mysore Race Club, a three hours drive from the capital city of Bangalore. The club also hosts a number of high profile races and was the first to introduce horse racing in the state under the patronage of the rulers of Mysore.

There are three ways of betting in horse racing. The tote is a computerized form of betting where wagers are added to a pool and divided among the winners. The winning amount is derived only after the race with the government getting is share in the form of taxes. The other forms of betting are fluctuating or fixed odds and payouts with the bookmakers.

On August 16, 2014, the Karnataka Government had suspended racing at the BTC during the peak racing season following police investigations into the alleged rigging of two races by the club’s stewards. A lack of evidence prevented the police from charging them while a fierce battle between government and BTC officials continued. The government passed an order banning race-horse owners from becoming a steward in the managing committee of BTC. Stewards were also banned from betting directly or indirectly on the races. This resulted in four of the nine racing stewards having to resign from the club’s managing committee.

The BTC profits significantly from off course betting, earning as much as $21,000 per day from the 217 off-course betting days in the season.

Betting Cricket and Other Sports

Betting cricket in Karnataka India legal or illegal

Betting on sports has always been a grey area in India, including the State of Karnataka [9].

While horse racing enthusiasts enjoy all the privileges of placing wagers on thoroughbred horse racing held at the Bangalore and Mysore race tracks, betting on sports like cricket is still illegal in the state [10] although a thriving business worth   $60 billion and more annually.

Cricket matches in Karnataka are mainly held at the Chinnaswamy Stadium in Bangalore where thousands of people throng to watch both international and domestic games. The stadium also hosts many of the IPL matches.

The Federation of Indian Chambers of Commerce and Industry have been urging the Central Government to legalize sports betting, including cricket, which could help the government rake in millions of dollars in tax revenue. However, under the Karnataka Police Act, 1963 [11] and Public Gambling Act, 1867 [12], betting on cricket and any other sport remains illegal and punishable by law.

Under the Public Gambling Act of 1867 operating, assisting in operation and visiting a gambling house is a crime. In the case of M.J. Sivani and Others v. State of Karnataka and Others [13], the Supreme Court held that when an element of change is strongly preponderate, the game cannot be a game of mere skill. On the other hand, Justice Mudgal has observed that these regulations are inconsistent where betting on the skill of horses and jockeys is permitted but betting on the skill of sportsmen is prohibited.

The investigations on match fixing allegations in the Indian Premier League (IPL) in 2013, one of the most popular cricket events held during the Indian summer has led to hundreds of bookies in the state of Karnataka going underground although they have been back to business in subsequent years of the IPL.  Apart from Bangalore and Mangalore, there are several cricket betting hubs in small cities and districts such as Hubli, Manipal, and Gulbarga, to name a few.

According to some legal experts, the Karnataka Police Act does not state anything that criminalizes the act of placing bets on athletic games and sports. The Act, in the opinion of a former advocate general, B.V. Acharya, does not apply to wagering on athletic sports or games. The Act defines ‘game of chance’ as any game that requires a combination of skill and chance and does not mention athletic sports and games, which according to some legal experts makes sports betting in Karnataka legal [14].

In the opinion of former additional advocate general, K. M. Nataraj, sports is defined as activities that involve skill and physical exertion where teams or individuals compete against each other. Therefore, all forms of sports betting including wagers on cricket, tennis, football and other sports are legal in Karnataka as long as betting is done within the jurisdiction of the state. However, betting can only be done on the final result.

However, the matter gets more complex when it comes to betting on whether a ball in cricket could result in a four, six, or dismissal of a player, or betting on which player would score a goal in the first half of a football match, since it involves a combination of chance and skill.

According to current law in India and the Information Technology Act, [15] online betting can be prohibited under the same law and the guilty can be prosecuted. However, there are loopholes that allow online betting in many sports in India to continue. Proponents of online betting argue that legalizing online sports betting in India can only result in additional revenue to help build better sports facilities and infrastructure the country. Outright banning can only result in the proliferation of illegal betting

Lottery in Karnataka

Ironically, the Public Gambling Act, 1867 [16] excludes horse racing and lottery from ‘gaming’. However, the State of Karnataka is among the numerous states to eventually ban all forms of lottery gaming in 2000.

The current chief minister, Mr. Siddaramiah does not plan to introduce state lottery in the near future. A proposal by the state planning board deputy chairman CM Ibrahim to launch a lottery to on the lines of the state of Kerala to fund healthcare programs was turned down.

When all forms of lottery were banned in 2004, the current chief minister was then the deputy chief minister in the Dharam Singh government. One of the main reasons for the ban was the introduction of single-digit lottery which had an adverse impact on the labor and lower middle class who spent their wages on buying lottery tickets.

Under the Lottery Regulation Act of 1998 [17], state governments were given the powers to make rules.

The ban resulted in a ‘mobile lottery’ racket being discovered by the State Excise and Lottery Enforcement Cell. A gang was busted in the town of Ramnagaram for running a racket where bets were placed on a specific number and prizes distributed through a physical network and the internet.

Legal experts say the business took advantage of a loophole in Section 5 of the Lottery Regulation Act which bans all kinds of lotteries operated through vending machines and not through the internet or mobile networks. The law enforcement agencies expressed their inability to book anyone due to the loophole although they have been advised to book cases under Section 78(3) of the Karnataka Police Act, 1963 [18]. Legal experts say that this doesn’t carry sufficient weight to deal with this form of illegal betting.

Flush, Rummy, Poker and other Card Games

Games of skill laws at Karnataka India

Karnataka has a huge following when it comes to poker, rummy and other card games, which is evident by the number of poker and rummy clubs in the city of Bangalore alone.

A number of poker rooms have mushroomed across the city riding high on a judgment by the Karnataka High Court which declared poker in India a game of skill and not a game of chance [19]. Many who have played the online version have been attracts to these poker rooms located across the city of Bangalore.

In Indian Poker Association v. State of Karnataka, (WP Nos. 39167 to 39169 of 2013), the Karnataka High Court ruled that no license was required by recreational clubs that offer poker and that the game could be freely permitted.

Justice AS Bopanna observed that if played as a game of skill, poker does not require a license while the petitioner in the case was entitled to conduct such games in accordance with the law. The court order also mandated that the police refrain from interfering with the running of lawful activities by the club. With this order, poker is permitted for ‘recreational purposes’ and the legality of it being played for profit or stakes is still unclear. However, this decision opened the gates for offline and online poker in Karnataka. The popularity of poker clubs in cities like Bangalore is evidence that the state is poised to benefit from a legalized gambling market with the potential to funnel millions of dollars in revenue.

Rummy enthusiasts in cities like Bangalore also received a fillip from the landmark case of MJ Shivani v. State of Karnataka (1995) [20], in which the Supreme Court determined that Rummy was game of skill and not gambling [21]. The decision was based on State of Andhra Pradesh v. K. Satyanarayana in which the court ruled that Rummy required a certain amount of skill since the cards had to be memorized and was not entirely a game of chance.

The Karnataka High Court dismissed charges against 19 people who were arrested for playing rummy.  Incidentally, the city of Bangalore went on to host the World Rummy Tournament (WRT) in May 2012 at The Bangalore City Institute with the grand finale hosted in Goa where the winner took home a purse worth approximately $166,000.

According to a report, Bangalore police did cut a sorry figure in December 2013 when they shut down hundreds of sports and recreation clubs. However, their prosecutors argued under an outdated order following which the clubs were allowed by the court to resume business. Apparently, the government’s advocates were behind the times on the law and did not refer to the relevant order where the High Court had rules that licenses were not necessary to run poker and rummy.

Several cases were thrown out the court with as many as seven on one day. Subsequently, the Karnataka Government passed an order on September 12, 2013, making it mandatory for clubs that offer games of chance and gaming to register under the Karnataka Co-operative Societies Act of 1959 [21] or Karnataka Societies Registration Act of 1960 [22].

Since online gambling is not limited to specific jurisdictions, implementing any online gaming law is a daunting task since different states in India like Karnataka, Tamil Nadu and Goa and High Courts adopt different laws. Goa from all the Indian states it has been widely successful allowing gambling to some extent. Read more on Goa state laws here.

Even countries like the USA are also struggling to bring about complete legalization on several gaming laws. There is no doubt that the bets are high in the Indian gaming market and stakes are even higher. It would be interesting to see how states like Karnataka are able to monetize on the rapidly growing betting market.

Gambling Laws Reference in this Article

[1] [3] [6] [11] [12] [18] dpal.kar.nic.in,  The Karnataka Police Act, 1963, 1992

[2] [16] sangrurpolice.in,  The Public Gambling Act, 1867, 1937

[4] [8] dpal.kar.nic.in,  The Mysore Betting Tax And Race Course License  (Karnataka Amenment) Act, 1974, 1974

[5]  thehindu.com,  Archaic betting laws are toothless, 2013

[7]  glaws.in,  A primer on horse racing laws in India, 2013

[9] [14] thehindu.com,  Odds are you can bet on sports in Karnataka, 2013

[10]  indialawjournal.com,  Online Gambling and Betting on Cricket Matches Continues Unabated, 2007

[13] indiankanoon.org,  M.J. Sivani and Others v. State of Karnataka, 2011

[15] deity.gov.in, The Information Technology Amendment Act 2000 ,2009

[17] indiankanoon.org, Lottery Regulation Act of 1998 , 2011

[19]  legallyindia.com,  SC clears air, online rummy not gambling, 2014

[20]  indiankanoon.org,  M.J. Sivani And Ors vs State Of Karnataka And Ors on 20 April, 1995

[21]  sahakara.kar.gov.in,  The Karnataka Co-Operative Socities Act, 1959

[22]  dpal.kar.nic.in,  The Karnataka Societies Resgistration Act, 1960, 1975