Digital Gambling: Supreme Court's Intervention in Online Betting Apps Regulation

In the digital age, the proliferation of online betting applications has emerged as one of the most contentious issues plaguing Indian society. Recent data reveals that 60% of children in urban areas spend up to 3 hours daily on social media and gaming platforms,¹ creating unprecedented exposure to potentially harmful content, including betting platforms. The Supreme Court's recent consideration of a Public Interest Litigation seeking to ban betting apps in Dr. K.A. Paul @ Kilari Anand vs. Union of India & Ors.,² highlights the urgent need for judicial and legislative intervention in addressing the menace of online gambling.

The PIL by Dr. KA Paul seeks several specific directions; declare betting apps as gambling, ban or regulate betting apps, and remove betting apps from app stores. This edition examines the complex legal landscape surrounding online betting in India, analysing the current regulatory framework, the recent Supreme Court intervention, and the broader implications for digital governance and youth protection.

The Current Legal Framework: A Patchwork of Regulations

The regulation of gambling and betting in India operates within a complex federal structure. Under the Constitution of India, Entry 34 of List II (State List) bestows upon the States the authority to regulate the realms of ‘betting and gambling’. This constitutional provision has resulted in a diverse regulatory landscape where different states have adopted varying approaches to gambling legislation.

The Public Gambling Act, 1867³ (hereinafter referred as “Gambling Act”), a colonial legacy, is the general law governing gambling in India. This colonial-era legislation, enacted during British rule, continues to form the backbone of India's gambling laws. The primary object of this Bill was to repress public gambling in large towns without giving rise to oppression and other malpractices on the part of the Police⁴. However, the Act suffers from significant limitations in the digital context. Most of the Gambling Legislations have been enacted prior to the advent of virtual or online gambling and hence these Gambling Legislations primarily refer to gaming/gambling activities at the physical premises. Section 12 of the Gambling Act, 1867 provides the foundational exemption, games where skill predominates over chance are exempt from gambling prohibitions. However, neither the Public Gambling Act nor most state gaming laws define what constitutes ‘skill’ or ‘chance,’ leaving this determination to judicial interpretation.

The Supreme Court in State of Bombay v. R.M.D. Chamarbaugwala⁵ established the foundational principle that “if even a scintilla of skill was required for success the competition could not be regarded as of a gambling nature.” However, this broad interpretation was later refined. In the companion case R.M.D. Chamarbaugwala v. Union of India,⁶ the Court clarified that “a competition in order to avoid the stigma of gambling must depend to a substantial degree upon the exercise of skill.” The Court held that competitions requiring substantial skill were business activities protected under Article 19(1)(g) of the Constitution. State of Andhra Pradesh v. K. Satyanarayana⁷ refined the test further by examining the card game Rummy and said that, “the distribution of the cards is not according to any set pattern but is dependent upon how the cards find their place in the shuffled pack. From this alone it cannot be said that Rummy is a game of chance and there is no skill involved in it.”

In Dr. K.R. Lakshmanan v. State of Tamil Nadu,⁸ the Supreme Court crystallized the predominance test and said that, “The courts have reasoned that there are few games, if any, which consist purely of chance or skill, and as such a game of chance is one in which the element of chance predominates over the element of skill, and a game of skill is one in which the element of skill predominates over the element of chance. It is the dominant element - "skill" or "chance" - which determines the character of the game.”⁹

Games of pure skill enjoy comprehensive legal protection under Section 12 of the Public Gambling Act, 1867, the primary statutory exemption, while Article 19(1)(g) of the Constitution of India guarantees the right to trade and business for skill-based activities. Similar exemptions exist in various state gaming laws, creating a uniform framework for protecting legitimate skill-based gaming. The judiciary has recognized several games as predominantly skill-based through landmark decisions. Rummy was established as a game of skill in State of A.P. v. K. Satyanarayana, while horse racing received similar recognition in Dr. K.R. Lakshmanan v. State of Tamil Nadu. Chess and Bridge have been acknowledged as skill-based games in Manakadu Elainger Nala Sports v. State of Tamil Nadu,¹⁰ and Poker has gained recognition through Law Commission recommendations and various High Court judgments. Conversely, games of pure chance face strict prohibition under Sections 4 and 5 of the Public Gambling Act, 1867, which forms the foundation of these prohibitions, supplemented by similar provisions in state gaming acts and relevant sections of the Information Technology Act, 2000 for online platforms. Games classified as chance-based include “three-card” games like Teen Patti Flush, traditional lottery systems except state-run lotteries, casino games such as roulette and slot machines, and pure betting on uncertain events. These activities fall squarely within the gambling prohibitions and carry criminal penalties under various statutes.

The Supreme Court in Chamarbaugwala established that “competitions that involved substantial skill were not gambling activities. Such competitions were business activities, the protection of which was guaranteed under article 19(1)(g) of the constitution.” This constitutional protection has far-reaching implications for the gaming industry. Skill-based games are recognized as legitimate business activities with full constitutional protection. States cannot arbitrarily ban games of skill without violating fundamental rights. Operators engaged in skill-based gaming platforms enjoy fundamental right protection under the Constitution, providing them with legal recourse against unreasonable state interference.

The determination of whether a game qualifies as skill-based is “a question of fact” that must be decided based on the specific circumstances of each case (Manoranjithan Manamyil Mandram v. State of Tamil Nadu).¹¹ Courts undertake a comprehensive examination of various factors in making this determination. The rules and mechanics of the game are analysed to understand the role of player decision-making. Statistical analysis of outcomes helps determine whether skilled players consistently outperform novices. Player behaviour patterns are studied to assess learning curves and strategic development. The improvement potential over time indicates whether experience and practice enhance performance. Expert testimony on skill requirements provides technical insights into the game's complexity and strategic elements.

The traditional ‘skill vs. chance test’ faces new complexities in online gaming. Online platforms present unique challenges that complicate traditional legal analysis. Algorithm manipulation concerns arise from the lack of transparency in digital game mechanics. The absence of clear visibility into card distribution and game algorithms creates suspicion about fairness. State governments have argued that “online rummy is not primarily a skill-based game and there was an element of cheating involved and that even the card deal was manipulated,” challenging the digital versions of traditionally skill-based games.

The regulatory response has been swift and comprehensive. The Information Technology (Intermediary Guidelines) Rules, 2021 amendments introduce new compliance requirements for online gaming platforms. Mandatory verification of ‘permissible’ online games places the burden on platforms to demonstrate skill-based nature. Due diligence requirements for online gaming intermediaries create additional layers of regulatory oversight and compliance obligations.

Despite Supreme Court precedents, states have adopted varying approaches creating a complex patchwork of regulations. Permissive states like Goa, Sikkim, and Nagaland recognize skill-based games and have created licensing frameworks to regulate them. These states view gaming as a legitimate industry that can contribute to tourism and economic development. Restrictive states take a more conservative approach, with Assam prohibiting all games for money regardless of skill content, while Telangana and Andhra Pradesh maintain strict prohibitions on most forms of gaming. States with evolving positions, including Tamil Nadu, Karnataka, and Kerala, frequently change their legislative approaches, creating uncertainty for industry participants.

This fragmented approach creates significant legal uncertainty and encourages forum shopping, undermining the uniform application of constitutional principles established by the Supreme Court. The lack of consistency across states poses challenges for national gaming companies and creates an uneven playing field for industry participants.

The skill vs. chance distinction in Indian law operates on clear judicial precedents but faces implementation challenges in the digital age. While the constitutional and legal framework strongly protects skill-based games, the emergence of online platforms and varying state interpretations continue to create regulatory complexity that requires comprehensive federal intervention.

The Digital Challenge: Online Betting Platforms

The exponential growth of the online gaming industry has presented a unique challenge to regulatory bodies, as its rapid expansion has outpaced the legislature's ability to enact specific regulations governing its operation. The Information Technology Act, 2000¹² regulates cyber activities in India but does not mention the words gambling or betting, thereby the act was left for interpretation by the courts which have refused to examine the matter.

Recognizing the growing menace, the government has taken several steps:

• • In October 2022 and in February 2023, MeitY imposed blocking orders against a total of more than 150 mobile apps and websites, including those of foreign betting and gambling operators.
• • On 6 April 2023, the Ministry of Electronics and Information Technology introduced essential amendments to the IT Rules to better regulate online gaming, which included, inter alia, the classification of 'online gaming intermediaries'.

Under the Foreign Direct Investment Policy,¹³ FDI remains prohibited in certain sectors, including lottery business, gambling and betting. Besides FDI, any form of foreign technology collaboration, such as licensing for franchise, trademark, brand name, management contract, etc., for lottery business, gambling and betting activities has also been prohibited.

Dr. K.A. Paul @ Kilari Anand vs. Union of India & Ors.: A Judicial Intervention

Dr. Paul had filed the PIL on March 26, 2025. He sought an immediate ban on online betting apps and strict action against endorsing celebrities. Paul cited 978 youth suicides in Telangana in the past year, linking them to distress from these apps. The petition was heard by a Bench comprising Justice Surya Kant and Justice N. Kotiswar Singh.

Dr. Paul's arguments centred on several critical aspects. Dr KA Paul contended that out of 900 million, 300 million Indians are being ‘trapped illegally’ through the betting platforms, and the same is a violation of their Article 21 rights. Paul made a reference to “God of Cricket” Sachin Tendulkar's alleged endorsement of such apps. “When he himself is endorsing, a billion people consider oh this is a good app”, he submitted. In the span of two months, the reported suicide toll in Telangana linked to betting apps rose from 978 to 1,023.

The Supreme Court's initial reaction was cautious yet empathetic. Justice Surya Kant observed, “People are voluntarily doing these things. What can be done? Principally, we are with you, it should be stopped… but probably you are under a misconception that it can be stopped through a law”. However, recognizing the gravity of the situation, the Court issued notice to the Union of India, returnable by August 1, 2025. It also directed that a soft copy of the petition be served to the Attorney General and Solicitor General.

Law Commission’s Report

The Law Commission of India, in its 2018 report,¹⁴ provided comprehensive recommendations for gambling regulation. The Commission recommended that gambling and betting should only be permitted by licensed operators from India. For participants, it recommended that there should be a cap on the number of such transactions for a specific time period.¹⁵ Parliament may also enact laws under Article 249 (in national interest) or Article 252 (if two or more states consent). With regard to online gambling and betting, it observed that Parliament has the competence to enact a law.¹⁶

The Commission recommended classifying gambling activities into two categories, namely ‘proper gambling’ and ‘small gambling’. ‘Proper gambling’ would be characterised by higher stakes.¹⁷

Given the cross-border nature of online betting platforms, there is an urgent need for comprehensive federal legislation that can address the lacunae in the current state-based regulatory framework. The regulatory framework must evolve to address the technological sophistication of modern betting platforms such as mandatory geo-blocking for unlicensed operators, real-time monitoring of suspicious transactions, integration with financial intelligence units, and blockchain-based verification systems.

Dr. Paul highlighted that Telangana Police have filed an FIR against 25 celebrities for promoting betting applications. Given that 60% of India's population is under 25 years of age, there is an urgent need for enhanced protective measures targeting this vulnerable demographic. The court is now awaiting the Union of India's official response to address this matter.

Concluding Remarks

Any regulatory framework must respect the constitutional distribution of powers while ensuring effective governance. Parliament may enact laws under Article 249¹⁸ (in national interest) or Article 252¹⁹ (if two or more states consent), providing pathways for comprehensive national legislation. The legitimate gaming industry must be differentiated from illegal betting operations. As of the end of FY 2023, there are 425 million online gamers in India, spending an average of 10–12 hours per week on gaming. Regulatory frameworks should support legitimate skill-based gaming while curbing harmful gambling activities.

The Supreme Court's consideration of Dr. K.A. Paul's PIL represents a watershed moment in India's approach to online gambling regulation. Justice Kant remarked, “Because he knows that in the name of watching IPL, there are thousands and thousands who are betting,” highlighting the pervasive nature of the problem.

The intersection of constitutional law, digital governance, and social protection requires a nuanced approach that neither stifles innovation nor compromises public welfare. The Court's decision to seek the Centre's response indicates a recognition that this issue transcends traditional legal boundaries and demands comprehensive policy intervention.

As India grapples with the dual challenges of technological advancement and social protection, the resolution of this case will likely establish precedents for digital governance in the 21st century. The ultimate goal must be to create a regulatory ecosystem that protects vulnerable populations, particularly youth, while allowing legitimate digital innovation to flourish.