The Influence Of Lobbying On The Enforceability Of Wagering Contracts In India
Author: LawSphereX
Category: General Law
Published:
Updated:
THE INFLUENCE OF LOBBYING ON THE
ENFORCEABILITY OF WAGERING CONTRACTS IN INDIA
Nandini Singhal, Jindal Global Law School
ABSTRACT
In many different industries, the results of legislative and policymaking are significantly influenced by lobbying, which is a strategic attempt to sway decision-makers. This paper tries to look into how lobbying affects the enforcement of wagering contracts in India. Due to historical, cultural, and ethical factors, wagering contracts, often known as gambling contracts, have a complicated legal standing in India. The historical context of gambling laws, the legal structure governing wagering agreements, and the impact of lobbying on the development of these laws are all examined in this research paper.
INTRODUCTION
“A wagering contract is one by which two persons, professing to hold opposite views touching the issue of future uncertain event, mutually agree that, dependent upon the determination of the event, one shall win from the other, and other shall pay or handover to him, a sum of money or other stake ; neither of the contracting party having any other interest in the contract than the sum or stake, he will so win or lose, there being no other real consideration for making of such contracts by either of the parties.”1 Lobbying is a well-established practice of influencing the governmental and administrative actions by communicating directly with the officials in the executive branch or the legislative branch of the State. It has a huge impact on the laws and policies made in the country as well as the enforcement of these laws. It generally works in dispersed and opaque manner. In India,
1 ‘Wagering Contract: A Question of Definition, 6, Harv. Law. Rev., 204, 203-204(1892)
this practice is neither legalised nor officially prohibited. It provides a direct link between various interest groups, individuals and organisations with the executive and legislative branch of the country, where the former engages with the latter to promote their agenda. For an instance- The tobacco industry has a long history of using lobbying techniques in shaping the laws governing tobacco products, advertising and public health initiatives. Since the use or consumption of tobacco is a serious public health issue as it is connected to innumerable diseases, premature deaths, cognitive dissonance, affecting productivity, noting financial risks, potential legal issues etc. Incessant tobacco consumption can severely impact Human Resources by turning valuable assets into liabilities.
It’s detrimental effects on psycho-social fabric led the government to impose various restrictions on the sale and consumption of tobacco in order to safeguard its Human Resources. However, the tobacco industry rejected these initiatives and restrictions, employing lobbying to safeguard its interests and navigating to mitigate the impact of these restrictions. In the context of gambling, lobbying efforts to be made by the stakeholders of gambling industry in order to influence the legal as well as regulatory framework of gambling industry. It will involve direct engagement with legislators and other various regulatory authorities to envisage for desired gambling laws.
HISTORICAL
BACKGROUND
The concept of gambling is not novel in India. Its origin can be traced back in the history. It dates back thousands of years and can be found in various forms throughout history, from Asian civilisation to modern societies. The Public Gambling Act of 1857 governed gambling laws in India prior to the adoption of the Constitution of India. The United Kingdom's Parliament passed the Gaming Act 1845 and the Betting Act 1853, which are likely the sources of the Public Gambling Act 1857. The Unlawful Games Act of 1541, which declared games of skill like tennis and bowling to be illegal, was repealed by the British Acts of 1845 and 1853, which tried to make wagering contracts unenforceable. This strategy appears to be reflected in the Indian Public Gambling Act of 1857, which forbade common gaming establishments and public gambling while making an exception for games of skill2.
After the enactment of the Constitution of India, the authority to enact laws pertaining to gaming and betting was given to the State Legislature. Several states then adopted the Public Gambling Act of 1857, albeit with certain modifications. Every state has its own laws governing betting and gaming. 3
LEGAL FRAMEWORK
OF WAGERING CONTRACT IN INDIA Wagering Contract, usually referred as gambling or betting contract has a complex legal status in India. The Indian Contract Act, 1872 provided underlying legal framework for all type of contracts, that exists in India, including wagering contracts. Section 30 of Indian Contract Act, 1872 pertains the provision of the wagering agreements. It states as follows: - Agreement by any of wager, void. – Agreements by way of wager are void; and no suit shall be brought by recovering anything alleged to be won on any wager, or entrusted to any person to abide the result of any game or other uncertain event on which any wager is made. 4 To elaborate, this section constitutes that any agreement which has characteristics of being a wager is void.
And no suit related to it can be filed in the court of law to recover anything that is alleged to be won by any of the parties. For the contract to qualify as wagering contract, several requirements must be met which are given below: - Firstly, there must be two parties involved. 2 Vidushpat Singhania, A General Introduction to Gambling Law in India, Lexology, (May 11, 2022, 2:06 PM),
3 id.
4 The Indian Contract Act,1872, s30
Secondly, each having equivalent possibility of winning and losing i. e. , a contract can’t be a wagering contract if one party has more probability of winning than losing and vice versa. Thirdly, there must be no interest involved other than betting money. Fourthly, no party has control over the happening of an event. Fifthly, the event must be indefinite and unpredictable in nature. 5 Despite the outlawing of the wagering contracts, there are certain exceptions to the wagering contracts which are recognised by the Indian law. The first exception states the distinction between the Game of Skill and the Game of Chance. Indian law has recognised of the Game of Skill legal and enforceable. Under the judgement of Dr. K. R. Lakshmanan vs State of Tamil Nadu and ors on 12th January 1996, the court laid the points that helps in distributing between the two.
It stated that the Game of Skills is based upon the training, proficiency, adroitness and understanding of the player while the Game of Chance merely depends upon the good fortune of any player, and no skill is required per se. Thereby it can be concluded that in the sport of Horse Racing, the skill of the jockey is included, and the victory is not result of a good fortune. On the other side, if we engage into a contract where it is decided that the horses will run on their own and whoever's horse stops first will be declared the loser, then it will be considered as the Game of chance. There is no skill involved specifically; the horses will alone determine the outcome. 6 Further, taking another example of Dream 11 app. This app is an exemption of the provisions of Public Gambling Act, 1867.
This app resembles betting as it includes pooling of money from various people who bet on the happening and non-happening of an event where the calculation of rewards is based upon the performance of players. However, the High Court of various states has declared it legal and valid as this game requires actual skills. 7 The second exception to this rule is Insurance Contracts. An insurance contract is a unilateral contract, where only one party agree to make a promise to make payment in the event of any 5 Shashank Reddy, Wagers, betting and online gaming: Guidelines for Self-Regulatory Bodies, Bar and Bench (Apr. 29, 2023, 11:44 AM), 6 Anushka Singhal, Sports Betting in India: Wagering Contract or Not? , Lexlife India ( March 1, 2021, 11:44 AM), 7 Vaishnavi Agarwal, Wagering Contracts in India- Progress and Perceptions, Jus Corpus Law Journal (March 23, 2022, 4:30 PM), .
unforeseen circumstances like accidents or damage. They are typically not considered as wagering contracts but are contingent contract. The last exception is the share market, where dealing in the market necessitates making decisions about the transfer of shares for the purpose of settling prices, involves speculation. However, these agreements and dealings are not regarded as wagering contracts because the decisions are based on market analysis and informed judgment rather than solely on chance. 8 ROLE OF LOBBYING IN THE ENFORCEABILITY OF WAGERING CONTRACT IN INDIA Lobbying efforts put by the stakeholders of the gambling industry by directly engaging with lawmakers, policymakers and bureaucrats could change the structure of whole of the industry. For instance, legalising the various gambling platforms such as, casinos, online gambling and fantasy sports.
The main objective of these efforts is to make a difference in a preconception in legislative attitude towards wagering contracts by passing or amending the existing laws that restricts them as well as in order to be in charge of unregulated gambling activities in the country. In order to earn quick money, common man usually indulges in the wagering contracts, and get exploited to the hands of cunning people. Regulations need to be passed in order to prevent the common man from such exploitations. Lobbyists can contest for desired framework that regulates the enforcement of wagering contracts and gambling activities in India. Involving with legislative as well as executive authorities, they can affect the regulations and practices of procuring licenses, taxation polices and other other measures concerning the same.
Lobbyists can spread awareness by campaigning to bring a change in the point of view of the general public regarding wagering contracts and gambling activities. Public need to be aware 8 Dhruv Soni, Exceptions to A Wagering Agreement And Its Enforceability In India: An Analysis, Jus Corpus Law Journal (Dec. 28, 2021, 1:25PM), . about the fact, what the gambling activities such as casinos could do to our tourism industry, revenue industry and the way it can affect our GDP. Lobbyists could target the modification of various activities as exceptions restricting the wagering contracts. For say, making the private lotteries legal and enforceable under the law, where the private lotteries are regulated by laws made by the State Legislature.
It will not only be accelerating economy but also generating employment opportunities in our country, and the regulating laws will prevent the exploitation of common man. IMPACT OF THE LOBBYING EFFORTS ON THE ENFORCEABILITY OF THE WAGERING CONTRACTS Lobbying’s influence on the enforcement of the wagering contracts can impact all the aspects of the society. Lobbying efforts could influence the selective enforcement of various activities, such that where the regulation of particular activities is targeted to be lenient or strict, based upon their influence on the gambling industry. Further, lobbying could lead to the passing of the new gambling laws or amending the existing ones, which could impact the enforceability of wagering agreements, these laws could be in favour of or against the interests of lobbyists.
Favourable Outcomes of Lobbying Efforts The enforcement of gambling or wagering contracts would have a massive impact on the economy of the country. Legalising of gambling laws could lead to the involvement of more people into the gambling industry, such as, casino industry, which will lead to the generation of great amount of revenue. Taxation levied on the the functioning of these gambling industry, might that be casino, lottery, betting and various other activities would sway the revenue collection of our country. Further, this might impact the employment generation in our country, such as, involvement of more people of this industry, could lead to this industry’s expansion, creating more job opportunities. In addition, this could lead to the rise in the earning capacity of an individual by earning the side income through betting or online gambling.
Furthermore, this could boost the tourism of our country too, such as, casinos or other gambling platforms attracting more tourists to the country. 9 Moreover, legalising of the gambling contracts could prevent the illegal trade or black money circulation. For instance: - Some states like Goa have legalised casinos. The state of Goa allowed gambling after the introduction of Goa, Daman and Diu Public Gambling Act. It also allowed slot machines and card rooms in offshore vessels subject to prior approval of State government on payment of specified recurring fee. 10 In January 2020, Goa was ranked the best performer for collection of state taxes. 11 In 2017, Goa was ranked third in the list of top five states in tourism as per WTTC-II. 12 From above example it can be concluded that casinos I. e.
, gambling activities play a crucial role in boosting the tourism as well as revenue collection the country. Adverse Outcomes of Lobbying Efforts The enforcement of wagering or gambling contracts could adversely impact the vulnerable section of the society. The legalisation of gambling could lead to the involvement of more people into this gambling industry which could result in addiction of gambling or betting on people. It is more likely that the addiction in people could lead to the family issues such as, conflict, disruption or even breakdown of families. Also, could lead to psychiatric problems such as anxiety, depression, substance use and others. Further, affecting the work sphere such that, people addicted to gambling are less productive at work as compared to people, having no addiction.
People investing their hard-earned income in the gambling with their hopes to earn more money could not only lead to addiction but also the large debts, poverty or even bankruptcy. This could lead to the indulgence of an individual into the criminal activities
9 supra note 7
10Casinos and Gambling Laws in India’ (Legal Service India - Law, Lawyers and Legal Resources) accessed 28 August 2023 11 Goa Ranked Best Performer for Collections of State Taxes, The Times of India (Jan. 30, 2020, 07:56 AM), https://timesofindia. indiatimes. com/city/goa/goa-ranked-best-performer-for-collections-of-statetaxes/articleshow/73746409. cms. 12 Bindiya Chari, Goa in the List of Top Five Indian States in Tourism, The Times of India (Nov. 23, 2017, 2:39 PM),https://timesofindia. indiatimes. com/city/goa/goa-in-the-list-of-top-five-indian-states-intourism/articleshow/61766283. cms. related to embezzlement in order to pay off the debts. Furthermore, it is not indespensible that legalisation of gambling activities could overall eliminate the illegal laundering of money. Moreover, there is a chance that a common man could get exploited at the hands of deceitful people.
13 LANDMARK JUDGEMENT Supreme Court of India’s ruling in the case of ‘GHERULAL PARAKH v MAHADEODAS MAIYA AND OTHERS’14 in 1959 elucidates the principles of wagering contracts in India. Held: The Appellant and the Respondent entered into a partnership for carrying a wagering transaction and the Respondent who carried on transactions on behalf of the partnership claimed the share of loss incurred in respect of those transactions from the Appellant. Initially, the claim was resisted on the grounds that the object of the contract was forbidden by law, was opposing the public policy and was immoral. Rejecting the contentions and allowing the claim.
15 It was held that: Ø Section 30 of Indian Contract Act, 1872 was based upon the provisions of section 18 of the Gaming Act of 1845 and though a wager is void and unenforceable, it is not forbidden by law and therefore the object of a collateral agreement is not unlawful under section 23 of the Contract Act; and the partnership being an agreement within the meaning of section 23 of the Indian Contract Act, it is not unlawful though, its object is to carry on wagering transactions. 16 Ø Wagering Contracts have been never struck down on the grounds of public policy under the common law of England and that of India; in fact, they have been declared by void by the statute, they are not held to be illegal.
Even after the wagering contracts were declared to be void in England, collateral contracts were enforced till the passing of the Gaming Act of 1892 and in India, except in the state of Bombay, they have been enforced even after the passing of the Act XXI of 1848, which was substituted by 13 Sanju George et al, Should Gambling Be Legalised in India, National Library of Medicine (Jul. 20, 2020),
14 Gherulal Parakh vs Mahadeo Das Maiya, A.I.R 1959 S.C. 781
15 supra note 14.
16 supra note 14.
section 30 of the Indian contract act. The moral prohibitions of Hindu law text against the gambling were not legally enforced but were allowed to fall in desuetude. In practice though gambling is controlled in specific matters, it has not been declared illegal and there is no law declaring wagering illegal. In the circumstances, it is not possible to hold that there is any head or principle of public policy which would directly apply to wagering contract. 17 Ø Precedents confine the concept of immorality only to sexual immorality and courts cannot evolve a new head so as to bring in wagers within its fold. Accordingly, the suit partnership was not unlawful within the meaning of section 23 of the Indian Contract Act of 1872. 18 It can be stated from above judgement that wagering contracts are void and unenforceable in India, however, they are not forbidden by law.
Also, the partnership formed to carry out wagering transactions or for signing the wagering contracts, even though the object of these partnerships is illegal, it is not. Also, it is said that the wagering contracts have never been struck down or held illegal, even though they are void under the statute.
CONCLUSION
Wagering Contract is an agreement where one party is liable to pay another based upon the occurrence or non-occurrence of an event. As per Indian statute, The Indian Contract Act of 1872, under Section 30, wagering contract is void and unenforceable by law. This section only clarifies the principles of wagering contract and doesn’t really define what is wagering contract. Therefore, it is crucial to ensure the validity of such contracts based on landmark judgements and judicial interpretations.19 Further, the statute should be updated by clearing defining the wagering contracts, as to what constitutes a wager, by removing all the ambiguity with regards to its legality. For a contract to be a wagering contract it must be signed by two parties, having mutual chance of winning and losing and have only monetary interest involved. Gambling laws in India is
17 supra note 14.
18 supra note 14.
19 Paramjeet Sangwan, Understanding Wagering Agreements under the Indian Contract Act, Legal Stix (Jan. 01, 2024, 03:45 PM), governed by the Public Gambling Act of 1857, it is a central law. Power to make gambling laws in India are in the hands of State Legislatures. Goa and Sikkim and new Union Territory of Dadra and Nagar Haveli and Daman and Diu are the states which allow gambling and betting based on chance. Exceptions to wagering contracts are betting on the game of skills and insurance contracts and dealings done in share market. Lobbying plays a pivotal role in the enforcement of wagering contracts by engaging with lawmakers and policymakers in order to either legalise various gambling laws or make them the exception of existing ones. Also, engaging with general public through the campaigning the positive impacts of gambling laws.
Lobbying could have favourable as well as adverse outcomes. However, by weighing the pros and cons of the enforcement of wagering contracts, it can be observed that there are more pros to it as compared the cons. Enforcement of wagering contracts could literally upgrade India’s economy and it should not be hindered only because an individual couldn’t control one’s addiction. Under the judgement of Dharmendra Ravipratap Rajak vs State of Gujarat on 27 January 2022, the court laid that public interest will always have precedence over a private interest of the parties. 20 Hence, wagering contracts should be enforceable in India.
20 Dharmendra Ravipratap Rajak vs State of Gujarat, Livelaw (Jan. 21, 2022, 12:04 PM),
.