Legality of Casinos in India – A Comparative and Reform Oriented Legal Analysis:

The legalization of casinos in India remains a deeply contested issue, situated at the intersection of law, economics, and societal morality because gambling is a game of chance not a game of skill. While some Indian states have cautiously embraced regulated gambling as a revenue-generating avenue, the majority of the country still adheres to archaic colonial statutes that treat gambling as a criminal offense. This legal inconsistency has hindered the potential economic gains from the casino industry, even as countries like the United States, Monaco, and Singapore have successfully harnessed gambling to stimulate tourism, employment, and infrastructure development. The complex legal framework governing casinos in India comparative to international models is very diverse.

Understanding the Legal Status of Casinos in India

The legality of casinos in India is shaped by a combination of colonial legislation, post-independence constitutional provisions, and evolving state policies. At the core of the legal uncertainty lies the division of legislative competence between the Union and State governments, entrenched in the Seventh Schedule of the Constitution of India, which governs the distribution of legislative powers.

1. Constitutional Framework:

Entry 34 of List II (State List) under the Seventh Schedule empowers state legislatures to make laws on “betting and gambling.” This means that the subject is exclusively under state jurisdiction, and the central government cannot legislate on gambling or casinos unless empowered through a constitutional amendment or unless the subject falls within the ambit of a central subject like interstate trade, communication, or public order (Entry 97 of List I or Entry 1 of List III under special circumstances).This decentralization has resulted in a heterogeneous legal regime, where a few states have legalized and regulated gambling (notably Goa, Sikkim, and Daman), while others continue to prohibit it outright. States like Gujarat, Tamil Nadu, and Maharashtra follow a prohibitory approach, often modelled on the Public Gambling Act, 1867, a pre-constitutional colonial statute.

2. Fundamental Rights and Reasonable Restrictions:

• Article 19(1)(g): Guarantees all citizens the fundamental right “to practise any profession, or to carry on any occupation, trade or business.” Operating a casino could fall within this protected right. However, the right is not absolute.
• Article 19(6): Empowers the state to impose “reasonable restrictions” on this freedom in the interest of the general public. This includes the state’s authority to regulate morally sensitive trades like gambling.

The Courts have repeatedly held that trades considered Res Extra Commercium (outside the bounds of commerce) can be subjected to stricter regulation or prohibition. In “State of Bombay v. R.M.D. Chamarbaugwala” AIR 1957 SC 699: the Supreme Court classified gambling as res extra commercium, thus placing it outside the full scope of Article 19 protections. This has enabled governments to justify complete bans or tight regulations.

3. Directive Principles of State Policy:

Though not enforceable by courts, Part IV of the Constitution guides legislative policy. The following are particularly relevant:

• Article 38: Directs the state to promote the welfare of the people by securing a social order where justice — social, economic, and political — prevails.
• Article 47: Mandates the state to raise the level of nutrition and the standard of living and improve public health — often invoked to justify bans on intoxicating or harmful activities like gambling.
• Article 39(e): Obligates the state to ensure that health and strength of workers are not abused, particularly relevant in the context of compulsive gambling and addiction.

These Articles allow states to justify regulation or prohibition in terms of public health and social morality. However, they also place a duty on the state to reform and regulate potentially harmful industries, rather than simply criminalizing them without alternatives.

4. Federalism and Economic Policy:

The Preamble and Article 301 ensure the freedom of trade, commerce, and intercourse throughout India. Casinos, especially those with interstate tourist draw (like those in Goa), arguably fall within this domain. Any overly restrictive state legislation could potentially violate Article 301, unless it satisfies the limitations imposed by Article 302–304, which allow the imposition of reasonable restrictions in the public interest. Moreover, Article 246 and Schedule VII demarcate legislative authority. While states have the primary authority over gambling, Parliament could step in under Article 249 (national interest), Article 252 (if two or more states consent), or Article 253 (for implementing international agreements).This opens up policy opportunities for central intervention, especially in light of cross-border online casinos and international trade obligations under WTO frameworks.

5. Judicial Attitudes and Precedents:

The judiciary has largely adopted a conservative approach, emphasizing public morality:

• In K.R. Lakshmanan v. State of Tamil Nadu, (1996) 2 SCC 226, the Supreme Court held that horse racing is a game of skill, not chance, and therefore excluded it from gambling prohibitions. The ruling underlines the legal distinction between “games of skill” and “games of chance,” a key issue in casino legality.
• In State of Andhra Pradesh v. K. Satyanarayana, AIR 1968 SC 825, the Court reaffirmed that gambling activities are not a legitimate business and can be regulated or banned.

Yet, in recent years, courts have recognized the need for regulatory clarity. In online gaming cases like Skill Lotto Solutions v. Union of India (2020) and Varun Gumber v. Union of India (2017), courts hinted at the commercial potential of such industries, if regulated appropriately.

The Government of India should appreciate that Indian coastline touches Nine States: Gujarat, Maharashtra, Goa, Karnataka, Kerala, Tamil Nadu, Andhra Pradesh, Odisha, West Bengal and Two Union Territories: Daman and Diu and Puducherry and Two Island Territories: Andaman and Nicobar Islands in the Bay of Bengal and Lakshadweep Islands in the Arabian Sea which has a total coastline of 7516.6 km, of which 5422.6 km is the mainland coastline and 2094 km is the island coastline. While MONACO has merely 3.83 km coastline and the east coastline of the USA is approximately 3,329 km on which many states of USA have casino.    

Global Models: What Can India Learn?

India’s cautious and piecemeal approach to casino regulation stands in stark contrast to the bold and systematic frameworks adopted in several first-world countries.

The United States of America, adopts a decentralized model where each state has the autonomy to regulate gambling. The most notable example is Nevada, where Las Vegas serves as the global epi-centre of legalized gambling. Under the Nevada Gaming Control Act, casinos operate under the supervision of the Nevada Gaming Commission and the Gaming Control Board. These bodies conduct background checks, audit financial records, and ensure strict compliance with ethical standards. The economic contribution of casinos to Nevada’s GDP is immense. Las Vegas alone generates over $8 billion annually in gambling revenue, and supports more than 300,000 jobs in the hospitality, foreign tourism, and gaming sectors. Moreover, a significant portion of state tax revenue is derived from gambling, which funds public education, infrastructure, and social services. This model demonstrates how structured legalization, when paired with rigorous oversight, can transform gambling into a sustainable economic asset.

Singapore’s experience, although more recent, offers valuable insights into managing the social consequences of gambling. Under the Casino Control Act, 2006, the country introduced entry levies for local residents, thereby discouraging habitual gambling while promoting tourism. At the same time, the government mandated social safeguard measures, including self-exclusion programs, family intervention options, and public awareness campaigns. Singapore’s dual-casino model has emerged as a major source of tourism-driven revenue, without causing a substantial rise in gambling addiction

The Indian Scenario: Challenges and Opportunities:

India’s fragmented approach to casino regulation has given rise to multiple challenges, including the growth of illegal gambling markets, lack of tax collection, and vulnerability to organized crime. However, the economic potential remains enormous.

Legalizing and regulating casinos could result in:

• Massive employment opportunities in hospitality, gaming, tourism, and transport.
• Boost to foreign and domestic tourism, particularly in Indian states having coastline.
• Increased FDI in the form of luxury hotels, integrated resorts, and entertainment complexes.
• State revenue through licensing, entry levies, and gaming taxes.

However, these benefits must be weighed against genuine social concerns, including:

• Gambling addiction and mental health issues, especially among lower-income groups.
• Money laundering and use of casinos for hawala transactions or political funding.
• Moral opposition from religious groups and civil society.

Given the mixed legal landscape and the economic potential, the following solution-oriented reforms are proposed to reconcile the interests of stakeholders:

1. CENTRAL MODEL LEGISLATION:

A centrally drafted but state-optional “Gambling and Casino Operation Regulation Act” should be introduced. This would provide a model framework for states that wish to legalize and regulate casinos while ensuring consistency in definitions, licensing, and enforcement and regularization.

2. CENTRAL GAMING MONITORING AUTHORITY:

The central government should be introduced “Central Gaming Monitoring Authority Act” for establishing:

• Scrutinize license applicants through background checks.
• Audit casino operations.
• Coordinate with enforcement agencies to monitor financial irregularities.
• Create a central registry of licensed casinos and gambling offenses.
• Limited Restriction on the native person for spending money in casino for gambling.

3. RESPONSIBLE GAMBLING FRAMEWORK:

The legislation should incorporate mandatory social safeguards such as:

• Biometric and age verification systems.
• Caps on daily or monthly spending.
• Entry levies for citizens (similar to Singapore).
• Addiction counselling centres funded by a share of gambling revenue.

4. REGULATING ONLINE CASINOS AND GAMBLING APPS

With the rise of digital gambling, a separate regulatory framework for online gambling must be introduced. This should include:

• Mandatory registration of platforms.
• Ban on foreign-hosted unlicensed apps.
• Compliance with the Information Technology Act, 2000 and the upcoming Digital India Act.

5. TRANSPARENCY IN TAXATION AND REVENUE ALLOCATION

Casino generated revenue should utilized only for public welfare purposes in their respective states such as:

• Mental health and addiction recovery programs.
• Public infrastructure development.
• Education and tourism initiatives.

Conclusion:

The question is no longer whether India should legalize casinos, but how it can do so in a responsible, transparent, and economically productive manner. The experiences of Las Vegas, Monaco, and Singapore prove that regulated gambling when coupled with strict oversight and social safeguards can stimulate significant economic growth without endangering public morality.

India’s constitutional structure permits states to make individual choices regarding gambling. However, in the absence of a centralized legal and regulatory framework, the potential of this industry will remain underutilized and vulnerable to misuse. With the introduction of the BNS and BNSS, and the increasing digitalization of commerce, now is the appropriate moment for India to modernize its casino laws, embrace international best practices, and unlock a multibillion-dollar sector under the rule of law and regulation.

Author:

This article is written by Vedika Awasthi, law student of NMIMS University during her internship with SHRIPAD (Law Firm) under the direction and legal educational guidance of Advocate Vivek Kumar Verma.