Wagering Contract is one in which there are two necessary parties between
which the contract has been made and wherein, the first party promises to pay a
certain sum of money to the second party on the happening of a particular event
in the future and the second party agrees to pay to the first party on not
happening of that particular event. The basic fundamental of a wagering
agreement is the presence of two parties who are of sound mind to get profit or
A Wager in the common language means Betting or Gambling. The basic meaning of
the term wager is betting. Section 30 of the Indian Contract Act specifically
talks about agreements by way of wager, as void.
Agreements by way of wager are void and no suit shall be brought for recovering
anything alleged to be won on any wager, or entrusted to any person to abide by
the result of any game or other uncertain events on which any wager is made.”
Essential of a Wagering Contract:
As per the Indian Contract Act Section 30 states that there are also certain
exceptions in the wagering agreements and thus the section read as follows:
- Equal opportunity:
One of the main points in a wagering contract is that there should be an
equal chance for both to either win or lose depending upon the outcome of
the future event.
- Uncontrollable Event:
These events are futuristic which may or may not take place and it should be
beyond the control of either of the parties because if either of the parties
has control over it then it would not amount to wager.
- No Outside Interest:
Both the parties should have a single interest as to the profit or loss in
the result of the event and there should not be any outside or personal
interest attached with the uncertain event as that will not amount to wager
The wager agreement is fully dependent upon the happening of the futuristic
event whether it is contrasted with the past, present or future as to the
result of that event.
The wager contract should contain an important clause which should state
that the parties promise to pay the money or money's worth to the other
party on the happening of the event and this should be agreed upon by both
This section shall not be deemed to render unlawful a subscription or
contribution, made or entered into for or towards any plate, prize or sum of
money, of the value or amount of five hundred rupees or more, to be awarded to
the winner of any horse race. Nothing in this section shall be deemed to
legalize any transaction connected with horse- racing, to which the provisions
of section 294A of the Indian Penal Code shall apply.
Thus there are exemptions to it which are as follows:
- Showcase of talent is not a wager
- Share Market
- Horse race competition
- Insurance Contracts
- Commercial transactions
Thus, it can be stated that all wagering agreements are contingent agreements
but all contingent agreements are not wagering agreements. Thus in the simple
language, we can understand that a wagering contract is a futuristic contract
which is based upon the happening of a certain event in the future. A wagering
contract may or may not be imposed depending upon the circumstances in the
Difference between Wager Agreement & Contingent Contract:
- All wager contracts are void but Contingent contracts are not void.
- Wager contracts come under the ambit of Contingent contracts and thus
are a narrow concept while contingent contracts cover the concept of wager
contracts and are a wider concept.
- The happening of the uncertain event is the sole condition of the
wagering contract. And the happening of the event is not the sole condition
of the contingent contracts.
- In a wager contract the parties have only one interest in the contract
i.e. the winning or losing depending upon the outcome. In a contingent
contract parties have their personal and other motives attached to the
contract except for the profit or loss.
- In a wager contract the parties are required to keep a mutual promise
under the rules of the wagering contract. While in a contingent contract the
parties are not required to keep mutual promises under the contract.
The Legal status of Gambling in India:
Going back in 1867, Gambling was banned for the first time through The Public
Gambling Act. It was updated every now and then. However, the funny part is that
the law did not define what gambling was; forget about addressing the elephant
in the room: Online Gambling. Even more ironic is the fact that there have been
no reforms in this sector ever since. If this was not confusing enough, do note
that the legislation is primarily based on the state laws around the subject,
for example, Goa allows gambling conditionally and in Sikkim, it's even easier.
Further, the law differentiates gambling on games on the broader categories i.e.
whether it's a game of 'chance' or a game of 'skill', for example, gambling on a
horse race is legal because the deciding factor is the skill of the horse.
Games of Chance:
Games of chance for stakes fall within the ambit of the gambling acts of the
states and are largely prohibited. Some states, such as Goa, have created
exceptions within their gambling acts, allowing for authorised gaming. Thus,
licences are issued in the State of Goa for games of chance in casinos, which
are operated on land as well as offshore. The State of Sikkim has also
promulgated the Sikkim Casino Games Act 2004, which allows for casino operations
within the state.
Games of Skill:
Games of skill are outside the ambit of states' gambling acts. Whereas games of
skill for stakes, like horse racing and teer, require a license from state
governments, other games of skill like rummy and bridge can be offered without a
license in most states. Nagaland has sought to regulate and license games of
skill throughout India, through the Nagaland Act.
The Nagaland Act contemplates the regulation and promotion of games of skill
through the issuance of licensees. A license can be procured by a person, firm,
company or limited liability company incorporated in India that is substantially
held and controlled in India. A licensee is allowed to offer games of skill
across India, in states where such games are not classified as games of chance
and in states where an exception for games of skill exists in the state's
In the case of D Krishna Kumar v. State of Andhra Pradesh
, the Andhra Pradesh
High Court held that since games of skill fall outside the ambit of Andhra Pradesh's Gaming Act, games of skill for profits and stakes would, therefore,
also fall outside the Gaming Act.
The High Court of Rajasthan (Jaipur Bench), vide its decision dated 14 February
2020 in the case of Chandresh Sankhla v. The State of Rajasthan and Ors
observed and held, in view of the decisions of the Punjab and Haryana High Court
and Bombay High Court (Division Bench), that the online fantasy game of the game
operator does not involve elements of 'betting
' and 'gambling
' respectively and
that the playing of a fantasy game by any participant user involves a virtual
team selected by him or her that would require a considerable amount of skill,
judgment and discretion.
In the case of Indian Poker Association & Anr v. State of West Bengal & Ors.
the Calcutta High Court (Circuit Bench at Jalpaiguri) vide its order dated 29
August 2019 observed and held that since the game of poker is not included
within the gambling activities under the West Bengal Gambling and Prize
Competitions Act 1957, the police cannot interfere with such games.
The rise of Fantasy Sports in India:
What are Fantasy Sports? Fantasy Sports are online prediction games where the fantasy gamers (persons
playing the game) put together a virtual team of real sports players such as
players from the Indian Premier League (IPL), English Premier League (EPL)
the National Basketball Association (NBA), etc.
Prominent Fantasy Sports Platforms in India There have been many fantasy sports platforms in the offing in India, but it
was Dream11 that made it big and popularized fantasy sports in India. Some
of the other apps such as MPL, My11 Circle, My team 11, Fancode, Fancy11,
Faboom, Fanfight, Guru 11, and Balle Baazi are fighting out in the market
which already is in surge with the number of new players joining in. Dream
11 has been the first Fantasy Sports platform that has entered the league of
unicorns in India. They have also been at the forefront when it comes to
legal suits as many cases have been filed against it and some are still
Legal Issue Around Online Gaming in India The main legal hurdle faced by online gaming companies in India is whether
it is a game of skill or a game of chance.
The Court for the first time had settled this question in the case of Varun
Gumber v. UT of Chandigarh & Ors
. (2017), clarified that: Playing a fantasy
game by any participant user involved forming of a virtual team by him which
certainly required considerable skill, judgment and discretion. The participant
had to assess the relative worth of each athlete/sportsperson as against all
athlete/sports persons available for selection. He was further required to study
the rules and regulations of the strength of athlete or player and weakness
The High Court made its stance clear that Dream 11 is completely a game of skill
and held that fantasy sports did not amount to gambling. The Court also added
that Dream 11 was conducting a business activity protected under Article 19(1)
(g) of the Constitution.
Two years after the Varun Gumber case, the legality of Dream 11 was questioned
again in the Bombay High Court in the case of Gurdeep Singh Sachar v. Union
of India case
The Court again sided with the previous judgment and observed:
The participants do not bet on the outcome of the match and merely play a role
akin to that of selectors in selecting the team. The points are scored by the
participants for the entire duration of the whole match and not any part of the
match.” This was an interesting analysis done by the Bombay High Court which
further strengthened Dream 11's case.
Dream 11 again got the benefit of the doubt in 2020 where the Rajasthan High
Court dismissed the PIL in Chandresh Sankhla v. The State of Rajasthan and Ors.
(2020) which argued that the said app was involved in betting on cricket games.
Recently in D Siluvai Venance v. State
, the Madras High Court has called
for stricter regulations for online games. The Court showed concern by pointing
out how youngsters are being attracted to play such online games where some
prize money is involved. The Madras High Court also sent a notice to MPL
ambassador Virat Kohli and My11Circle ambassador Sourav Ganguly for promoting
online gaming apps. It is worth noting that the apps mentioned above not only
include fantasy sports but they also have online rummy- which was the major
point of contention in the Siluvai case
Andhra Pradesh was the latest state to ban fantasy sports in its entirety when
the savings and exceptions for 'game of skill' from the provisions of the Andhra
Pradesh Gaming Act were done away with.
Lastly, to determine whether MPL or Dream 11 or any online fantasy sports that
have been offered in India fall under Wagering Contracts or not, can be decided
by seeing into the essentials of Games of Skill.
Horse Racing falls under the exceptions of Wagering Contracts because in the
case of Dr KR Lakshmanan v. State of Tamil Nadu
, the Supreme Court of
India recognised that horse racing, football, chess, rummy, golf and baseball
are games of skill. It further held that betting on horse racing was a game of
skill as it involved judging the form of the horse and jockey, and the nature of
the race, among other variables.
As mentioned above, till now the cases in which the Court held that fantasy
sports did not amount to Gambling because it's a game of skill. So here Game of
Skills” plays a very significant role because where any game in which we need
some skills to play it then it gets the protection and cannot be held illegal on
the ground of wagering contracts or gambling.
Since, the decision of the Bombay High Court in Gurdeep Singh Sachar v. Union
of India case
(2019) has been challenged before the Supreme Court already.
The Supreme Court has issued notices to all the parties for hearing the fresh
contentions. So, it can be said that the future of online fantasy sports hangs
in the balance until the Supreme Court decides on the pending matter.
Written By: Shashwata Sahu, Advocate,
LLM, KIIT School of Law