Allahabad High Court Instructs UP Government to Set Up Regulatory Panel for Online Gaming

The Allahabad High Court has directed the Uttar Pradesh Government to establish a High-Powered Committee to assess the need for a dedicated law to regulate and monitor the rapidly expanding online gaming and betting industry.

The decision comes amid growing concerns over unregulated online betting, particularly in cases where individuals exploit legal loopholes to operate illegal gambling networks. The Court’s ruling was issued while hearing a petition from two Agra residents accused of running an online betting racket, allegedly earning crores and encouraging locals to gamble away their income.

Outdated Gambling Laws Require Urgent Reform

Justice Vinod Diwakar, presiding over the case, emphasized the urgent need for modern legislation that reflects the digital transformation of the gambling industry. The Public Gambling Act, 1867, which currently governs gambling laws in India, was designed for physical betting houses and does not account for online gaming platforms, offshore servers, or cross-border transactions.

“The Public Gambling Act is a pre-digital law that lacks provisions for virtual gambling environments accessed via mobile phones, computers, or international servers,” the Court stated.

UP Government to Form Expert Panel for Online Gaming Regulation

To address these concerns, the High Court has ordered the formation of a special committee, led by Professor KV Raju, Economic Advisor to the Uttar Pradesh Government. The Principal Secretary of State Tax will serve as the Member Secretary, alongside industry experts who will provide a multidisciplinary perspective on the issue.

The committee’s findings will be used to draft a comprehensive legislative framework aimed at effectively regulating and monitoring online gaming and public betting.

Legal Ambiguity Surrounding Fantasy Sports in India

The Court also addressed the legal uncertainty surrounding fantasy sports, which exist in a grey area between games of skill (permitted) and games of chance (prohibited under the Public Gambling Act, 1867).

Multiple High Courts, including those in Punjab and Haryana, Rajasthan, and Bombay, have ruled that fantasy sports qualify as games of skill, thereby granting them constitutional protection under Article 19(1)(g) (the right to practice any profession). However, the Court noted that this classification remains contested and jurisdiction-dependent.

Mental Health and Social Risks of Online Gaming

The Court also raised concerns about the mental health and social risks associated with online gaming, particularly among adolescents and young adults. It flagged several negative consequences, including:

• Gaming addiction
• Anxiety and depression
• Disrupted sleep patterns
• Academic decline
• Social withdrawal

The Court criticized gaming platforms for using manipulative algorithms and reward systems that promote compulsive engagement.

Challenges in Regulating Offshore Gambling Platforms

Another major concern highlighted by the Court was the operation of online gambling platforms from outside India, with servers located overseas and transactions routed through unregulated financial channels.

The Court warned that this complicates law enforcement and raises risks related to:

• Money laundering
• Financial fraud
• Terror financing

Proposed Amendments to Strengthen Gambling Regulations

Until a robust legislative framework is enacted, the Court suggested revising fines and imprisonment terms in line with inflation and the scale of operations in Uttar Pradesh. It recommended amendments to the existing law to make offenses non-cognizable, ensuring stricter enforcement.

The Court ruled that the accused were charged under a non-cognizable offense, meaning police action without prior magistrate approval was procedurally incorrect. As a result, it quashed the ongoing proceedings but granted the police liberty to initiate a fresh investigation, provided they follow due legal procedures.