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Incorporation of Online Gambling Company

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Last Updated on July 4, 2023 by Kanakkupillai

Incorporation of an Online Gambling Company

The rise of online gambling has attracted a significant portion of the youth in our country. The allure of earning quick money quickly has become a major driving force behind the surge in online gambling. However, several disadvantages associated with online gambling severely affect society. It misleads and diverts the minds of youngsters, hampering their focus on their careers. In extreme cases, the negative impact of losses in online gambling has even led to cases of depression and suicide among young individuals. This article discusses India’s stance on online gambling and the disadvantages of incorporating online gambling companies.

State legislation

The legislation by the Tamil Nadu government regarding online gambling and games of chance played for money was criticized, restricted, and struck down. On the other hand, the state of Karnataka has taken a strong stance against online gambling and games of chance for money. The government has declared that online gambling and games will be considered cognizable and non-bailable offences. States like Andhra Pradesh and Telangana have also banned online gambling.

The current legal position in India

In post-independence India, there is no central legislation governing online gambling. The decision regarding the use of online gambling is left to the states. Each state has different legislation on online gambling, making it challenging to consolidate the decisions taken by each state. The Gambling Act, enacted in 1867, exempted games related to chance, and gambling falls under this category.

Legal Position in Tamil Nadu

The Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022, prohibits online gambling in Tamil Nadu. Companies with the objective of online gambling cannot be incorporated in Tamil Nadu. Section 7 of the Act above specifically prohibits online gambling and playing online games with money or other stakes. According to Section 16 of the Act, any person indulging in online gambling or playing any online game with money or other stakes can be imprisoned for up to three months or a fine of up to five thousand rupees.

Corporate social responsibility

Corporate social responsibility (CSR) is an essential consideration for the incorporation of a company, as mentioned in Section 135 of the Companies Act 2013. CSR is crucial for a company’s reputation and an important factor when evaluating a company for incorporation.

However, if a company is involved in gambling or games of chance, the social responsibility established by the company becomes subject to criticism from society. Moreover, it goes against the provisions of the Companies Act 2013. When a company involved in gambling contributes a certain amount to charity, it lacks meaningful impact. Corporate social responsibility is not limited to monetary contributions but encompasses activities that benefit society.

Conclusion

Based on records, online gaming, such as rummy, has had a tremendous negative impact on society, leading to a decline in the skills of youngsters and causing mental health issues like depression. Therefore, it is not advisable to incorporate companies involved in gambling, even in the future, due to the extensive negative effects associated with such activities.

FAQs:

1. What are the disadvantages of incorporating a company involved in gambling?

Incorporating a company involved in gambling can lead to negative consequences such as societal criticism, reputational damage, and conflicts with corporate social responsibility. It may diminish the company’s reputation and face societal backlash.

2. What is the legal position of online gambling in India?

The legal position of online gambling in India is complex and varies from state to state. Currently, no central legislation governs online gambling, and each state has its own laws and regulations. Tamil Nadu, for example, has prohibited online gambling through the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022.

3. Why is corporate social responsibility important for company incorporation?

Corporate social responsibility (CSR) is vital in establishing a company’s reputation and positive impact on society. It involves contributing to the betterment of society through various activities, not just monetary donations. When a company involved in gambling claims to fulfil CSR obligations, it may face criticism due to the negative societal impacts associated with gambling.

G.Durghasree B.A.B.L (Hons)

G Durghasree B.A.B.L (Hons) is a registered trademark attorney with extensive experience as an Advocate for a period of 8 years. She possesses expertise in trademark law, including trademark filing and trademark hearings. Additionally, she is skilled in contract drafting and reviewing, providing legal advice and opinions, particularly in the areas of Company Law, Insolvency and Bankruptcy Code (IBC), and Goods and Service Tax Law (GST). Her experience encompasses both litigation and non-litigation aspects of these laws.