A

PROJECT
ON
Wagering Agreement

Submitted as a partial fulfilment of the requirements

for
B.A. LL.B (HONS) 5 Year Integrated Course

Session: 2022-2023

Submitted On: 17 January 2023

Submitted By: Submitted to:

Dr. GUNJAN SHARMA
ARNAV LEKHARA
Roll no-15
Semester -3 Sec on -A

University Five Year Law College

University of Rajasthan, Jaipur

ti

 Declaration

I, Arnav Lekhara, hereby declare that this project titled

“Wagering Agreements” is based on the original research work carried out by
me under the guidance and supervision of Dr. Gunjan Sharma.

The interpretations put forth are based on my reading and understanding

of the original texts. The books, articles and websites etc. which have been
relied upon by me have been duly acknowledged at the respective places in the
text.

For the present project which I am submitting to the university, no degree

or diploma has been conferred on me before, either in this or in any other
university.

Date: 17 January 2023 (Arnav Lekhara)

Roll No.15
Semester 3A

 Certificate

Dr. Gunjan Sharma Date: 17 January 2023

Faculty - Contract Law
University five year law college,
University of Rajasthan, Jaipur

This is to certify that Arnav Lekhara student of semester 3.Section A of

University Five Year Law College, University of Rajasthan has carried out
project tittle “Wagering Agreements” under my supervision. It is an
investigation of a minor research project. The student has completed research
work in stipulated time and according to norms prescribed for the purpose.

Supervisor

 Acknowledgment

I have written this project titled, “Wagering Agreements” under the

supervision of Dr Gunjan Sharma Faculty, University Five Year Law College,
University of Rajasthan, Jaipur. His valuable suggestions herein have not only
helped me immensely in making this work but also in developing an analytical
approach this work.

I found no words to express my sense of gratitude for Director.

Dr. Akhil Kumar, constant encouragement at every step.

I am extremely grateful to librarian and library staff of the college for the
support and cooperation extended by them from time to time.

Arnav Lekhara

 Table of content

1. Abstract

2. Introduction

3. What is a Wagering Agreement?

4. Wagering Agreement meaning and Features

4.1. Mutual chances of gain and loss

4.2. There should be two parties

4.3. Uncertain events

4.4. No interest other than the stake

5. Suit for recovery- When lies and when does not

6. Lottery

7. Conclusion

8. Bibliography

 Abstract

In Indian culture, wagering has been seen many a times from the ancient times, even when
there were no dice; Indian used the nuts of the bhibhakti tree. If we go back in the
Mahabharata times, one of the oldest mythologies of India; where skills of the opponents
were tested not by a war, but through game and board. According to section 30 of Indian
Contract Act, 1872, “Agreement by way of wager are void; and no suit shall be brought for
recovering anything alleged to be won for any wager, or entrusted to any person to abide by
the result of any game or other uncertain event on which any wager is made. The section
does not define “wager” but represents the whole law of wagering agreement/contract now in
forced in India.

The nature of gambling is inherently vicious and pernicious. Gambling activities which have
been condemned in India from ancient appear to have been equally discouraged and looked
upon with disfavour in Scotland, the United States of America and Australia. Gambling is
now legalised under English law subject to the provisions of the Gambling Act, 2005 in force
in England, Wales and Scotland.

Introduction

According to section 30, “Agreement by way of wager are void; and no suit shall be brought
for recovering anything alleged to be won for any wager, or entrusted to any person to abide
by the result of any game or other uncertain event on which any wager is made.

This section represents the whole law of wagering agreement or contract now in forced in
India, supplemented in Bombay State by the Act for Avoiding Wagers (Amendments) Act,
1865 which amended the Act for Avoiding Wager, 1848. Before the Act of 1848, the law
relating to wagers in force in British India was the Common Law of England.

By that law an action might be maintained on a wager, if it was not against the interest of
feelings of third persons, did not lead to indecent evidence, and was not contrary to public
policy. The nature of gambling is inherently vicious and pernicious.

 Gambling activities which have been condemned in India from ancient appear to have been
equally discouraged and looked upon with disfavour in Scotland, the United States of
America and Australia. Gambling is now legalised in English law subject to the provisions of
the Gambling Act, 2005 in force in England, Wales and Scotland.

The Hindu Law relating to gambling has not been introduced in the law of contract in India.
[5] Gambling is not trade and commerce, but res extra commercium and therefore is not
protected within Art. 19(1) or Art.301. Under the Indian Constitution, the state legislatures
have been entrusted with power to frame state specific laws on ‘Betting and Gambling’.

The Public Gambling Act, 1867, is the central enactment on the subject, which has been
adopted by the certain states of India. The other states in India have enacted their own
legislation to regulate gambling activities within its territory (Gambling Legislations). The
gambling legislations regulate casinos in India.

The Gambling Legislations of Goa, Daman & Diu and Sikkim allow gambling to a limited
extent, under a license, in five star hostels. In Goa, the law also permits casinos on board an
offshore vessel.

Section 30 only says that “agreement by way of wager is void”. The section does not define
“wager”. SUBBA RAO J in a case said: Sir William Anson’ s definition of “wager” As a
promise to give money or money’s worth upon the determination or ascertainment of an
uncertain event, brings out the concept of wager declared void by section 30 of the contract
act.

There is no technical objection of the validity of a wagering contract or wagering agreement.

It is an agreement by mutual promises, each of them conditional on the happening or not
happening of an unknown event. So far as that goes, promises of this form will support each
other as well as any other reciprocal promises.

In Alamai v. Positive Government Security Life Assurance Co. A case of life insurance, the
judge said “ what is the meaning of the phrase ‘agreements by the way of wager’ in Section
30 of the Contract Act ?”

 In of the case, the judge said that the essence of gaming and wagering was the party to win
and the other was to lose upon a future event; which at the time of the contract of an
uncertain nature; but he also pointed out that there were some transaction in which the parties
might lose and gain according to the happening of a event which did not fall within the
phrase such transactions, of course, are common enough including the majority of forward
purchase and sales. If any agreement does not involve loss to either of the party, it is not a
wager.

What is a Wagering Agreement?

Agreements entered into between parties under the condition that money is payable by the
first party to the second party on the happening of a future uncertain event, and the second
party to the first party when the event does not happen, are called Wagering Agreements
or Wager.

Wagering Agreement meaning and Features

A wagering agreement or contract is one by which two persons professing to hold opposite
views touching the issue of a future certain event, mutually agree that, dependent on the
determination of that event, one shall pay or handover to him, a sum of money or other stake;

neither of the contracting parties having any other interest in that contract than the sum or
stake he will so even win or lose, there being no other real consideration for the making of
such contract by either of the parties.

It is essential to a wagering agreement that each party may under it either win or lose,
whether he will win or lose being dependant on the issue of the event, and therefore,
remaining uncertain until that issue is known. If either of the parties may win but cannot lose,
it is not a wagering agreement. This statement has the merit of bringing out all the essential
features that make a transaction a wager.

 Mutual chances of gain and loss

The first essential feature is that there must be two parties, or two sides, and mutual chance of
gain and lose, i.e., one party is to win and the other to lose upon the determination of the
event. It is not a wager where one party may win but cannot lose, or if he may lose but cannot
win, or if he can neither win nor lose.

If one of the parties has the event in his own hands, the transaction lacks an essential
ingredient of wager. It is of the essence of a wager that each side should stand to win or lose
according to the ascertained or uncertain event in reference to which the chance or risk is
taken.

In one of the case two wrestlers agreed to play a wrestling match on condition that the party
failing to appear on the day fixed was to forfeit Rs. 500 to the opposite party and, the winner
was to receive Rs. 1125 out of the gate money. The defendant failed to appear in the ring and
the plaintiff sued him for Rs. 500.

It was held that the agreement could not be looked upon as one of the wagering in law. In the
present case neither side stood to lose according to the result of the wrestling match. “The
stakes does not come out of the pocket of the parties, but had to be paid from the gate money
provided by the public.”

A chit fund does not come within the scope of “wager”. It is no doubt true that some chance
gain may come to some of the members, but none of them stands to lose his money, for his
periodical deposits are refunded to him at the end of the scheme.

Madras High Court in a case said that “It is true that in most chit fund transactions, no
subscriber looses the money he had contributed; and so long as getting back the actual
amount of subscription is assured, the interval of time, however long it may be, is
immaterial.”

The transaction being valid, a member was allowed to recover his subscription when the
organisers refused to run the scheme upto the promised schedule.

 There should be two parties

The second most essential feature of wagering contract is that there must be two persons,
either of whom is capable of winning or losing

Uncertain event

The third most essential feature of wagering contract is that the event may be uncertain, but
need not to be future event. Parties may wager about the qualities or attributes of existing
things, or the result of events already occurred, they both do not know about these things. The
subject of the wager is then the accuracy of each person’s judgments and not the
determination of the event.

No interest other than the stake

To constitute a wager, the parties must contemplate the determination of the uncertain event
as the sole condition of their contract. The stake must be the only interest which the parties
have in the contract.

One may thus distinguish a genuine wager from a conditional promise or a guarantee.
Neither party must have any interest in the contract other than the sum which he will win or
lose. The transaction must ‘wholly depend on the risk in contemplation’ and neither must
look to anything but the payment of money on the determination of uncertainty.

This is what distinguishes a contract of insurance from a wager. Every contract of insurance
requires for its validity the existence of insurable interest. An insurance affected without
insurable interest is no more than a wagering agreement and, therefore, void. “Insurable
interest” means the risk of loss to which the assured likely to be exposed by the happening of
the event assured against.

In a wager, on the other hand, neither party is running any risk of loss except that which is
created by the agreement itself. Whether an agreement is of a wagering nature depends upon
the substance and not the words of the agreement. The real object of the parties must be
discovered.

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 Suit for recovery- When lies and when does not

While a wagering contract cannot be enforced, a deposit made by one gambler with the other
as security for observance of the terms of the wagering contract cannot be recovered, unless
the amount has in fact been appropriated for the purpose for which it was deposited.

A claim for loss in consequence of a wagering agreement is not legally enforceable, and if
such contract be by one person with another, who is a partner of a firm and the contract is as
between principle and principle, such a person cannot recoup the loss by filing the suit
against the other partner of the firm.

Where the contract forming the basis of the suit is void being a wagering one, the court is
competent to dismiss the suit in spite of a confession of an event on the part of the defendant.

Where the parties have agreed that the performance of their respective promises is to be
simultaneous, one party cannot sue the other for damages for breach of contract unless he
proves that he was ready and willing to perform his part of the contract at the appropriate
time.

A suit lies for recovery of money deposited by the party to a wagering contract as security for
performance of his part of the contract. The direct prohibition contained in this section does
not cover such a claim.

Whereas the suit for recovery lies in a case where a person bets on a horse for himself and on
behalf of another, and the horse having gone receive the winning for himself as well as for
another, suit for recovery of money for this share is maintainable.

The loser of the bet is entitled to recover his deposit form the stake-holder if he demands it
from the latter before he pays over to the winner, but he has no right to recover the money
from the winner if it is paid by stake holders to the winner in spite of plaintiff’s protest.

The forbearance of plaintiff to sue coupled with his forbearance to declare the defendant
defaulter constitute good consideration for a fresh agreement, although the original contract
had been in the nature of a wagering transaction and the plaintiff is entitled to recover on the
fresh agreement.

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 This section does not bar suit by the principle against an agent or trustee in respect of prize
money on a wagering contract on behalf of his principle. Where a broker acts on the behalf of
his customer and the customer gambles, the customer cannot set up a plea of gaming and
wagering against the broker’s claim.

Lottery

Under the constitution of India, the central legislations has the power to enact laws with
respect to lotteries. Lotteries have been expressly excluded from the purview of the Gambling
Legislations and are governed by the central law- Lotteries (Regulation) Act, 1998 under
which the lottery (Regulations) Rules 2010 (“Central Lottery Laws”) and state specific rules
have been framed (“Lottery Laws”).

A cross word puzzle wherein prizes are awarded to person whose solution corresponds
closely to the set solution of the editor is a lottery because the prize did not depend upon the
best solution of a competitor but upon the chance of his solution corresponding closely to set
solution.

But if a prize is awarded to the best solution and is not dependent upon an exercise of a
substantial degree of skill. A Kuri chit fund has been held to be a lottery. A sweepstake has
been held to be a lottery. A contract to purchase a lottery authorised by the government is null
and void as it is a contract by the way of a wager.

The law is however, different in the State of Maharashtra, in that state, contracts collateral to
in respect of wagering transactions are prevented from supporting a suit by the special
provisions of Bombay Act III of 1865, Section 1 and 2 of the Act run as follows:-

Section 1: “All contracts, whether by speaking, writing or otherwise knowingly made, to

further for assist the entering into, effecting or carrying out agreements by of gaming or
wagering, and all contracts by a security or guarantee for the performance of such agreement
or contracts, shall be null and void; and no suit shall be allowed in any Court of Justice for
recovering any sum of money paid or payable in respect of any such contract or contracts or
any such agreement or agreements as aforesaid.”

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Section 2: “No suit shall be allowed in any court of Justice for recovering any commission,
brokerage free or reward in respect of the knowingly effecting or carrying out or of the
knowledge aiding in effecting or in carrying out or otherwise claimed or claimable in respect
of any such agreements by way of gaming or wagering or any such contracts as aforesaid,
whether the plaintiff in such suit or be not a party to such last mentioned agreement or
contract, or for recovering any sum of money knowingly paid or payable on account of any
persons by way of commission, brokerage fee or reward in respect of any such agreement by
way of gaming or wagering or contract as aforesaid. “

But in order to make the sections of the Bombay Act applicable it must be shown that the
transaction in respect of which the brokerage, commission or losses are claimed must amount
to a wagering agreement.

It is no answer to a suit by the broker in respect of such a claim against his principle that; so
far as the defendant was concerned, he entered into the contract as wagering transaction with
the intention of paying the differences only; and that the plaintiff must have known the
inability of the defendant to complete the contracts by payments and delivery, having regard
to his position and means.

Consequently, it must be shown that the contracts which the plaintiff entered into with the
third persons on the behalf of the defendant were wagering contracts as between the plaintiff
and those third persons.

In furtherance, it has also been held that that the deposit paid on wagering contract cannot be
recovered; in a case subject to the provisions of Section 1 of the Bombay Act, whether the
person suing the winter or a loser in the transaction.

An agreement to settle differences arising out of a normal agreement for sale which was
really a gamble is no less void than original wagering transaction.

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 Conclusion

Neither in India nor in England has the legislature born so far as to enact in express terms that
the betting transaction are illegal, but it is clear that both these countries the legislature
regards it as undesirable in the public interest that any assistance should be given by the
Court of law to enforce obligations which have been created in connection with betting or
wagering contracts.

While law in England started recognising betting as legal more than a decade back but the
position remains the same in India as it was in earlier days.

The common law of England and that of India have never struck down contract of wagers on
the ground of public policy; indeed they have always been held to be not illegal
notwithstanding the fact that the statute declared them void.

Even after the contracts of wager were declared to be void in England, collateral contracts
were enforced till the passing of Gaming Act of 1892, and in India, except in the State of
Bombay, there been enforced even after the passing of the Act 21 of 1848, which was
substituted by section 30.

The moral prohibitions in Hindu Law texts against gambling were not only legally enforced
but were allowed to fall into desuetude. In practise, though gambling is controlled in specific
matters, it has not been declared illegal and there is no law declaring wagering illegal.

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 Bibliography

• Indian Contract Act, 1872.

• Sikkim Casinos (Control and Tax) Act, 2002 read with Sikkim Casino Games
Commencement (Control and Tax) Rules, 2007 and Sikkim Casino Games
(Control and Tax) Amendment Rules, 2011.

• https://www.thelawgurukul.com/post/wagering-agreement

• https://indiankanoon.org/doc/1295756/

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