Introduction To The Concept Of Wager
The term ‘wager’ literally translates to mean ‘a bet’. It is understood as something to be lost or won on the result of a doubtful issue. Wagering contracts are regulated and governed under Sec. 30 of the Indian Contract Act, 1872. defines wagering contracts now in force in India, supplemented in Bombay State by the act for Avoiding Wagers (Amendment) Act, 1865 which amended the Avoiding Wagers Act, 1848 based principally on the English gaming act, 1845 and was repealed by the Contracts Act.
In Hampden v Walsh, A wager has been defined as ‘a contract by A to pay money to B on the happening of a given event, in consideration of B paying (this should be “promising to pay”) to him money on the event not happening’.
Section 30 of ‘The Indian Contract Act, 1872’ lays down that ‘agreements by way of wager are void; and no suit shall be brought or recovering anything alleged to be won on any wager, or entrusted to any person to abide the result of any game or other uncertain event on which any wager if made.’ The Section allows for an exception in favour of certain prizes for horse racing.
Essentials of a Wagering Agreement
Essentials of a wagering agreement are as follows:
- Future Uncertain Event:A wager is generally made on a future event which needs to be ‘uncertain’
- One to Lose, Other to Win:In every wager, there is a gain to one party and a loss to another. In Carlil v Carbolic Smoke Ball Co the contract in question was held not to be in the nature of a wager as the user would not lose anything in case he fails to catch influenza.
- Between Two Persons:Duality of parties is a necessary condition for contracts of wager. As it has been said that there can be only two parties to a wager, in the event of their being more than two, the participants must be divided into two sides.
- No Other Interest:The parties should not have any other interest in the transaction other than winning or losing.
- Expected Benefit Founded On Legal Right:Interestingly, one of the peculiar features of wagering contracts is that any future benefit which is expected and based on a legal right can also be the subject matter of such a contract. Drawing an analogy from this statement, an owner of an orchard can insure “next year’s apple crop” , and a person who holds shares in a company can insure against the failure of an enterprise in which the company is engaged.
- Parties Having Different Intentions:The requirement of consensud ad idem is to be fulfilled even in wagering agreements. The parties may have different intentions. Such a contract is not a wager.
Lotteries are a game of chance, in which the event, either of gain or loss of the absolute right to prize, is dependent on drawing of lots and therefore it assumes the nature of a wagering transaction. Transactions involving lotteries are not only void, but are rendered illegal as per Sec. 294-A of The Indian Penal Code, 1860 which declares ‘conducting of lottery a punishable offence’.
Prior to the enactment of Sec. 294 of Indian Penal Code, 1860 lotteries not authorized by the Government were prohibited in India by the Private Lotteries Act, 1844. The act declares all such lotteries “common and public nuisances and against law.”
The landmark case of Dorabji Tata v Lance, explains the elements of lottery which make it a part of wagering contract. The Hon’ble Court in this case has held that if a lottery is authorized by the Government, the only effect of such permission is that the persons conducting the lottery will not be guilty of a criminal offence, but the lottery remains a wager.
If the obtaining of property in a suit is left to chance and is dependent on obtaining the “winning ticket”, this amounts to a clear case of a transaction involving lottery and the agreement is void. Similarly, a scheme may be fairly regarded as a lottery if it is clear that whatever other benefit the subscriber or competitor may get in return for his money, the chance of getting a prize was also a part of the bargain and must have entered into his calculation. When the commission in a scheme was such that it were to be given to any person regardless of their skill or labour but rather upon pure chance, the scheme was a lottery.
Although the concept of lottery is dealt with severity under law, yet there are some shortcomings in the Law of Contracts in India because Sec. 30 fails to define what exactly wager is and has to be interpreted by judicial pronouncements of various countries.
The rationale behind Sec.30 of the Indian Contract Act, 1872 which treats an agreement by way of wager as void is that the law discourages people to enter into games of chance and make earning by trying their luck instead of spending their time, energy and labour for more fruitful and useful work for themselves, their family and society. The law is made such with a view to inculcate a positive outlook towards earning a living by way of sincere and dedicated efforts towards securing a job. With this view to achieve a social and economical welfare of its citizens, the Indian Contract Act, 1872 is the as it stands.
 Hampden v Walsh, 1876.
 Beale. H.G., Chitty on Contracts, Sweet & Maxwell Ltd.
 Carlil v.Carbolic Smokeball, Co., (1893) Q.B. 256
 Ellesmere v Wallace, (1929) 2 Ch. 50.
 Thacker v Hardy,(1878) 4 Q.B.D. 685
 Wilson v Jones, (1867) L.R. 2 Ex. 139.
 Thacker v Hardy, (1878) 4 Q.B.D. 685.
 Maung San v I.T.A. Club, 38 IC 566; Kamakshi v Appavu, I MHCR 448
 Dorabji Tata v Lance, (1918) 42 Bom. 676;41 I.C. 689.
 Kaluram v. Ram, 3 I.C. 55.
 Sesha v. Krishna, 70 M.L.J. 36 (F.B.)
 Director v. Phillips,  1 K.B. 391;  All E.R. Rep. 243
 Subhash Kumar Manwani v. State Of M.P., A.I.R. 2000 MP 109