Section 30 declares the wagering agreement as void. The section is as follows:-“30 Agreement by way of wager void-Agreement by way of wager are void and no lawsuit 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 event on which any wager is made. The Indian Contract Act, 1872 does not define a wager or a wagering agreement. It only states that agreements by way of the wager will be void and no action can lie to contracting parties to recover anything or claim performance of the wagering agreements. A wagering agreement has the characteristic of a contingent contract but is not enforceable by Section 30.
The essentials of a wagering agreement are :
- The opposite views of the parties on an uncertain event;
A wagering agreement depends upon the uncertain event. The parties to the agreement have uncertainty in their minds about the determination of the event in one way or another. A wager may be based on a future event or even relate to a past event and the parties are not aware of the outcome of its happening.
- Mutual chances of gain and loss, i.e. the gain of one party should be the loss to the other;
In a wagering agreement, two parties must have mutual chances of gain and loss i.e., one party will win and the other will lose depending on the outcome of the event. Each party should stand to win or lose upon the determination of the contemplated event about which the chance or risk is taken.
It is not a wager where one party may win but cannot lose, or it 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 a wager.
- Neither party should have control over the event;
- The parties have no other interest in the event except the sum agreed as a stake to be lost or won.
A wagering agreement is void ab initio, and section 65 of the Indian Contract Act has no application to it. The payment made directly by the third party to a winner of a wagering agreement cannot be recovered from the loser. In Gherulal Parekh v. Mahadeo Das, the Supreme Court held that a wager is void and unenforceable. It is illegal and not forbidden by law. Hence a wagering agreement is lawful under section 23 of the Contract Act and therefore the transaction collateral to the main transaction is valid and enforceable.
EXCEPTIONS
1)HORSE RACE-Any subscription or contribution made towards the prize of the horse race is not void as per the section. The horse races are excluded from the purview of wagering agreements by this section.
2) CROSSWORD COMPETITION AND LOTTERY-The various competitions which involve the application of skill and an effort is made to select the most skillful competitor are not wagers. But where prices depend upon the chance that is a lottery. The purchaser of the ticket buys it for a prize, which is by chance and the consideration is the price of the ticket. There is an element of chance with no skill involved in the State lotteries as private lotteries, therefore, State lotteries also are of gambling in nature which falls within the category of wagering contact
ILLUSTRATION -1) A and B enter into an agreement where A promised to pay B a sum of Rs. 20,000 if India wins the world cup. This agreement is void and non-enforceable as it is dependent on an uncertain event and both parties have opposite views regarding the event. If India wins, B will win the wager and A shall pay the agreed sum. Thus, one party will lose and the other will gain.
2)In illustration 1, India wins the match and there is an obligation on A to pay the amount to B but he fails to do so. B initiates a suit against A for the recovery agreed amount. The suit shall fail as the agreement between them is void.
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