Wagering Agreement 

By Koushambi Sengupta

Introduction

The word 'wager' means 'a bet'. Wagering agreement are nothing but ordinary betting agreement. For example, A and B mutually agree that if it rains A will pay B Rs 200 and if it doesn't B will pay A Rs 200. This is a wagering agreement.

The essence of wagering is that one party os to win and the other party to loose upon happening or non happening of a future event. 

Essentials of wager

The essentials of a wagering agreement are as follows- 

a) therr must be a promise to pay money or money's worth.

b) the promise must be conditional on the happening or non happening of an event.

c) The event must be an uncertain one- If one party has the event in his hand, the transaction is not a wager.

d) each party must stand to win or lose under the terms of agreement- if one party may only lose and cannot win or vice versa then agreement is not a wagering agreement.

e) no party should have a proprietary interest in the event- the stake must be the only interest which the parties have in the agreement. 

Agreement by way of wager is void

Section 30 of the Indian Contract Act, 1872 says that, ''agreements by way of wager are void and no suit shall be brought for recovering anything alleged to be won on any wager or entrust to any person to abide the result of any game or other uncertain event on which any wager is made.'' Thus where C and D enter into an agreement that on tossing of a coin, if head falls upward C will pay D Rs 100 and if tail falls upwards D will pay C Rs 100 such agreement are wagering agreement and are void in nature.

This section has an exception in favour of certain prizes for horse racing.  It is further stated that, " This section shall not be deemed to render unlawful a subscription or contribution or an agreement to subscribe or contribute, made towards ant prize, plate or sum of money of the value of amount Rs 500 or upwards, to be awarded to the winner or winners of any horse race." 

In the States of Maharashtra and Gujarat wagering agreement are not only void but also illegal.

Cases to examine wagering agreement

Commercial transactions- An agreement to sale and purchase any commodity or any sort of share market transaction, where there is genuine intention to give and take goods or shares, are not wagering agreement. If there is no genuine intention or if parties only eant to gamble on rise and fall of market by paying and receiving money or such value then such agreement would be a wagering agreement and will be void.

Lotteries- Lottery is a game of luck. Hence it is a wagering transaction. It is void and illegal. Section 294-A of the Indian Penal Code says that conducting lottery is a punishable offence. However, any lottery authorised by Government, the person running the lottery will not be guilty of criminal offence but lottery remains a wager.

Insurance contracts- Insurance contract are valid contract even though it involves payment of money by insurer to the insured on the happening of an uncertain future event. It differs from wagering agreement as- 

1. Contract of insurance are based upon accurate calculation of risk. Wagering agreement are gambling which doesn't include such scientific and accurate calculation of risk.
2. The holder of an insurance policy must have insurable interest in the event upon which insurance amount is payable. In wagering agreement, there exist no interest to protect and parties bet exclusively because they can make money.
3. Contract of insurance are beneficial in many ways specially in provides security in many ways. Wagering agreement does not provide any such security to the parties.