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Effects of wagering agreements

  • Void: The agreement by way of wager is void. Thus a winner in a wager cannot recover the stake money from the other party to agreement. Moreover, the money deposited with the third person (custodian) to enable him to pay to the winner cannot be recovered by the winner, but the depositor can recover from the stake holder if it has not been paid to the winner.
  • Collateral agreements are valid: The wagering agreements are void but not illegal (except in states of Gujarat and Maharashtra). Thus the transaction collateral to the main transaction is not void.

Note: Money lent for the purpose of gambling or repaying a gambling debt can be recovered even though lent with the knowledge of its purpose except in States of Maharashtra and Gujarat


A took a loan from B of ₹ 1,00,000. A entered into a wagering agreement with C which was based on the outcome of the cricket match. A lost the bet and paid the money to C. B can recover the money from A as collateral agreements to an wagering agreement are valid and enforceable.


Note: If the above transition took place in states of Maharashtra and Gujarat then B would have no recourse against A.

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