Thank you for this question.
It inspired me to do my own research.

For starters the Indian magicians that perform the 'traditional Hindu Cups and Balls' that I have spoken to will tell you that it was used primarily for gambling for thousands of years.
Of course this is a non-falsifiable hypothesis since written records of such things are rare. Everything was passed on orally from guru to disciple.
But I have found some references you may find interesting.

Gambling undoubtedly has an extremely long history in India.
In the Śatapatha Brâhmana, written approximately between the 8th to 6th centuries BCE it said:
“the gods trick the demons out of their winnings, this world, the sacrifice”.

It was at Mohenjo-daro, one of the largest settlements of the ancient Indus Valley Civilization, and one of the earliest major urban settlements in the world, that the oldest chessmen and the very first chess boards, dice and playing cards were found.

Hundreds of other recreational games of skill and chance were also excavated there. It riddles archaeologists that their civilization was richer in games and gaming than any other civilization in the last 5000 years. Why did they have so much recreational time to play games while the Egyptians and Mesopotamian's were toiling all day long building huge architectural formations and striving just to survive? According to Topsfield, during the last five thousand years, more variation and richness in the range of games and game utensils can probably be seen in the Indian subcontinent than anywhere else in the world (Topsfield 2006b:12).You can read all about it in his extremely fascinating Doctoral thesis:

That is why I believe that the conditions were perfect for the possibility that the Hindu Cups and Balls is the original shell game.

I am qualified* to say that wherever there are games of chance there is always the likelihood of cheating.
* I am a Casino Surveillance Specialist and have been in the industry for the last 40 years.
Also written in the 7th century CE the 'Daśakumāracarita of Dandin' says:
“Entering the casino to join the gamblers there, I witnessed their skill at the twenty-five gaming arts - at such tricks as loading the dice and moving a piece, unnoticed, from one place to another”
That is why I said that the conditions were perfect for the possibility that the Hindu Cups and Balls is the original shell game.

So in answer to your question - “Do you have any evidence of the Hindu Cups being used as a gambling game before 1700?”

Yes I do.

There is absolutely no evidence of what you state - “Thimble-Rig, the original version of the shell game”
That is an hypothesis that appears to be completely based on Eurocentric thinking.

Gary, thanks for a very informative research on the topic. I think you are a very useful source of information on this topic. The following is my addition to what you have said. Please do let me know your opinion as I value it so much as you are doing some serious research on the topic.

According to researchers, dice or pasa (side) are the oldest game instruments in the world. Excavations made in the southeast of India (the current Pakistan) revealed relics of the Harappan civilization, among which prehistoric dices, older than 5000 years, that may indicate the Asian origin of the dice.

They are so many indore games that I would take a book to capture them all but just to mention the most popular ones would be Pachhasi or the modern Ludo, Ganjifa or the playing cards, Chaturang (Based on the four major division of the Indian army e.i. solders, charioteers or horse back riders, camels and Elephants. Who even played havoc on Alexander of Macedonia) or the modern chess and Backgammon.

There are two very famous tales where kings lost their kingdoms and even their wives in betting. Mahabharata the great epic tells us how the Pandavas lost their kingdom and even their wife to their cousins in a game of Chaupad. The legend has it that the die were made from bones of the die thrower’s brother and that’s why he could get the number he wanted

Betting and gaming become so notoriously popular in ancient India that with the advent of Buddhism, these were shun down upon. In fact, Vinaya Pitaka, a Buddhist script names 18 games which were forbidden.

Three very popular betting games which used little resources were or only die were:
Khali ya Jota (Empty or pair): Iin which two die are held in cupped hand and shaken and then both the hands with closed fists are placed on the ground. There are three possibilities: 1) Empty hand, 2) One dice 3) Both the die. And depending on the guess made by the bidder the money was lost or was to be paid in triple. Since dice would be hidden in the hands, two coconut shells were used for fair play.

Satta (Seven): This is played by making two stright lines on the ground, thus making three spaces. Middle represents 7. one on the left less than 7 and one on the right numbers over seven. People bet. The dice were rolled and according to which number came, the bidders lost or gained. They one who placed his money on Satta or seven always got three times more than that what he placed. Even today the name Satta Bazar is used for Stock Market in India.

The three shell game: Where as the first two games were more of a game of chance, this was a scoundrel type of game. In its basic form it was played with three walnut shells and a small marble or cotton ball. Various versions of this betting game came up. One version used cards and another version used small pill box type of cups.

It is interesting to note that the number in play is always three. Thee is an auspicious number in Hinduism representing the Holy Trinity or Brahma, Vishnu and Mahesh. Similarly seven is also considered a luck number bringing good luck and hence the lucky 7.

So anyone could hazard a guess on where the Hindu Cups and Balls came from. In fact, my humble opinion is that, thee were developed by the Brahmans to educate the lay people and there is trickery involved in all gambling game. Since the Brahmans evolved it, and it was taught to the street magician there was a message to be taken to the people and the those who practised it are scoundrels. No doubt traditional street magicians of India keep repeating during the whole show what, this is all sleight of hand. This is why Hindu Cups and Balls is considered the mother of all magic tricks. The three shell or box game is also to be blamed why the Indian magicians always face the "catch the magician"syndrome while performing. Becase the, people have been trained to catch the swindler.

The Indian Gypsies who were expelled from India were the ones who duped the people with these tricks. And it were the gypsies who introduced these tricks to the west. With time the bell shaped Indian cups took the form of glasses and rest is history. In fact the Hindi word for Gambling is Jua. As it belongs to the Indo-European languages it is interesting to observe that most of the words in the neo-latin languages aver very similar to the Hindi word Jua.

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Maharajademagia,

Thank you for sharing your knowledge of the Harrappan civilization. Harappan was a suburb of Mohenjo-daro.

I have always been very curious as to the history of the 'Cups and Balls' and the 'Shell game', especially the Asian varieties. Unfortunately, all the current paths magicians have been taking has lead to nowhere.

For years we were convinced that the walls of the burial chamber in Beni Hasan, Egypt displayed the oldest version of the 'Cups and Balls' and it's derivatives. That turned out to be a complete fallacy.
I believe the mistake we have been making is that we are overlooking the knowledge from other indigenous sources.
New paths must be found. I feel a closer look at the ancient Indus Valley civilizations will unveil the true beginnings of not only the Cups and Balls and the 3 Shell Game but also Magic.

Thank you once again Maharajademagia.

I have never seen the famous fresco in the Egyptian chamber even in a clear and bright picture. When I went there even the most knowledgeable guides did not know about it. In the TV show done by Penn and Teller they did visit the tomb, but even there it picture was not very clear.

Does someone has that picture?

What I have seen and is very clear is the hand drawn version is our dear friend Bill Palmer's C&B Museum. And from what it seems to me and I guess no westerner would even think about it is that the chap sitting there is not performing Cups and Balls but making cow dung cakes. As you would know cow dung cakes are used in the east as combustible or fire wood. They are still being used in rural India and in Egypt.

If the cups and balls existed in Egypt back in those days
I am sure you would have seen and heard more about it then
on the wall of one burial chamber. Cow dung cakes,
that sounds right, looks exactly the same shape when stacked:

http://www.flickr.com/photos/vaijayanta/4558042787/

You are very observant besides being extremely knowledgable.

Gary you are funny. I thought you had posted the picture of the Egyptian burial chamber with the so called "cups and balls". I could not help smiling.

This video is private now ;(

Sorry about that.
I am going to put up a new one on Youtube.
I really was not that happy about the quality.

Here it is maharajademagia :

http://magic.about.com/od/magichistory/a/091107cupsballs.htm

They are exactly the same shape as stacked cow dung cakes.

Thanks Gary. I have seen this picture in Bill's Museum. But I am looking for a foto from the chamber. A real Kodak picture.