Legality of Online Gaming in India


Posted On : March 21, 2022
Legality of Online Gaming in India
In recent months, the Indian online gaming industry has been buzzing with activity. Given the young people in India and the widespread use of mobile phones and the internet, business has already grown tremendously and still has plenty of room for growth. Revenue is projected to grow at a CAGR of 22.1 percent from about USD 600 million in FY18 to USD 1.6 billion per FY23 . Indian and foreign investors have shown great interest especially in dream sports. Dream 11 is said to have recently become the first unicorn to play in India.
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Table of Contents

Online Gaming Industry in India - Introduction

A natural problem in the midst of this turmoil is whether online games are legal in India. In view of India's ancient and complex legal structure, the answer is not clear. Add to the mix a series of recent tragic events in which players have committed suicide after losing money in online games, as well as those in which the stadium was investigated for money laundering, which led to the banning of online games in various Indian provinces.


Legal framework

There is no unifying law in India that governs games or gambling (both terms are very varied for the purposes of Indian law). India's constitution gives each country the power to establish its own gambling law. There are several state-specific variations as a result of this. Many states have set limits on online games over the past two years, from Assam, Andhra Pradesh, Odisha, Tamil Nadu, Karnataka, and Telangana. The main focus was on games of skill and game of chance with real money. Bridge, poker, and rummy games are not considered gambling in Western Bengal. There is a government notice in Kerala that frees rummy from gambling if there is no side bet. Online games require a license in Sikkim and Nagaland. Before delving into the difficult issue of legitimacy of online games, it is important to understand two types of online games: the game of chance and the game of skill.

Game of Skill – A game of skill is one in which the player takes time to learn, practice, and develop talent. A skill game is one in which the result is usually determined by the player's physical ability, higher knowledge, training, and experience. In the game of skill, skill must be a very important factor.

Game of Chance – The game of chance is based on factors such as luck and unpredictability of the final outcome of the game, and the results are not predictable at all. The winner is determined by the amount or chance in the game of chance, and the participant does not have the opportunity to exercise reason, judgment, wisdom, or understanding.

Currently, India's online skill game sector is governed by a patchwork of state regulations, with a national statute that is stuck in the nineteenth century. Even provinces that admit that online games have different approaches. Tamil Nadu continues to allow online games (but not others) online games, while Telangana and Andhra Pradesh have banned all online games for money or stakes.

Different courts in India have made different decisions on how to deal with online games due to lack of similarity or clarity in the law. These ideas often do not reflect the realities of modern sports. The Supreme Court of India has established a guiding principle: games where more opportunities than talent are denied, while games where skills beyond opportunities are allowed.[1] However, in the absence of tests aimed at distinguishing between skill and games of chance, the courts have applied this principle in certain cases in different ways. As a result, there is a complex legal framework that determines whether a game is legal or not.


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Popular online games

Rummy - Rummy is a game of skill under normal circumstances, according to the Supreme Court, and is legal under gambling laws.[2] However, there is a warning in this judgment. In any other case, there should be no gambling symbol - game owners should not win or benefit from a rummy, and games should not be played for stakes. The excuse clause means that some online rummy games will not be able to benefit from a Supreme Court decision because they could incur the revenue of both players and game owners, who often charge participation fees.

RummyCircle (online rummy) has just been declared non-gambling by the Kerala High Court. Keep in mind that if there is no side betting involved, Kerala law does not consider rummy as gambling, which means that courts in some states may disagree.[3]

Poker - Different High Courts have come to different conclusions about whether poker is a skill or a game of chance. Although Gujarat [4] and Bombay High Courts have ruled that poker is a game of chance and that is why it is illegal[5], the Calcutta High Court has ruled that poker is not covered by the country's gambling laws (meaning that it is not restricted)[6]. Also, the context is that poker is not included in the definition of gambling in West Bengal game rules.

The Supreme Court also ruled that games such as poker double up, blackjack, and Pacman do not allow the use of skill (meaning that it is not allowed).[7] However, based on the true findings of the lower court, which marked these games as games of chance, this seems to be a passing view. This means that there is no definite decision in poker.

Fantasy Sports - Unlike other online games, Indian courts often treat fantasy sports with the same treatment as game of skill and legalize them as they seek skill and professionalism. Both the Punjab and Haryana High Courts and the Bombay High Court[8] have found that the activities offered in Dream 11 (fantasy cricket, kabbadi, football, and other sports) require talent, knowledge, judgment, and attention and are not gambling.[9] The Rajasthan High Court has made a similar decision.[10]

The above conclusions give reason to believe that dream games are legitimate. However, the matter will not be considered as unresolved at present because some courts may respond differently. For example, based on the Supreme Court's rummy ruling, does it suggest that the game's owner of the game falsified the game or that the participant played real money that the game has a gambling character? Sadly, we may have to wait for the court to decide.


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Recent Developments

Earlier this week, the Karnataka High Court struck down the state government’s order banning online gambling games--the law had banned all formats of online games involving wagering, betting, and gambling in the state. [11]

“The verdict is welcome news for all the sports fans in India, the biggest market for fantasy sports globally, with over 13 crore (130 million) users playing across more than 200 platforms. This judgement follows other positive judgements given by Hon’ble High Courts of states such as Punjab & Haryana, Rajasthan, Bombay that recognised Fantasy Sports as games of skill and a legitimate business activity protected under Article 19(1)(g) of the Constitution of India,” said Bimal Julka, Chairman of Federation of Indian Fantasy Sports (FIFS).

Last year, the Madras High Court had struck down a similar law that targeted online rummy and poker.

Last December, Sushil Kumar Modi urged the government to come up with a “comprehensive framework” to regulate online gaming, while the NITI Aayog has been batting for self-regulation by the industry.


Conclusion

Recent events have highlighted the need to protect the interest of gamers, but there may be alternatives to online games. Alternatively, checks and balances may be considered. For example, NITI Aayog recently released a draft of guiding principle for fantasy sports game, which includes establishing a governing body, maintaining talent and skill in games, seeking the approval of an independent sports committee to play games with real money, minimum age of 18 years for participation, fairness and transparency in game terms and conditions, policies to prevent misuse, marketing practices, and more. The Advertising and Standards Council of India has recently issued guidelines for self-regulatory advertising for real money games.

But, first and foremost, the outdated country laws need to be updated to regulate online games in their current form. Prohibiting a game purely because it generates income for the game's proprietors or is played for stakes may no longer be relevant.

The problem of achieving legal uniformity between states is going to be tough. Perhaps the Central Government should take steps to promote state-level negotiations in order to achieve certain legal similarities. Because many of the country's laws are based on the provisions of the Old Law, it may be advisable to consider a model amendment to the Old Law that recognizes (or prohibits) online games. The principles of NITI Aayog are a good start and reflect the good intentions of the government. I hope this will pave the way for a much clearer legal framework that is in line with modern gaming.

 


[1] Dr. K.R. Lakshmanan v. State of Tamil Nadu and Anr. (AIR 1996 SC 1153)

[2] State of Andhra Pradesh v. K. Satyanarayana (AIR 1968 SC 825)

[3] Play Games 24X7 Private Limited and Ors. v. Ramachandran K. and Ors. (2019 4 KLT 542)

[4] Dominance Games Pvt. Ltd., v. State of Gujarat (2018 1 GLR 801)

[5] Nasir Salim Patel v. State of Maharashtra & Ors., (WP (Criminal) 427 of 2017)

[6] Indian Poker Association v. State of West Bengal, (W.P.A. No. 394 of 2019)

[7] M. J. Sivani v. State of Karnataka (AIR 1995 SC 1770)

[8] Gurdeep Singh Sachar v. Union of India and Ors. (2019 75 GST 258 Bombay

[9]Varun Gumber v. UT Chandigarh (2017 CriLJ 3827)

[10] Chandresh Sankhla v. The State of Rajasthan and Ors. (2020 2 RLW 1601 Raj)

[11] All India Gaming Federation v. State of Karnataka (WP 18703/2021)

Written By:
Anik

Anik

Bangalore

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