Online Gaming Laws In India
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This is an update to our previous post, wherein we covered a detailed analysis on the legislations and landmark judgements that regulate gambling and other allied activities across India and how certain States in India have enacted their own legislation to regulate gaming/ gambling activities. We also saw how many online games today face complications when they have to be tested additionally against the Prize Competitions Act, 1955 and also specifically check for prohibitions under each State. While the Public Gambling Act, 1867 is the only centrally recognized law related to gambling/ gaming activities in India, little or no steps have been taken to codify a regulatory framework governing the operation of modern/ online gaming and gaming-related businesses in India. Recently, an interesting stance has been taken by the Madurai Bench of the Madras High Court in the case of D. Siluvai Venance vs. State (“Judgement”).
Madras High Court Judgement
There is a law in India that says it is illegal to fund online gambling sites without using Rupees. This law is called the Foreign Exchange Management Act. If you are to place a bet at an online bookmaker or gaming site you need to do so in Rupees. The Information Technology Act 2000 is a central act that governs all online activities in India. The Act does not specifically use the word gambling or betting and hence a number of iGaming providers have entered the market due to the language used in the Act. In India, the online gaming law is at a very nascent stage and is being administered by the available, if any, local laws. The online gaming involving stakes is neither per se prohibited in India, nor are regarded as gambling activities. The presence of numerous online games including poker bears testimony to this fact. Online gaming with stakes or real money is allowed in most of the states of India. Therefore, unless specifically prohibited by the state government, it is not prohibited. Online games with stakes/ real money cannot be played in whole of India as the laws of the states of Assam, Odisha and southern State of Telangana specifically prohibit.
The Judgement has stressed upon the need to have a proper regulatory framework to regulate modern/ online games in India that are luring unemployed youth to bet and lose all their money.
The case was initially involved in determining the legality and scope of “gambling” at a “public place” and running a “common gaming house” for commercialization purposes. The petitioners along with others were arrested for playing cards for stakes on a farmland and were charged for gambling on a public street under Section 12 of the Tamil Nadu Gaming Act, 1930. The petitioner contested that the game of card for stakes was being played on a private land owned by one of his friends. The petitioner further stated that he was not involved in the game and was just a mere spectator. The contention of the petitioner was supported by the Madras High Court which stated that a game of cards being played on private farmland did not constitute to be a gaming house. Subsequently, the charges against the petitioner were quashed by the High Court.
In support of the Judgement, the Court relied upon the precedent laid down in Raman Nair and others v. State[1], which stated that gaming is not an offence per se but is punishable only when it is carried on at a public place for commercialization purpose or in a common gaming house for profit. The Court further referred to the judgement in J. Raghunandhu v. Emperor[2] wherein it was held that a part of a private house which has access to a public street cannot be termed as a public place. This Judgement of the Madras High Court is the current case which has laid down an important foundation in determining which activities and tendencies will be termed as gambling at a public place.
Observations and Recommendations of the Court
During the pendency of the case, the High Court raised a query to the Assistant General of Police for seeking clarification as to how the police were permitting other forms of virtual and online gaming in the state of Tamil Nadu despite being very particular in prohibiting/ encouraging playing game of cards. The Assistant General of Police filed a status report throwing light upon the need for a regulatory framework to govern virtual and online gaming in India.
Given the increase in smartphones and internet penetration, India has become one of the fastest-growing markets for online gaming. The increase in the number of individual online gamers has created a huge need for having a tight compliance mechanism to tackle the growth and spread of illegal activities associated with online gaming. The High Court also suggested that the Tamil Nadu Government should bring out regulations/ policies, as framed by the States of Sikkim (i.e. Sikkim Online Gaming (Regulation) Act, 2008), Nagaland (i.e. Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2015) and Telangana (i.e. Telangana Gaming (Amendment) Ordinance, 2017).
In Sum
In India, the Public Gambling Act, 1867 and other State regulated laws have been enacted to govern gaming and gambling in India. While these laws deal with the physical gaming and operation of gaming/ gambling houses, no reliance has been placed on the concept of “virtual and online gaming”. The interest in online gaming has witnessed a sudden increase in recent times all over the world, including India and due to this many countries are adopting or updating their existing framework on gaming laws. The Judgement appears to be crucial, in light of these recent developments. It throws light on the importance of setting up a regulatory framework to regulate and deal with the online gaming sector in India. Such enforcements would also lead to investments in the gaming sector in India and also generate employment.
– Archana Balasubramanian, Partner, Charulata, Associate (assistance from Amogh Taskar, Intern)
[1] 1990 (2) MWN Crime 195
[2] 1933 Mad WN 1422
India have a cultural norm where parents expect their children, many of whom live with them well into adulthood, to concentrate on academics and professional pursuits. online gaming/gambling laws in India prohibit betting or wagering and any act which is intended to aid or facilitate the same.In the 21st century, more people have started making cash bets upon prohibited betting and gambling activities in India. gaming/gambling being a state subject, gaming/gambling in India have laws which differ from state to state . this would mean what is permitted in one state may be an offence in another.
Gambling in India is heavily restricted except for selective categories including lotteries and horse racing. Critics of gambling claim that it leads to crime, corruption and money laundering, while proponents of regulated gambling argue that it can be a huge source of revenue for the state.
Casinos in Goa contributed Rs. 135 crores to the state revenue in 2013. The Public Gambling Act of 1867 is a central law that prohibits running or being in charge of a public gambling house. The penalty which will be imposed on breaking this law will be a fine of rupees 200 or imprisonment of up to 3 months.
It also prohibits visiting gambling houses, if violated a fine of rupees 100 or imprisonment of up to one month will be imposed. Section 1 of the above act has an interpretation clause on the subject of what is a common gaming house. The state gambling laws for online gambling in India, except the state of Orissa and Assam, probably all the states have excluded “games of skill†from applicability of its act of gaming/gambling laws. Online gambling in India is still an issue of discussion and there is no adjudication on the subject of online gambling yet.
Let's talk about a very famous online game which is not only famous among the youngsters but was also an infamous issue among the lawyers. On Friday, April 5, 2019 a boy in Hyderabad hanged himself and died. the cause of her death was her mother scolding her to stop playing a very famous game PUBG.
The 16-yearold's father demanded a ban on player unknown's battlegrounds, known by the acronym PUBG, after his son hanged himself from a ceiling fan at their Hyderabad home following a reprimand for wasting time online rather than studying for an English exam, according to Indian news reports. In March, two men in their twenties playing the game on their phones near railway tracks in Maharashtra state were killed by an oncoming train, the press trust of India news agency reported.
After these two cases there was a massive storm in India to ban this game because it is causing distraction, violence and hatred. Some cities in Gujrat had banned this game, young people across the state were arrested for violating the ban. Banning the game is a very extreme step, there must be some other ways to handle this, how can you call someone who is playing a video game a criminal, they aren't doing anything illegal. The internet freedom foundation in new Delhi filed a petition in the Gujrat high court asking them to declare the ban unconstitutional. There must be logical reasoning and legal basis on any type of ban which is violating the freedom of any citizen. Later on, the ban was lifted.
In India, we distinguish a game in two choices game of skill' and game of chance'. In the matter of state of AP vs. K. Satyanarayana (1968) held the game of rummy to be a game of skill. However, the Court in its judgment has indicated that if there is gambling or if the gambling house is making profit from the game of rummy, then it could amount to an offense under the laws of AP. It was further observed by SC that the three-card game which goes under different names such as flush, brag, etc. is a game of pure chance.
This was relied upon by SC in another its other judgments viz. M.J.Sivani v. State of Karnataka (1995) and Dr. K.R. Lakshmanan vs State Of Tamil Nadu And Anr (1996).
Delhi district court in the case of G. network private limited vs. monica lakhanpal under order 36 rule(1) of CPC held that:
- Game of skills, if played with stakes does not amount to gambling;
- Playing games of skill for money is only legal in the real form, online games cannot be compared to real games;
- Attracting business or enticing players by alluring them with prize money is illegal;
- Gaming sites partaking a slice on the winning hand are illegal as they amount to a virtual gambling house.
The next big game which was never discussed in court, whether it's a game of skill or game of chance until December 4, 2017 is POKER. In the case of Dominance games pvt. Ltd. V. stae of Gujrat
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it was held that:Poker is a
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game of chanceIs Online Gaming Legal In India
and therefore amounts to gambling under Gujarat Prevention of Gambling Act, 1887. As the poker is originated from the game of teenpati which is a game of chance. Wagering or betting is an inseparable part of the game of poker and therefore would involve stake.Conclusion:
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Moving with the above acknowledged facts, If a game is considered to be a game of chance under any state or observed to be played with stakes, it may be constituted as gambling and be illegal under the gambling act. Whereas in any online gaming or in any on-ground gaming its need to be shown that the game is a game of skill and it played without stakes, if its proved then it may come under the exceptions of the law.