The expansion of the gaming market has revolutionized the gaming laws in the country. Amidst the introduction of novel and forward looking legations like the Nagaland Games of Skill Act, 2016which legalizes the online games of skill and prevents gambling, the State Government of Telangana has imposed an impediment preventing online gaming or gambling.

The Telangana State Government introduced the Telangana State Gaming (Amendment) Ordinance, 2017 (Ordinance No. 4 of 2017) which explicitly states that a game has to be totally based on the skill and ability of the person to be classified as game of skill and any game which partly depends on skill and partly on luck or chance cannot be termed as a game of skill. The ordinance expressly stated that rummy is not a skill game as it is partly based on skill and partly based on luck or chance.

Owing to the detrimental impact of the aforesaid ordinance upon their business, the online gaming operators are strongly protesting against its implication. A writ petition was filed by Head Infotech Pvt. Ltd. (Ace2Three), Play Games24x7 Pvt. Ltd. (Rummycircle) and Junglee Games Pvt. Ltd. (Junglee Rummy) in the Andhra Pradesh and Telangana High Court, challenging the constitutional validity of the Telangana State Gaming (Amendment) Ordinance, 2017. The said companies alleged the said ordinance to be in violation of the provisions of Article 19(1) (g) thereby impeding freedom to carry on any trade, occupation or business. The Companies also contended this to be contravention to the Supreme Court judgement, which has clearly identified Rummy as being a game of skill [K.R. Lakshmanan v. State of Tamil Nadu 1996 SCC (2) 226]. The High Court granted partial relief to the petitioners by allowing them to deal with the customers based outside the State of Telangana.

The State Government issued another Telangana State Gaming (Amendment) Ordinance, 2017 (Ordinance No. 6 of 2017) which has included within its definition for “Wagering or betting” any act of risking money, or otherwise on the unknown result of an event including on a game of skill.

The Government of Telangana reasoned the introduction of the said ordinances to redress the complaints received by the Government on account of increasing cases of suicides due to heavy losses incurred through online games involving stakes. In the recent approach towards the furtherance of their objective, the Government of Telangana aims to give the aforesaid ordinances the colour of law by introducing them into the Legislative Assembly thereby imposing ban on online betting and gambling.

Present Scenario

The Supreme Court of India held [State of Bombay Vs. RMD Chamarbaugwala (AIR 1957 SC 699)] that

  1. the competitions where success depends on substantial degree of skill are not `gambling';
  2. despite there being an element of chance if    a game is preponderantly a game of skill it would nevertheless be a game of "mere skill".

Being a subject matter of State List for governance, states have varied provisions with respect to gambling and gaming. Currently there only two states which have online gaming legislations:

  • The Sikkim Online Gambling Rules, 2009 which legalized the playing of certain online gambling games to be legal within the premises of the State.
  • The Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2016 which has been issuing licenses even to online skill games.

Opinion

The Apex Court has vide catena of cases clearly distinguished between the games based on chances from those involving skill. Under the established laws, the games involving pure chance amount to gambling. The games of based on skill comprising of some element of chance is not gambling even if stakes are involved.

The rationale behind is that in the skill games, the bet taken is on one’s own caliber or capability which does not amount to an uncertain event do not fall within the purview of being categorized as games of chance. It is worthwhile to state that the mere change of media upon which the games are being played does not vary alter their very nature. Thus, the regulations which govern the physical form of game should be applicable to the online games as well.

While the Nagaland Games of Skill Act provides a legal mechanism eliminating ambiguity that persisted with regards to online skill games thus encouraging the online gaming, the limitations instituted by the Telangana Government not only contravenes the principles of the Supreme Court differentiating gaming and gambling but also demotivates the online gaming industry which aims to spread its wings in the gaming market.