Tracing The Legality Of Online Gaming In India: What High Courts Have Said Recently

The online skill-based gaming industry has had to contend with legal battles for decades, resulting in a long history of precedents from both the Supreme Court and various High Courts. It has all come down to one thing — real-money games of skill, such as rummy, fantasy, poker, and bridge, cannot be considered gambling or betting.

Not particularly seeing it that way, various state governments, especially in the country’s south, have sought to impose a ban on the gaming sector. However, jurisprudence has remained consistent in reminding governments of the unconstitutionality of doing so.

The centre has been rather encouraging of the gaming industry of late. Both Finance Minister Nirmala Sitharaman (in her Union budget 2022 address) and Prime Minister Narendra Modi have spoken about the potential of the gaming industry.

“Today, one area that has blossomed very quickly is gaming. There is a very big market for it globally. The youth have joined in (to this trend) very quickly,” the Prime Minister said recently at a webinar on technology-enabled development. Having already earned the respect of the world for its work in the area of information technology, India can now build up strength in specific sectors, he added, in reference to gaming.

The demand and consumption of online gaming across domestic and global markets has been huge and it’s expected to keep growing. This has implications for allied areas, like FinTech, EdTech, semiconductors, entertainment, and, of course, as a pillar of employment in India.

The sector is already said to employ over 50,000 people. This figure can rise quickly, across various allied technology areas, if the sector receives suitable growth conditions.

The centre’s recent enthusiasm towards the gaming sector has incidentally followed a spate of high court judgements over the last six months that have drawn a distinction between online gaming and gambling, driving home the legitimacy of the online gaming business in India.

The question that the judiciary has been predominantly concerned with is whether online gaming falls under the realm of games of chance — which puts it in the betting bracket — or a perfectly legitimate game of skill. This difference is critical; whereas betting on games that involve luck alone are illegal, games where one can hone their talent or skill to improve their success outcomes are legitimate.

In August 2021, the Madras High Court, in Junglee Games India Private Limited and Others vs State of Tamil Nadu, held that a complete ban on online gaming is unconstitutional as it was not a reasonable restriction imposed on the fundamental right given under Article 19(1)(g) of the Constitution.

The court held that an online version of a game of skill played for real money does not turn into a game of chance, challenging the Tamil Nadu Gaming and Police Laws (Amendment) Act 2021. It was also held that a ban on online games of skill is akin to the prohibition of both the user and platform’s fundamental rights and that a blanket ban is excessive and amounting to paternalistic behaviour.

Further, it said the state cannot legislate on games of skill under the ambit of Entry 34 of the State list, as it is only concerned with betting and gambling, which, by their very nature, exclude any sort of skill.

Most recently, the Karnataka High Court in the case All India Gaming Federation vs State of Karnataka was posed with a similar question.

The constitutional validity of the amendment to the Karnataka Police Act 1963, which would have led to the criminalisation of playing and facilitating online games, was challenged.

Quashing unconstitutional sections of the amendment, the court said, “In any organised society, knowledge, wisdom, talent, and skill are invaluable tools for wealth generation” and are the “unseeming ingredients of economic rights such as rights to profession, property.”

Of course, while understanding the strength of the jurisprudence, it is vital to consider a valid concern raised by the states — addiction in children and adults alike.

The world of online gaming has various types of games. A game with a real money element can either be a game of chance (gambling, betting, wagering) or a game of skill. In addition, a gamut of casual games exist across genres that do not include a monetary element.

The industry's best practices and self-regulatory charters categorically disallow any pay-to-play versions of games of chance (betting) and go further to restrict access to any real-money games to children (under the age of 18). Preventing addiction in children will require that valid and legitimate business entities be supported while the battle against offshore and local gambling websites is continued.

To combat addiction in adults, apart from mandating rigorous KYC (“know your customer”) and data protections norms, the self-regulatory charter mandates the setting of a pre-specified limit for an individual game as well as daily, weekly, and monthly restrictions.

Legitimate business operators also identify ‘risky’ and ‘non-risky’ players and use their artificial intelligence (AI) and machine learning solutions to flag players who may show addictive patterns of playing or spending, also helping provide counselling to identified players.

This provides feedback into mainstream de-addiction channels and mental health groups as online addiction is otherwise difficult to recognise and easy to miss. With the help of robust AI, there may be a way to signal addiction before it becomes an issue and provide support to those who need it through appropriate mental health channels.

With responsible regulation in place, all players will have to follow such a model. Currently, such frameworks are only mandated to those responsible organisations that belong to industry associations. This is why regulating the sector and addressing troubling issues is the first, and possibly, the most important step.

What may help is if the state governments work with industry associations to create a conducive environment for the growth of this sunrise sector.

Also Read:

What’s Holding Back Indian Gaming