Gaming firms tussle with states over gambling laws in India

Gaming firms tussle with states over gambling laws in India
Photo Credit: Pixabay
17 Nov, 2021

The Odisha High Court, on November 16, has issued notice to the State of Odisha seeking a response to a petition that challenges the constitutional validity of the Odisha Prevention of Gambling Act, 1955, reported LiveLaw. The case is the newest in a line of battles gaming firms in India are fighting against various states.

The Odisha Prevention of Gambling Act, 1955 prohibits gaming for money or other stakes by which a person intentionally exposes cash and faces the risk of loss by chance. The petition was filed by online gaming company Tic Tok Skill Games Pvt. Ltd, which operates social gaming platform WinZO Games. 

In its petition, Tic Tok Skill Games Pvt Ltd argued that the Act "is violative of Article 14 (of the Act) as it defies the concept of reasonableness and non-arbitrariness."

Real money gaming platforms have seen massive growth in terms of user base and revenue, especially after the pandemic-induced shift to remote work and learning. 

Paytm First Games reported a 200% growth in user base and a four-fold increase in gameplays in the first half of 2020. Likewise, WinZO saw a 30% jump in traffic and a 3-fold increase in gameplays immediately after lockdown, according to data shared by both companies last year. 

Gaming firms vs States

But at the same time, real money gaming has received backlash from lawmakers in several Indian states, who feel these platforms promote gambling and may lead to addiction. This was also triggered by some instances of suicide due to financial losses incurred on online gaming platforms. 

These gaming platforms are currently banned in the states of Odisha, Gujarat, Telangana and Karnataka. Gambling is a state subject in India, so states do have the power to regulate gambling as they see fit. 

Some of these blanket bans have been challenged successfully by real money gaming platforms in courts. For instance, in August 2021, Madras High Court struck down the Tamil Nadu Gaming and Police Laws (Amendment) Act of 2021, which banned online betting games including rummy and poker. The petition was filed by a group of firms that included Junglee Games India Private Ltd) and the All India Gaming Federation (AIGF). The Tamil Nadu government moved the Supreme Court against this judgement on November 16. 

In September, the Kerala high court also decided to quash an amendment in Section 14A of the Kerala Gaming Act, 1960, which sought to ban online rummy in Kerala. 

The court was hearing petitions by Junglee Games India Pvt. Ltd, Play Games 24x7 Pvt. Ltd, Head Digital Works Pvt. Ltd, and Gameskraft Technologies Pvt. Ltd. Even as these judgments came out, in September, Karnataka also passed legislation that makes all forms of gambling, including online gambling, a cognizable and non-bailable offense.

At the time, the AIGF called the new rules highly regressive in nature, and a huge setback to Karnataka's reputation as a technology hub. 

Real money gaming platforms have reiterated that the games they offer enable and test participants' skills. The distinction between skill gaming and gambling has been a subject of contention over the years.

For instance, in the case of R.M.D. Chamarbaugwala versus Union of India (1957), the Supreme court said games, where a certain level of skill is involved, cannot be labeled as gambling.

In the State of Andhra Pradesh versus K. Satyanarayana (1968), the Apex Court ruled that rummy involved considerable skill and cannot be called the game of chance.

Similarly in K.R. Lakshmanan versus the State of Tamil Nadu (1996), the apex court ruled that horse racing was a game of skill.

In 2015, the apex court in response to another petition held the previous judgments and called online rummy a game of skill.