Bill Banning Online Gambling Gets Green Light In TN, Industry Body To Move Court

In what could complicate matters for online gaming platforms, Tamil Nadu Governor RN Ravi has reportedly given his assent to a Bill that proposes a complete ban on online gambling in the state.

This comes hours after the state Assembly, led by the ruling DMK, unanimously passed a resolution against Governor Ravi. Shortly afterwards, the Governor, according to NDTV, accorded his approval to the Bill, which bans online gambling and brings online gaming platforms under the state government’s ambit. 

It is pertinent to note that Ravi, last month, sent back the Bill for changes while noting that the Tamil Nadu Assembly had ‘no legislative competence’ to frame such norms. However, now, he has cleared the last remaining decks for the Bill to turn into law. 

Called the Tamil Nadu Prohibition of Online Gaming and Regulation of Online Games Act, 2022, the new law has specified a fine of up to INR 5,000, or imprisonment of up to three months, for those participating in gambling online. 

While the rules propose imprisonment of up to a year for platforms advertising such games, the new Act also specifies a jail term of up to three years for the organisers of such games. 

The development also comes hours after the head of the Tamil Nadu online gaming panel, Justice K Chandru called for a complete ban on online gambling in the state. Commenting on the recently notified online gaming rules by the Union government, he said that the Centre-backed norms had no bearing on the stance of Tamil Nadu government as it saw no other way except for an outright ban.

The approval is a shot in the arm for the Tamil Nadu government, which has been embroiled in multiple public spats with the Governor. However, the announcement could see the state government and the Centre fight it out in the courts, and it remains to be seen which side prevails in such a prospective situation.

Industry Seeks Legal Route

Meanwhile, industry players do not seem too happy with the move. The CEO of All India Gaming Federation, Roland Landers, has said that it will challenge the constitutionality of the law once it is notified. 

“As the oldest and largest industry body, representing the most number of Indian MSME startups, we will challenge the constitutionality of the law, once the effective date is notified and have full faith that our judicial system will uphold the fundamental rights of the gaming platforms and their users,” said Landers. 

Lashing out at the state government, he said that the new law conflates games of skill as gambling and games of chance. He also added that the new norms disregard established legal jurisprudence and a recent Madras High Court judgement that struck down a similar law. Backing the Centre, he said that the Union government had the rightful mandate under the Constitution to regulate online gaming in the country. 

Resuscitated From Limbo 

The drama surrounding online gambling platforms goes back to 2021 when the then AIADMK government enacted a law to regulate the online gaming space. Afterwards, the matter was dragged to the court and the Bill was scrapped. 

When DMK came to power afterwards, it formed a high-level committee under former Madras High Court Judge Justice K Chandru and accordingly formulated a bill based on the panel’s recommendations.

The state assembly then unanimously passed the legislation in October and sent the Bill to the Governor for approval, who returned the Bill, citing the lack of legislative competence of the state assembly to frame the Bill.

Afterwards, the Tamil Nadu Assembly re-adopted the Bill and sent the Bill for reconsideration before the Governor. The current developments pertain to this

Meanwhile, the promulgation of the norms could pose big issues for the online gaming industry, which has previously also flagged issues related to the overlapping nature of legislations from both the Centre and states. 

While states are empowered by the Constitution to delegate rules related to betting, gambling and wagering, the Centre, through its newly released gaming rules, has sought to develop a base framework for online gaming companies to follow. Curiously, the Tamil Nadu government has cited multiple deaths by suicide in the state related to online betting games as the rationale behind the move

At a meeting held with Minister of State for IT Rajeev Chandrasekhar last week, the platforms raised issues of ‘prosecution or probes’ by state governments while complying with central norms. Ministry officials reportedly told these companies that it would step in if states sought more clarification and assurance on the subject.

With this, online gaming companies are now caught between two sides and could be saddled with double regulatory compliances. While the matter could be debated in court, it remains to be seen how the industry recovers from this blow in the state.

However, the online gaming space continues to see big traction in the country. According to a report, India accounted for 507 Mn online gamers at the end of March 2022, with the homegrown online gaming market projected to grow to $8.6 Bn by FY27.