The Federation will challenge the provisions of the ordinance that categorise rummy and poker as games of chance
Industry body cites dissonance of Tamil Nadu government’s ordinance with multiple legal judicial pronouncements as the reason behind the proposed legal move
This came on the same day as the TN assembly passed a bill to ban online gambling and regulate other online games in the state
Inc42 Daily Brief
Stay Ahead With Daily News & Analysis on India’s Tech & Startup Economy
Industry body e-gaming federation (EGF) on Wednesday (October 19) said that it will drag the Tamil Nadu government to the court over a contentious ordinance that bans online gambling games in the state.
The federation will challenge the provisions of the ordinance that categorise rummy and poker as games of chance.
The announcement came hours after the Tamil Nadu assembly passed the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Bill, 2022 to ban online gambling games and regulate online games in the state. This replaced an ordinance that the state government had promulgated last week to ban online gambling games.
“After examining the ordinance, we have decided to file a lawsuit as it categorises rummy and poker as games of chance. This is in dissonance with multiple legal judicial pronouncements including the recent judgement by the Madras High Court, which has clearly segregated games of skill and chance,” said EGF chief executive officer Sameer Barde.
Citing multiple judgements, EGF said that bringing rummy under the ambit of the game of chance directly violates Supreme Court and the Madras High Court judgements that have previously overturned a law banning online gambling games.
EGF also lashed out saying that the state government should create an enabling gaming policy that safeguards players, rather than resorting to a blanket ban.
“For the online skill gaming industry and for the State of Tamil Nadu, the need of the hour is a comprehensive online gaming policy that protects players and ensures that only legitimate online skill-gaming operators offer their services while weeding out the ones who break the law,” added the industry body.
Tamil Nadu Govt Tightens Noose
On Wednesday, Chief Minister MK Stalin moved a Bill to prohibit online gambling and to regulate online games in the state. It was promptly afterwards passed by the state Assembly.
Citing the addictive nature of online gambling and online games, the Bill had stated that these online offerings posed a threat to public order
This comes close on the heels of a similar ordinance moved by Governor RN Ravi recently. The Bill will now replace this and is expected to come into force soon. The ordinance had proposed to establish the Tamil Nadu Online Gaming Authority to regulate the burgeoning space and address the grievances of all stakeholders.
Interestingly, the new legislation comes as the Apex Court has begun hearing an appeal filed by the DMK-led state government against the Madras High Court ruling that overturned the November 2020 ban on online games imposed by the then state government.
Amidst all this, the union government is also reportedly working on broad-based regulations to govern the gaming industry.
The Regulatory Wild West
The online gaming industry in India continues to be marred by red tape. While some states have scant to no regulation, others have over-regulation. There is no central oversight and multiple states have approached courts for more clarity on the matter.
The issue largely appears to be the distinction between games of skills and games of chance. While esports websites vehemently state that games such as poker and rummy fall under the ambit of games of skill, authorities have pointed out the addictive element of the game.
Additionally, the government also appears to be in a quagmire when it comes to consolidating a taxation framework for such games. While the GST Council still has not ratified the 28% GST, it had sought to impose on online games, the further distinctions have further complicated taxation regimes for these emerging startups.
While striking down the TN government’s ban order, the Madras High Court had previously held that when it comes to card games such as rummy and poker, there is no distinction between skill involved in physical form or in virtual form.
A judgement by Karnataka High Court on a similar case ruled that games of skill did not metamorphose into ‘betting or gambling’ irrespective of whether they were played for stakes or simply because they were played online. Subsequently, the HC lifted the ban imposed on online games, while the state government hurried to the Apex Court to file an appeal in the matter
Add to that, a number of states such as Telangana, Andhra Pradesh and Kerala have also issued several notifications banning online gaming. While many of the states have sought to bring in a new framework to address the issues, others have just simply dragged the matter to court.
In the recent past, India has seen the emergence of a plethora of gaming startups, including unicorns such as Games24x7, MPL and Dream11.
According to a report, the Indian gaming market was pegged at around $2.2 Bn at the end of FY21. This number is expected to surge to $7 Bn by FY26, largely aided by a growth in smartphone penetration and the growing popularity of online esports games.
Note: We at Inc42 take our ethics very seriously. More information about it can be found here.