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Online Gambling Caught Between Skill, Chance & Regulation In India

Online Gambling Caught Between Skill, Chance & Regulation In India

A myriad of policy regulations and the onus of respective states to take a stand on gambling has created a policy labyrinth

SC judgments since 1960s have held that games such as poker and rummy have a dominant element of ‘skill’, which trumps the element of ‘chance’

Given that gambling is a state subject, different states have framed their own laws

Online gambling walks the thin line between skill, chance and strict regulations. Google Play Store’s decision to remove Paytm may be based on its updated gambling policies in India. Google is peeved that the app “leads consumers to an external website which allows them to participate in paid tournaments to win real money or cash prizes.”  

A myriad of policy regulations and the onus of respective Indian states to take a stand on gambling has created a policy labyrinth. 

Supreme Court judgments since the 1960s have held that games such as poker and rummy have a dominant element of ‘skill’, which trumps the element of ‘chance’, hence ruling that both games are skill-based card games and as such, should be exempted from the anti-gambling regulations when played for stake. 

However, given that gambling is a state subject, different states have framed their laws, some of which have outrightly banned all real-money card games. These include Telangana and Odisha, where there’s a blanket ban on card games played for a stake. 

In states such as Sikkim and Nagaland, while the respective state governments have excluded the staking of money on games of skill from the ambit of gambling, the operators of online portals for such games are mandated to get licenses for conducting such games within state boundaries. 

Plus, there are games that may prima facie look like games of skills but their rules and features may not fit the legal definition, which also complicates the situation further.

With the Public Gambling Act, 1867, the centre’s actions on the subject are outdated since it doesn’t take into account gaming or gambling in the virtual space. Secondly, a section of the population refuses to delink ‘gaming’ from ‘gambling’ which has also bogged down the industry’s growth. 

Online Gaming Rising In India

Multiple stakeholders have urged the government to clarify the policy around online gaming, virtual gambling and more to help businesses overcome the growth challenges. 

Currently, India is home to more than 278 Mn online gaming users which make up approximately 46% of the total 604 Mn internet subscribers in India. This number is expected to reach 312 Mn by the year 2020. A major driving force behind the rise of mobile gaming in India is due to the 54% surge in internet users from 391 Mn in 2016 to 604 Mn in 2018.

Dream 11, The official sponsor of the 2020 edition of Indian Premier League (IPL), which will kick off tomorrow, is also facing legal trouble with a petition filed against it in the Supreme Court. The plea was filed against the gaming platform challenging a Rajasthan HC order which upheld the legality of Dream11.  

Speaking about gambling for an earlier story carried by Inc42, Harsh Jain, CEO and cofounder of Dream11, India’s only gaming unicorn so far, said, “Anti-gambling laws in some states which also include online skill-based gaming within their purview became a huge challenge for us in India. The investor sentiment at that time in India was pretty shaken. I pitched everywhere, from New York to San Francisco in more than 150 meetings before getting a Series A cheque from Kalaari Capital in 2015.” 

In November 2019, Tamil Nadu government cracked down on Google Pay’s scratch offers, as it violated the state’s lottery ban, which has been in effect since 2003.

Manish Agarwal, CEO of Nazara Technologies, a Mumbai-based mobile gaming company, told Inc42 earlier that clarity around policy which could apply to all operators across the country is essential. “A self-regulatory body which is working in guidance of some central ministry, or working to ensure that the rules of a central regulation are imposed in letter and spirit, is important for responsible gaming,” said Agarwal.