SC To Hear Tamil Nadu’s Appeal Against Madras HC Order Quashing Ban On Online Rummy, Poker

The Supreme Court (SC) on Monday (February 5) reportedly agreed to hear the appeal filed by the Tamil Nadu government against a Madras High Court (HC) order setting aside the provisions of the state’s online gambling law.

In November 2023, the Madras HC ruled that the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022 could not be invoked to ban skill-based games such as online rummy and poker. 

As per a Moneycontrol report, the SC on Monday clubbed the state government’s plea with its previous appeal, filed in 2022. The previous appeal challenges a separate order of the HC quashing the Tamil Nadu Gaming and Police Laws (Amendment) Act of 2021.

As per the report, there is no clarity on the next date of hearing in the matter.

Madras HC Vs Tamil Nadu Govt

The case harks back to 2021 when the state government passed an emergency legislation, called the Tamil Nadu Gaming and Police Laws (Amendment) Act, to ban online gaming, including skill-based games, in the state. The legislation came after a woman allegedly died by suicide after suffering losses in online gaming.

Right after that, a clutch of online gaming companies moved the Madras HC, which struck down portions of the law as it did not distinguish between games of skill and chance. Following this, the state government filed a plea before the SC, which is still pending.

Subsequently, the local authorities appointed a committee under the chairmanship of former Madras HC judge, Justice K. Chandru, to recommend changes to the existing laws. 

As a result, the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022 was eventually promulgated. 

The new rules brought online rummy and poker under the purview of the ban, terming them games of chance.

In April 2023, names such as industry body All India Gaming Federation (AIGF), Gameskraft, Games24x7 and Head Digital Works, moved the HC yet again challenging the constitutionality of the state government’s new online gambling law.

In response, the Madras HC, while upholding the new law, quashed certain provisions of the legislation that banned skill-based online gaming such as online rummy and poker.  It, however, ruled that local authorities were free to formulate rules to regulate these platforms, including setting age bars and time spent on such online games. The second appeal filed by the TN government on Monday is challenging this order. 

This comes at a time when the Indian online gaming sector is already reeling under the impact of 28% GST imposed by the GST Council . This has led to additional tax liabilities for these online gaming companies and as many as 71 show-cause notices that run into INR 1.12 Lakh Cr for the period between April 2022 and October 2023. 

As a result, the gaming ecosystem has seen mass layoffs and some companies have even either shut down completely or temporarily halted operations to tide over the new regulations.