Tamil Nadu Passes Ordinance To Ban Online Gaming With Stakes

In a major setback to the online gaming industry in India, the Tamil Nadu cabinet has approved an ordinance banning online gaming with stakes in the state. The ordinance has been sent to the governor of Tamil Nadu for approval.

The development comes days after the Supreme Court issued a notice on a plea filed by the Tamil Nadu government challenging the Madras High Court’s order striking down the state’s ban on online games such as rummy and poker.

The case was being heard first by the Madras HC, which quashed the state’s ban on online games in August 2021. Following in the footsteps of Madras HC, Kerala HC and Karnataka HC also lifted the ban on online rummy and poker. The high courts struck down legislation seeking to ban online games as unconstitutional.

After the order from Madras High Court, the Tamil Nadu government moved the Supreme Court in December 2021. Three months later, the Karnataka government also moved the apex court.

It is prudent to mention that the Tamil Nadu government moved against the Madras High Court’s order to strike down the Tamil Nadu Gaming and Police Laws (Amendment) Act, 2021. The act sought to ban online rummy and poker. However, the High Court struck down the act, stating that the state government can regulate these games differently.

As a result, the TN government formed a new committee in June this year to regulate online gaming.

The state government argued that the amendment act qualifies as legislation on gambling and not on online gaming. The Tamil Nadu government had also argued that even though rummy might be a skill-based game, it would be counted as gambling because stakes are involved.

This categorisation has been problematic and industry bodies such as the Esports Players Welfare Association requested the state’s government to separate skill-based games from gambling.

Following the plea filed against Madras HC’s order, an SC bench of Justice Aniruddha Bose and Justice Vikram Nath issued a notice to various industry stakeholders such as gaming companies and the All India Gaming Federation, to give their views on the matter. The stakeholders were given four weeks to respond to the notice.

The Supreme Court set the matter for the next hearing in eight weeks on September 9.

Online gaming has become a focus of the government as a sector to regulate, with an inter-ministerial committee being set up by the Centre to develop a regulatory framework for the industry. 

Earlier this month, media reports surfaced stating that the committee has recommended setting up a regulatory body to classify online games as based on skill or chance. Most online gambling apps classify themselves as a game of skill, which has prevented governments from outrightly banning them.