New Delhi The online gaming industry is set to challenge an ordinance by the Tamil Nadu government that seeks to ban online gambling and regulate online gaming. Stakeholders and lawyers with knowledge of the development said the ordinance, passed on October 3, “goes against the established court orders of many years”.
This will be the second time the industry will challenge the Tamil Nadu government’s decision after the Madras High Court in August last year held the move to ban online rummy, poker and other similar games as against legal norms.
The Ordinance falls within the scope of “online games of chance”, which it defines as any online game involving both chance and skill, in which chance exceeds the skill required to play the game. It also includes games that contain both elements, and require players to have “excellent” skills to snag opportunities, among other factors.
According to Jay Sayata, a leading technology and gaming lawyer, Ordnance Club online rummy and poker under Game of Chance, without explicitly defining whether online fantasy games will also be covered under it.
“Such regulation goes against established court rules for years, with games of chance and skill separate. The law is trying to establish a kind of new regulation where the two are not mutually exclusive,” he said. Gambling being a state subject, the Central Government’s Public Gambling Act, 1867 prohibits money betting on games of chance. However, decisions by various courts in the past have classified games such as rummy, poker and daily fantasy games (such as Dream11) as games of skill.
Meanwhile, two industry officials said that Union Home Secretary Ajay Kumar Bhalla held a meeting with representatives of government agencies on Monday to discuss framing of a central law for online gaming and betting. Officials of the Enforcement Directorate, Department of Information Technology, Goods and Services Tax (GST) were present in the meeting, the people said, adding that officials from the gaming industry were not invited.
The landmark KR Lakshmanan vs State of Tamil Nadu judgment by the Supreme Court in 1996 is generally cited as the prime precedent. The court ruled that a game of skill is one that “does not depend on mere coincidence or accident but is determined by a number of factors.”
Sayata said the ordinance would be challenged in courts by gaming operators and other industry stakeholders early next week. However, unlike the earlier ban on online gaming, the lawyers said that with this ordinance, the Tamil Nadu government is taking a case-wise approach.
“It is a single effort from the government under a different guise, but setting up a regulatory committee will allow them to take a case-wise approach to regulate various sports. For example, minor changes in the rules of various rummy games may lead them to be defined as games of skill or opportunity under the definition of this ordinance,” said Shaubhik Dasgupta, partner at law firm Pioneer Legal.
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