Gaming in India: The Myth of Legislative Control

Introduction

Games, whether in the form of online mode like (gambling, fantasy leagues, etc.) or the offline mode, are relished by people of all the age criteria because of their high amusement value. It is entrancing to see that the game developers are trying to take the gaming sector to a different level and are trying to achieve new highs. The gaming sector has witnessed a fundamental change with expansion in the use of television, digital and online gaming modes. The global rise in the digitalised economy has acted as a catalyst for the tremendous increase to the web-based gaming software. The increase in the usage of internet from the mid-2000s has also contributed the internet-based games to gain popularity. The current Government in India has started a drive of Digital India has led to the improvement of the entire infrastructure in the technology sector. All these factors add to the enormous potential market present in India and have led to a rapid increase in the number of online gaming websites over the past few years. In a detailed analysis report published KPMG India dated September 2019, it suggested that India online gaming industry is set to become an INR 250.3 billion industry by 2024[1]. The data available on various certified forums suggest the high growth potential of the gaming sector in India. Many foreign companies are figuring out possibilities to set up operations in India.

Overview of the Legal Framework Regulating the Gambling Industry

The Constitution of India empowers the state legislature to frame state-specific law on “betting and gambling”[2]. The Public Gambling Act, 1867, is a central enactment on the said subject, which has been adopted by several states including Uttar Pradesh, Madhya Pradesh and Delhi. The other states in India have enacted their own legislation to keep a check on the gambling activities.  The gambling legislations were introduced before the growth and spread of the internet. Therefore, the provisions envisaged under these legislations do not expressly include online gambling activities. However, the states of Sikkim [“Sikkim Gambling Law”, 2008] and Nagaland [“Nagaland Gambling Law”, 2015] are the only states to enact laws which permit and regulate online gambling.

The Hon’ble Kerala High Court in the case of K. Ramachandran v. The Circle Inspector of Police[3] held that playing Rummy for stakes would amount to an offence under the Kerala Gambling Act, 1960. In the case of Play Games 24/7 Pvt. Ltd v. K. Ramachandran & Anr[4] a review petition was filed against the order passed by the Hon’ble Kerala High Court. The said review petition was dismissed by the Court wherein it was observed by the Court that irrespective of whether Rummy was played for stakes or not including online Rummy would lead to violation of the Act would have to be seen on case to case basis. As per most of the legislation in India, gambling is understood to be an act of wagering or betting for money or money’s worth. According to the Black’s Law Dictionary[5] “The practice or an act of gambling. An agreement between two or more persons to play together at a game of chance for a stake or wager which is to become the property of winner, and to which all contribute.”

Gambling does not include game of “mere skill”. The DREAM 11’s format of fantasy sport was observed to be a game of skill by The Hon’ble High Court of Punjab and Haryana in the case of Shri Varun Gumber v. UT of Chandigarh & Ors.[6] The Apex Court also upheld the decision of the Hon’ble Court. The Hon’ble Bombay High Court in the case of Gurdeep Singh Sachar v. Union of India[7] also observed that the similar format of the sport was a game of skill. It is essential to take into account the perspective to various countries across the globe relating to gambling. 

Most of the countries have adopted three approaches to regulate gambling. Countries, especially those who give high importance to religious morality, have taken the view that the role of Government is to protect its citizens from the adverse effects of such activities. Such countries have imposed a blanket ban over gambling activities, while other countries have observed such activities as an industry to drive trade and revenue. Some countries allow such activities in a restricted manner by imposing a tax on such activities and utilise the money collected for welfare of the state.

Skill Based Games v. A Game Of Chance

The Gambling legislations do not apply to games of “mere skill”. Games of chance are those wherein the winner is determined by luck, the person is unable to influence or affect the result of a game by his mental or physical strengths. The result is entirely based on luck. The skill of a person has absolutely no role to play in the game of chance. On the other side, the game of skill is entirely dependent upon the mental and physical skills of the person indulged in playing that game, the result is affected by the knowledge and experience of the person.

In the case of Rex Fortier[8], the King Bench was the first to distinguish between the game of skill and game of chance. It defined the game of chance as a game which either wholly or partially is dependent on mere luck without the involvement of skill in the outcome of the game. While defining game of skill, the bench stated that the outcome is not left to chance but is predominantly dependent on the mental and physical skills of the person.

The Apex Court, in the case of RMD Chamarbaugawala v. Union of India[9] interpreted the words “mere skill” to include games which mostly involve the skill of a person and have laid down that (i) the games/competitions where the result depends majorly on skill will not fall into the ambit of “gambling”; and (ii) even if there is the presence of an element of chance, if a game is preponderantly a game of skill, it would still be considered a game of mere skill.

Competitions which substantially involve skills are not gambling activities but are commercial activities, protected under Art.19 (1) (g). The Apex Court in State of Andhra Pradesh v. K. Satyanarayana & Ors.[10], held that, Rummy is preponderantly a game of skill and not of chance. The Court further observed that “it requires certain amount of skill because the fall of the cards has to be memorised and the building up of rummy requires considerable skill in holding and discarding cards.” In order to determine a game as a game of chance or skill is a question of fact to be decided on the facts and circumstances of each case.[11]

The Supreme Court in K.R. Lakshmanan v. State of Tamil Nadu & Anr[12] the differentiated between the terms games of skills and game of chance stated that “[In a] game of skill […] although the element of chance necessarily cannot be entirely eliminated, is one in which success depends principally upon the superior knowledge, training, attention, experience and adroitness of the player.” A writ petition was filed invoking the sections of the Bombay Prevention Gambling Act, 1887 in the case of Jaywant Balkrishna Sail v. State of Maharashtra[13] a group of people were arrested while paying Rummy and bridge. The Hon’ble Bombay High Court held that Bridge and Rummy do not come under the ambit of gambling as both the games are dependent on skill more instead of chance.

The Computer Scientist Roman Yampolskiy carried a study, wherein it was concluded that Poker is a game that requires a specific set of skills.[14] The Supreme Court of North Carolina in the case of State v. Gupton[15], held that any athletic game or sport is not a game of chance. The ‘dominant factor test’ is applied by many States, in the United States to determine whether or not a particular game is a ‘game of skill’ or ‘game of chance’. A detailed study of the aforementioned pronouncement clearly establishes the fact that games, where there is a preponderance of skills dominates, cannot be considered to be “game of chance.”

Prize Competition

A higher percentage of games and contests in India are in the form of crossword puzzle prize competitions, Sudoku prize competition, picture prize competitions etc., in which monetary or other prizes are offered. Previously, such prize competitions were found in a local newspaper or announced on the radio. However, in recent times, with the ever-growing number of media outlets, prize competitions have begun to feature in different forms. For example, on television shows. Also, there have been a growing number of SMS driven competitions and online prize competitions.

These competitions are regulated by a central enactment “Prize Competition Act, 1955”. “Prize competition” has been defined by the Prize Competition Act as any competition in which “prizes are offered for the solution of any puzzle based upon the building up, arrangement, combination or permutation, of letters, words, or figures.”[16] Any person intending on conducting such prize competitions has to obtain a license to engage in such activities.

In the case of RMD Chamarbaugwala & Anr. v. Union of India & Anr[17], the Supreme Court of India held that the Prize Competitions Act only applies to games of chance which were of a gambling character and not to games of skill. In the case of Bimalendu De v. Union of India & Ors[18]. , the legality of the popular show “Kaun Banega Crorepati (“KBC”) was questioned. A PIL was filed before the Court requesting that the show should be prohibited from being telecasted on the grounds that it is violating the provisions of West Bengal Prize Competition Act, 1857. The Court held that the game show in question did not fit within the ambit of the term prize competition.

Similarly in the case of News Television India Ltd. and Others v. Ashok D. Waghmare and Another[19] the Hon’ble Bombay High Court observed that the prize competition has a very narrow scope and does not include games of skills and competitions like KBC. The Tamil Nadu Prize Schemes (Prohibition) Act, 1979 (“Tamil Nadu Act”) regulates “prize schemes” in the state of Tamil Nadu. Under this enactment, there is a prohibition on the conduct of a prize competition[20]. The applicability of this enactment is determined purely on the facts and circumstances of each case. If the game format includes the (i) purchase of goods; and (ii) draw of lots to select the prize winner from amongst the persons who have purchased the product, then such a game format would fall within the ambit of this enactment.

No other state in India has made a specific law banning prize schemes on products, similar to the Prize Schemes Act of Tamil Nadu. This enactment does not provide any exceptions to games of skills. Analysis of the aforementioned decisions we can conclude that prize competitions, where the winner is based on the draw of lots are in the nature of gambling and cannot be extended protection under Article 19(1)(g) of the Constitution of India.

Conclusion

With the arrival of online gambling and the unusual features that it ensures, the gambling activities have acquired a global presence. It has, therefore, become more challenging for countries to monitor or curb these activities. Many countries that prohibit gambling have not been successful, particularly concerning online gambling. The extending character of online gambling platforms alarms for a much-needed change in approach. The size of the global gambling market has grown drastically in the last decade. This increase in size is naturally followed by an increase in revenue, which continues to rise every year. The regulation would, therefore, empower the authorised bodies to identify and prevent instances of illegal gambling as well as save the public from any kind of inconvenience at the hands of the law enforcement authorities. It would also enable the Government to curb the menace of black-money generation through illegal gambling effectively. Looking at the current scenarios due to the COVID-19, the world has witnessed technological setups by leaps and bounds. The mode of entertainment has expanded their wings and also inculcated online gaming as a part of it. We as a country need to understand the never-ending scope and market, and thus, it is necessary for us as a country to evolve and create more stringent and stick laws to govern and regulate the gaming sector.

 

[1] India’s Media and Entertainment Report-2019.

[2] Constitution of India, Seventh Schedule, List II, Entry No. 34.

[3] Writ Petition (Civil) No. 35535 of 2018.

[4] RP No. 514 of 2019 in Writ Petition (Civil) 35535 of 2018.

[5] Bryan A. Garner & Henry C. Black, Black’s Law Dictionary, (6th ed.) 679, 1990.

[6] 2017 Cri LJ 3827

[7] Bombay High Court, Criminal Public Interest Litigation Stamp No.22 of 2019.

[8] 13 Que K.B. 308

[9] AIR 1957 SC 628.

[10] AIR 1968 SC 825. 

[11]Manoranjithan Manamyil Mandram v. State of Tamil Nadu, AIR 2005 Mad 261.

[12] AIR 1996 SC 1153. 

[13] Criminal Writ Petition No. 1006 of 2012

[14] Roman Yampolskiy, “Game Skill Measure for Mixed Games” 1:3WASET 308-310 (2007) 

[15] 30 N.C. 271.

[16] Section 2(d) of the Prize Competition Act

[17] Supra note no.9

[18] AIR 2001 Cal 30.

[19] 2006 (2) MhLj431

[20] “Prize Schemes” has been defined as follows: “prize scheme means any scheme by whatever name called whereby any prize or gift (whether by way of money or by way of movable or immovable property) is offered, or is proposed to be given or delivered to one or more persons to be determined by lot, draw or in any other manner from among persons who purchase or have purchased goods or other articles from shops, centers or any other place whatsoever specified by the sponsors of the scheme or on any event or contingency relative or applicable to the drawing of any ticket, lot, number or figure in relation to such purchasers.”


ABOUT THE AUTHORS

Manuj Borkar

Manuj

Manuj Borkar is a fourth-year undergraduate student of BLS/LLB at Adv. Balasaheb Apte College of Law. He is inclined towards criminal law, Intellectual Property Rights and Corporate Laws.

Radha Sandeep Naik

Radha

Radha Naik is a second-year undergraduate student pursuing BLS/L.L.B at  Adv. Balasaheb Apte College Of Law. Her key areas of interest include Intellectual Property Rights, Sports Law and Civil Litigation.

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