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Madras HC upholds TN ban on online gaming with caveat

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The Madras High Court on Thursday refused to strike down the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022 in its entirety but ruled that that the prohibition would apply only to games of chance and not to games of skill such as rummy and poker.

First Division Bench of Chief Justice Sanjay V. Gangapurwala and Justice P.D. Audikesavalu said, the State government had miserably failed to demonstrate how rummy and poker, declared to be games of skill by the Supreme Court, would become games of chance when played online.

“The contention of the State that the petitioners (online gaming companies) may use bots is without any basis… The said propositions, on behalf of the State, are merely on surmise,” the Bench said and pointed out that the 2022 Act specifically deals only with online games and not offline games.

“The State could not gather authentic evidence about bots being used or that the software knows all the cards in the hands of each player, so also the unopened cards or that the software could change the unopened cards. In the absence thereof, it will be too far fetched to arrive at a decision on the basis of assumptions by the State,” it added.

Authoring the verdict, the Chief Justice wrote: “We are now transcending into the era of digitization and entertainment. People, instead of playing in clubs, are now playing online. With the rise of internet connectivity and technological advancements, we see a spurt in online games. Many online games are in vogue.”

He went on to state: “The games of rummy and poker, which are considered as games of skill are also now sought to be played online. In online games of rummy and poker also, the same brain activity would be involved as required for offline games of rummy and poker.”

The Bench also said: “Corruption or mischief in a game may not define the game. Of course, in an isolated case, if it is noticed by the State that the petitioners or any other online games servers/online games providers are using bots or have indulged in any illegal activity, it can take action against it.”

The judges, further, recognised the right of the State government to frame regulations with respect to imposing age restrictions on the players of online games, fiximing monetary as well as time limit for which the games could be played and such other restrictions required to implement the 2022 Act.

The verdict was delivered while partly allowing a batch of writ petitions filed by All India Gaming Federation and a host of individual online gaming companies challenging the constitutional validity of the law. The Bench held that the defintion of the term ‘online gambling’ under Section 2(i) of the Act should be restricted to games of chance.

They also read down Section 2(l)(iv) of the Act which defined the term ‘online game of chance’ to mean that it would exclude games of skill namely rummy and poker. The schedule, to the Act, which had specifically named rummy and poker under the head of ‘online games of chance’ was also set aside.

According to Anuraag Saxena, CEO, EGF, “The verdict today by the Hon’ble Madras High Court holding online Rummy and Poker as games of skill is yet another validation for the legitimate online skill gaming industry. Time and again, the Indian judiciary has struck down provisions seeking blanket prohibitions on skill gaming as Ultra Vires the constitution. A forward-looking policy has the potential to significantly drive and support the growth of this emerging sector. Central as well as state governments have realized the sector’s potential as an employment and revenue generator and this decision will further investor confidence, encourage and foster innovation. As an industry, we are optimistic that judgments like this will urge state governments to explore more progressive policy frameworks and regulatory structures for the sector.”



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