Tamil Nadu Governor RN Ravi has on April 10 approved a bill to ban online gambling, including online rummy and poker with stakes in the state, dealing a blow to the nascent but fast-growing skill gaming sector.
This move comes a few weeks after the Tamil Nadu cabinet, led by Chief Minister MK Stalin, had once again passed a bill to prohibit these games in the state on March 23.
Governor RN Ravi had returned the previous bill on March 8 mentioning that the state government had “no legislative competence” to frame the bill.
Meanwhile, The Ministry of Electronics and Information Technology (MeitY) had notified new gaming-related amendments to the IT Act 2021 on April 6, that will allow multiple self-regulatory organisations (SROs) to determine whether a real-money game, where the transfer of money is involved, is permitted to operate in India or not.
South India is a particularly important market for skill-based games such as Rummy, which has a significant penetration in these states, industry executives have previously told Moneycontrol.
Roland Landers, CEO of All India Gaming Federation (AIGF), a skill-gaming focused industry body, said they will challenge the constitutionality of this law, once the effective date is notified.
“What this law in effect does is treat and conflates games of skill as gambling and games of chance. The law also completely misunderstand technology and prohibits random number generators, which are an integral part of fairness for online gaming" Landers said.
Landers also mentioned that the law disregards the six decades of established legal jurisprudence and the recent judgment of the Madras HC which struck down a similar law. "The Central Government has anyway notified the online games rules, and as we have said the Central Government has the rightful mandate under the Indian Constitution to regulate online gaming." he said.
Another skill-gaming industry body E-Gaming Federation also said they are examining the legislation and shall be taking "appropriate action based on legal advice in due course of time"
"The legislation passed by the TN legislature incorrectly categorizes Rummy and Poker as a game of chance. The legal jurisprudence in this regard set by the Supreme Court of India and several High Courts, clearly stipulates that games like Poker and Rummy are games of skill" said Malay Kumar Shukla, Secretary, E-Gaming Federation.
Shukla also mentioned that games of skill are protected under Article 19(1)(g) and are different from gambling activities. "The fact that rummy and poker games are listed for prohibition as games of chance or gambling under this new legislation runs contrary to the decision of the Madras High Court and the Supreme Court" he said.
New online gambling law
MK Stalin, who took office as Tamil Nadu chief minister in May 2021, had set up a five-member committee led by retired Justice K Chandru to analyse the negative effects of these games and make recommendations for a new law prohibiting "online gambling games" on June 10, 2022.
In its report submitted on June 27, the committee had classified online gaming into two types: one with “minimal or negligible randomness factor” and “another having random event or count generators which are pseudo random and are addictively designed”. It had recommended to regulate the former and ban the latter.
The government stated that it also solicited feedback from seventeen stakeholders including representatives from the online gaming industry, think tanks, political parties, players association and social activists as well as the general public via email in order to draft the ordinance with advice from the state law ministry. On September 26, a draft ordinance was presented to the state cabinet for approval.
As per the ordinance, the state will establish an authority called Tamil Nadu Online Gaming Authority that will have powers to regulate online games, issue registrations and oversee the functioning of local online gaming providers, identify games of chance for suspension, and resolve any grievances or complaints received against any gaming provider.
The authority will have a chairperson who is an officer, retired from a post not below the rank of Chief Secretary, and four members, including an officer, who has retired from a post not below the rank of Inspector General of Police, an expert in the field of Information Technology, an eminent psychologist and an expert in the field of online gaming.
The ordinance was first passed in Tamil Nadu assembly in September 2022, following which it was promulgated with the governor's approval in October 2022. After this, the state assembly passed the online gambling bill called the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Bill, 2022, and sent it for the governor's assent. However, the governor returned the bill five months later.
Meanwhile, the Supreme Court is hearing a petition by the Tamil Nadu government challenging a Madras High Court decision that overturned the previous AIADMK-led government's November 2020 ban on online games involving the transfer of money. In an order issued on August 3, 2021, the state high court declared it unconstitutional.
On September 9, the Supreme Court issued notice to all of the petition's respondents, including skill-based gaming companies Junglee Games, Play Games24x7, Head Digital Works, and industry body All India Gaming Federation, giving them four weeks to file their responses. Since then, the Supreme Court has added a similar petition by the Karnataka government to the matter. The case is still pending with the apex court.
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