OPINION: Regulation of games of skill under a central legislative regime is the need of the hour
Apr 21, 2021, 18:29 IST
Prior to the enactment of the Constitution of India, the Public Gambling Act, 1867 (“Gambling Act”), was the central law governing gambling in India. However, under Entry 34 of List II of Schedule VII of the Constitution of India, the state legislatures are the competent legislatures to make laws governing “betting and gambling”. Since the Gambling Act, at the time of its enactment was enacted by the competent legislature, it continues to operate in the territories mentioned therein, having been saved under Article 372 of the Constitution. Since the states are now seized with the power to make laws on “betting and gambling,” the states having jurisdiction over such territories may amend/repeal the Gambling Act. Most states in India have, however, adopted the Gambling Act with certain amendments. Few states have enacted their own laws to regulate and govern gambling.
The Gambling Act provides that its rigours do not apply to “games of mere skill,” and only seeks to punish gambling and betting as understood in the traditional sense. The term “mere skill” has not been defined in the Gambling Act.
The Honourable Supreme Court, in the R.M.D. Chamarbaugwala case has held that a competition in order to avoid the stigma of gambling must depend to a substantial degree upon the exercise of skill. A competition where the success does not depend to a substantial degree upon the exercise of skill, is recognised to be of a gambling nature. It also observed that despite there being an element of chance, if a game is predominantly a game of skill it would nevertheless be a game of “mere skill.”
In today’s technologically advanced world, the archaic Gambling Act was seen as inadequate to regulate and restrict the activities of betting and gambling being undertaken over online media. Several states have enacted laws particularly prohibiting/controlling online gaming (such as Assam, Odisha, Telangana, Andhra Pradesh, Nagaland and Sikkim). Tamil Nadu was the latest state to join the list. The Governor of Tamil Nadu has, by an ordinance amended the Tamil Nadu Gaming Act, 1930, the Chennai City Police Act, 1888 and the Tamil Nadu District Police Act, 1859, prohibiting and criminalising the hosting and playing of online games (“TN Ordinance”). The stated object of the TN Ordinance is to ensure that innocent people do not get cheated and indulge in self-harm.
Illustratively, unlike Sikkim and Nagaland which control and regulate gaming activities under a licensing regime, Tamil Nadu has sought to prohibit gaming activities altogether. The TN Ordinance specifically prohibits betting and wagering “by playing rummy, poker or any other game”. Rummy, for instance, has been held by the Supreme Court in K. Satyanarayana case to be a game of skill because it requires a preponderant amount of skill in memorising the fall of cards, and in holding and discarding the cards. The TN Ordinance is therefore intended to apply to all games, whether or not they are skill based. Entry 34 of List II of Schedule VII of the Constitution enumerates “betting and gambling.”
Betting and gambling though different in themselves, by definition necessarily involve activities, where the outcome of the event on which the wager or bet is placed, is not within the control of the parties to the wager or bet i.e. they are substantially dependent on chance probability. Where the person risking money or valuable things himself participates in the event, the result of which is subject to chance probability (eg. ludo, snakes and ladders), he is said to be gambling. Where the person risking money or valuable things, does so on the outcome of an event which is dependent on a third person’s skill (eg. horse racing, sports events), he is said to be wagering or betting.
There has, however, been an increasing acceptance that the latter kind is in fact not in the nature of a wager or a bet, as it is a prediction based on substantial amounts of knowledge, training and skill.
However, once an activity is determined to be a game of skill i.e. the element of chance, though present does not control the outcome of the game, does staking money for such an activity amount to gambling or betting? Gambling and betting involve activities that are substantially dependent on chance probability, as seen above. Since the chance probability in games of skill are minimal or absent, playing games of skill for money should not prima facie, in pith and substance, be covered within the ambit of betting and gambling under Entry 34 of List II of Schedule VII of the Constitution and therefore outside the purview of the state’s powers to make laws.
Exploring the possibility of regulation of games of skill under a central legislative regime is the need of the hour to enable uniformity, eliminating uncertainty and keeping investors interested in the industry in India.
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The Gambling Act provides that its rigours do not apply to “games of mere skill,” and only seeks to punish gambling and betting as understood in the traditional sense. The term “mere skill” has not been defined in the Gambling Act.
The Honourable Supreme Court, in the R.M.D. Chamarbaugwala case has held that a competition in order to avoid the stigma of gambling must depend to a substantial degree upon the exercise of skill. A competition where the success does not depend to a substantial degree upon the exercise of skill, is recognised to be of a gambling nature. It also observed that despite there being an element of chance, if a game is predominantly a game of skill it would nevertheless be a game of “mere skill.”
In today’s technologically advanced world, the archaic Gambling Act was seen as inadequate to regulate and restrict the activities of betting and gambling being undertaken over online media. Several states have enacted laws particularly prohibiting/controlling online gaming (such as Assam, Odisha, Telangana, Andhra Pradesh, Nagaland and Sikkim). Tamil Nadu was the latest state to join the list. The Governor of Tamil Nadu has, by an ordinance amended the Tamil Nadu Gaming Act, 1930, the Chennai City Police Act, 1888 and the Tamil Nadu District Police Act, 1859, prohibiting and criminalising the hosting and playing of online games (“TN Ordinance”). The stated object of the TN Ordinance is to ensure that innocent people do not get cheated and indulge in self-harm.
Illustratively, unlike Sikkim and Nagaland which control and regulate gaming activities under a licensing regime, Tamil Nadu has sought to prohibit gaming activities altogether. The TN Ordinance specifically prohibits betting and wagering “by playing rummy, poker or any other game”. Rummy, for instance, has been held by the Supreme Court in K. Satyanarayana case to be a game of skill because it requires a preponderant amount of skill in memorising the fall of cards, and in holding and discarding the cards. The TN Ordinance is therefore intended to apply to all games, whether or not they are skill based. Entry 34 of List II of Schedule VII of the Constitution enumerates “betting and gambling.”
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There has, however, been an increasing acceptance that the latter kind is in fact not in the nature of a wager or a bet, as it is a prediction based on substantial amounts of knowledge, training and skill.
However, once an activity is determined to be a game of skill i.e. the element of chance, though present does not control the outcome of the game, does staking money for such an activity amount to gambling or betting? Gambling and betting involve activities that are substantially dependent on chance probability, as seen above. Since the chance probability in games of skill are minimal or absent, playing games of skill for money should not prima facie, in pith and substance, be covered within the ambit of betting and gambling under Entry 34 of List II of Schedule VII of the Constitution and therefore outside the purview of the state’s powers to make laws.
Exploring the possibility of regulation of games of skill under a central legislative regime is the need of the hour to enable uniformity, eliminating uncertainty and keeping investors interested in the industry in India.
SEE ALSO:
Netflix co-founder Reed Hastings says India is a 'speculative' investment – talks about pricing experiments and partnership with Jio
All the 'first-time from Apple' announcements from its Spring Loaded Event
Coinbase hires former Google Pay exec to lead India ops, is hiring aggressively and looking for startup acquisitions
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