In Internet gambling, the stakes are high!

In response to recent allegations of suicides in the state (supposedly a result of financial losses in online games), the Tamil Nadu government issued an ordinance on November 20, 2020, to "limit internet gaming." The law, among other things, forbids and punishes involvement in online wagering and betting, which includes playing “rummy, poker, or any other game” for money online, as well as conducting online gaming by wagering and betting.

The Tamil Nadu government's prohibition comes shortly after the Andhra Pradesh government issued a similar ordinance in October, amending state law to outlaw online, real-money gaming, make internet gambling cognizable and non-bailable offence, and eliminate the prior provision for "games of skill."

Telangana's state government passed a similar ordinance in 2017 that eliminated the "game of skill" provision from its state gambling legislation, a decision that has been challenged in the state high court by online gaming businesses. Leading real money gambling firms have had to ban players from Andhra Pradesh, Tamil Nadu, and Telangana from using their platforms as a result of these regulations. These states join Assam and Odisha, which have legislation that predates the game of skill exception by decades.

Individual states can create legislation in these areas since betting and gambling come under the competence of state legislatures under the constitution. Most states have either adopted or implemented legislation prohibiting betting and gambling, comparable to the pre-independence central legislation, the Public Gambling Act of 1867 (PGA).

One notable feature of the PGA is that it exempts skill-based games from its application. The Supreme Court decision in State of Andhra Pradesh v K Satyanarayana and Ors, where the exemption for games of skill was examined and found to encompass games that were primarily focused on talent rather than chance, is a landmark case in this regard. Following that, in the case of Dr KR Lakshmanan v State of Tamil Nadu and Anr, the Supreme Court defined games of skill as games that rely primarily on the participants' superior knowledge, training, attention, experience, and adroitness.

While these and other similar cases predate the internet, online real money gaming companies have continued to operate in most states, except for those that do not recognise the game of skill exception or have banned online real money gaming, such as Assam, Odisha, Telangana, and Andhra Pradesh.

While the Supreme Court acknowledged rummy as a game of pure skill in its Satyanarayan decision, it was categorised as falling beyond the purview of the restriction under the Hyderabad Gambling Act. An "offence may be brought home" if "the owner of the house or the club makes a profit or benefit from the game of rummy or any other game played for stakes."

Several high courts, including those of Kerala, Tamil Nadu, and Gujarat, have read this sentence into it and issued negative statements about rummy when played for stakes, and in certain cases, online real money gambling. While the state government of Tamil Nadu has already passed an ordinance outlawing internet gambling, media sources suggest that the state governments of Karnataka and Gujarat are also examining their options. As a result, it appears that the regulatory environment in several major states is changing.

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Finally, at a time when the online gaming sector is gaining substantial attention from worldwide investors, both financial and strategic, and is poised for exponential expansion, negative legislative changes such as recent events might represent a severe obstacle in high stake bets in India.