Evolution Of Jurisprudence On Online Games
The online skill-based gaming industry has had to contend with legal battles
for decades, resulting in a long history of precedents from both the Supreme
Court and various High Courts. It has all come down to one thing - real-money
games of skill, such as rummy, fantasy, poker, and bridge, cannot be considered
gambling or betting.
The question that the judiciary has been predominantly concerned with is whether
online gaming falls under the realm of games of chance - which puts it in the
betting bracket - or a perfectly legitimate game of skill. This difference is
critical; whereas betting on games that involve luck alone are illegal, games
where one can hone their talent or skill to improve their success outcomes are
In State of Andhra Pradesh v. K. Satyanarayana (1968), the Supreme Court
while dealing with Section 14 of the Public Gambling Act, 1867 which is similar
to Section 14 of KGA had observed that the game of rummy is not entirely based
on chance. This is because building up rummy requires considerable skill and
skill is also required for memorising the fall of cards, holding and discarding
cards etc. In light of the above observations, the court held that the game of
rummy is predominantly a skill-based game and cannot be categorised as a game of
chance and protection under Section 14 will be available to the game of rummy.
In Dr. K.R. Lakshmanan v. State of Tamil Nadu (1996), the Supreme Court
looked into the aspect of gambling in a game of skill. It observed that a
competition wherein a substantial degree of skill is involved and the results of
the competition are based on the application of such skill, even if there is an
element of chance, the competition would not be deemed to be gambling. It
further went on to define the term mere skill as an application of a substantial
preponderance of skill. It also held that in order to come within the meaning of
gaming, there should be gambling on a game of chance and that playing rummy for
stakes is not an offence.
In August 2021, the Madras High Court, in Junglee Games India Private Limited
and Others vs State of Tamil Nadu, held that a complete ban on online gaming is
unconstitutional as it was not a reasonable restriction imposed on the
fundamental right given under Article 19(1)(g) of the Constitution. The court
held that an online version of a game of skill played for real money does not
turn into a game of chance, challenging the Tamil Nadu Gaming and Police Laws
(Amendment) Act 2021.
It was also held that a ban on online games of skill is akin to the prohibition
of both the user and platform's fundamental rights and that a blanket ban is
excessive and amounting to paternalistic behaviour. Further, it said the state
cannot legislate on games of skill under the ambit of Entry 34 of the State
list, as it is only concerned with betting and gambling, which, by their very
nature, exclude any sort of skill.
In September 2021, the Kerala High Court, in Head Digital Works (P) Ltd. v.
State of Kerala, held that a complete ban on online gaming is
unconstitutional as it was not a reasonable restriction imposed on the
fundamental right given under Article 19(1)(g) of the Constitution. The HC said
that the Supreme Court has already held that rummy was "a game of mere skill"
and "playing for stakes or not can never be a criterion to find out whether a
game is a game of skill".
Therefore, for the same reasons that rummy was held to be a game of skill,
online rummy was also a game of skill, the high court said. "Online rummy played
either with stakes or without stakes remains to be a 'game of skill'," it said
and added that even without a notification the game will come within the purview
of the Kerala Gaming Act and will enjoy the exemptions provided under it for
games of skill. The Kerala High Court lifted the ban imposed by the state
government on online rummy and observed that it is a game of skill.
The high court quashed the notification issued by the Kerala government which
had imposed a ban under the Kerala Gaming Act, 1960. The bench of Justice TR
Ravi held that the notification issued by the government was unconstitutional
and in violation of the fundamental rights to trade and commerce under Article
19(1)(g) and the right to equality under Article 14 of the Constitution of
In February 2022, the Karnataka High Court in the case All India Gaming
Federation vs State of Karnataka was posed with a similar question. The
constitutional validity of the amendment to the Karnataka Police Act 1963, which
would have led to the criminalisation of playing and facilitating online games,
Quashing unconstitutional sections of the amendment, the court said:
"In any organised society, knowledge, wisdom, talent, and skill are invaluable
tools for wealth generation" and are the "unseeming ingredients of economic
rights such as rights to profession, property."
This decision of the Karnataka High Court comes in the aftermath of two
comprehensive decisions of the High Courts of Madras (delivered on August 3,
2021) and Kerala (delivered on September 27, 2021), in which similar state-led
interventions were struck down. The subject matter in these litigations was the
legality of "online gaming," in particular "online games of skill" such as
'rummy' and 'poker.'
In May 2023, the Bombay High Court quashed a First Information Report (FIR)
lodged against Wingame Enterprises proprietor booked for gambling' under the
Maharashtra Prevention of Gambling Act, 1887 vide Akshay Anant Matkar vs
State of Maharashtra. A division bench of Justices Sunil Shukre and MM
Sathaye quashed the FIR lodged against Akshay Matkar observing that the game is
one of skill and not chance and thus does not come within the ambit of
The court held:
"We are of the considered opinion that this online game is not game of chance
but there is mathematical skill involved. Apart from said skill, observation and
ability to solve mathematical equations within time bound manner is also
required, which definitely requires skills. In our view, the present online game
stands on better footing and the it is definitely preponderantly a game of skill
and therefore, it cannot be said from mere averments in the FIR that any offence
was committed under the said Act.
Therefore, in our view with the allegations in the FIR as they stand, if the
Petitioners are made to face trial, it will be an abuse of process of law, since
no offence is made out as alleged in the facts and circumstances of the case."
In May 2023, the Karnatka High Court, in Gameskraft Technologies (P) Ltd. v.
Directorate General of Goods Services Tax Intelligence, 2023 SCC OnLine Kar
18, decided the issue in question. The proceedings dealt with whether online
games under the platform would be considered games of skill or chance, as the
latter attracts 28 per cent GST but the former only 18.
According to Gameskraft, the majority of these games were rummy, which they
argued had been previously held to be a game of skill. The GST department had
argued that rummy was a game of chance and hence liable to taxation at 28 per
cent. In a decisive order, the court on May 12 struck down the notice claiming
Rs 21,000 crore GST payment, referring to the GST department's argument as a
"vain and futile attempt on the part of the respondents to cherry-pick stray
sentences from the judgments of various courts including the Apex Court, this
court and other high courts and try and build up a non-existent case out of
nothing which clearly amounts to splitting hairs and clutching at straws�".
The bench also noted that rummy being substantially a game of skill and not
chance, it would not be considered gambling even if the players are playing for
a stake. The same would apply in online and offline modes of the game alike, it
added. It was held that the impugned notice issued on 23-09-2022 issued by the
DGGSTI is illegal, arbitrary and without jurisdiction or authority of law.
These legal precedents depicts that Indian Judiciary have taken progressive
steps in order to provide an inclusive environment to the Gaming Industry.
However there are many loopholes and scepticism in the present gaming
regulations. Recently the Central Governement passed the Gaming Regulation Rule,
2023 to provide clarity in the previous rules. Its a positive step by the
legislature still there is a long way to go to provide freedom to our sharp
minds so that they could showcase their potential. This will further make India
a hub of Gaming Industry which has a huge potential in the coming years.
Law Article in India
You May Like
Legal Question & Answers