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Online Gaming Ban: Analyzing the order by Madras High Court for Online Gaming Ban in Junglee Games India Private Limited v. State of Tamil Nadu

The Tamil Nadu Gaming and Police Laws (Amendment) Act, 2021 was introduced by Tamil Nadu in their Legislative Assembly in February, 2021. The main objective is to ban wagering or betting in cyber space by amending the Tamil Nadu Gaming Act, 1930 and extending its application throughout the state.

Following changes were made to various sections:
  • Section 2 is substituted to extend the application of the Act to the whole state of Tamil Nadu.
  • Section 3 is substituted to introduce certain definitions in the Act. It defines gaming to include any game which involves wagering or betting either in person or in cyberspace. However, it does not include a lottery.
It also prescribes the punishment if any person is found indulging in any of the above-mentioned activities.
The Bill states that any person who wagers or bets or facilitates or organizes such wager or bet, shall be punished with imprisonment not exceeding two years or with fine of up to ten thousand rupees or with both.

Sections Prior To Amendment Section 4(1) Of 1930 Act

It talks about punishment for certain forms of gaming where the owner occupies or uses any room, tent, vehicle etc for the purpose of any form of Games which lead to betting examples are horse races, on the market price of cotton, bullion or other commodity, on the market price of any stock.

Further, it talks about advances or furnishes money for the purpose of gaming on any of the objects frequenting any such house, room, tent, enclosure, vehicle, vessel or place. Such person would be punishable with imprisonment for a term which may extend to two years and with fine which may extend to five thousand rupees.

The remaining parts of Section 4 talks about being involved in the prohibited acts of gaming, and also stipulated the punishments for such incidental activities. However, the other activities indicated in sub-clauses (ii) to (v) of Section 4(1)(a) of the 1930 Act are games of pure chance. Residuary sub-clause (vi) also prohibits any transaction or scheme of wagering or betting where the outcome depends on chance. Thus, the mischief that the original statute sought to address was the betting on games of chance.

Section 3(A) Of 1930 Act

This sections talks about wagering or betting in Cyber Space where it prohibits any sort of wagering or betting via computers, computer systems, networks etc or any other instrument of gaming by playing Rummy, Poker or any other game or facilitate or organize any such wager or bet in cyberspace. Whoever is found guilty under this section can be imprisoned for 2 years alongside a fine not exceeding 10,000 rupees.

Concept Of Bucket Shop

A bucket shop is a brokerage firm that engages in unethical business practices. Historically, the term was used to refer to firms that allowed their customers to gamble on stock prices, often using dangerously high levels of leverage. More recently, the term is associated with firms that practice bucketing, which involves profiting from a client's trades without their knowledge. The Madras City Police (Amendment) Act, 1929 was designed to deal with bucket shops in the City of Madras. It also combines, in the same Bill, the provisions of the Madras City Police Act, 1888, and the Towns Nuisances Act, 1889, which relate to gaming and the keeping of a common gaming-house.

Section 11
Section 11 talks about games of skills where Nothing in sections 5 to 10 of this Act shall be held to apply to games of mere skill wherever played. Further, Notwithstanding anything contained in this Act, Sections 3A and Sections 5 to 10 shall apply to games of mere skill, if played for wager, bet, money or other stake.

Arguments By Both Parties
Petitioner
  1. Petitioners argued that prohibiting these games of skills, if played for any prize or stakes, will disregard the law laid down by the Supreme Court since these games come under business activities. Article 19(1)(g) of the Constitution of India protects business activities. (The primary ground urged to assail the impugned legislation is in it apparently prohibiting games of skill, if played for any prize or stakes; which, according to the petitioners, is in flagrant disregard of the law laid down by the Supreme Court that competitions in games of skill are business activities and, thus, protected under Article 19(1)(g) of the Constitution of India)- Para 5 of the judgement.
     
  2. Further, the petitioners who solely provide a cyberspace for playing these games argue that it is only the person who plays the game that can place a bet and no person not playing can bet on a game, or on its outcome, or on the successful player, or on anything else at all. (Para 15 of the judgement)
     
  3. The rummy companies contend that games of skill are distinct as a class and have been judicially differentiated in this country from games of chance.
     
  4. According to the petitioners, States do not have any legislative competence over games of skill, but may regulate games of chance. This, according to them, is a rational distinction that goes to the very root of competence. (Para 17 of the judgement)
     
  5. They further maintain that the amendments result in manifest arbitrariness as the prohibition introduced thereby are blanket, disproportionate and excessive. (Para 18 of the judgement).
     
  6. The petitioners argued upon the fact that Second List of the Seventh Schedule to the Constitution "Betting and gambling" is limited to the transfer of stake on chance only. They suggest that competitions limited to events of chance may even be prohibited by the State. (Para 19 of the judgement)
     
  7. Further, the petitioners refer to the doctrine of res extra commercium which suggests that the expression "games of mere skill", as contained in Section 11 of the Act prior to the recent amendment, was judicially interpreted to imply games predominantly involving skill.1 These petitioners concede that every future event depends, at least theoretically, on an element of chance, but the activities understood as gaming involve almost no skill or the skill component is negligible.
     
  8. The Petitioners argued how rummy is a game of skill and not chance. 2
     
  9. Further the Petitioners argued about Article 19(1)(g) where the Supreme Court observed that citizens are free to choose any trade, business, calling or profession and the manner and terms in which they carry on their profession; but the State may, in the interest of the general public, impose reasonable restrictions which may be thought necessary.3
     
  10. They submitted that there are three types of games: points rummy; pool rummy; and, tournament rummy. A minimum of two persons can play at a table and a maximum of six. No spectators can gain access to watch a game and only the players actually playing the game are the persons at the relevant table. It is submitted that two decks of cards are ordinarily used on the basis of a random number generation software developed by the world leaders in such field, iTech Labs of Australia. (Para 67 of the judgement).

Defendant
  1. The state argued that any kind of betting and/or gambling breeds an immoral culture especially for the economically weaker sections of the society. Socially backward people along with economically weaker sections suffer the most from gambling since it becomes an addiction. Further, The state argues how gambling and betting leads to suicides upon a punter losing his all during the game.
     
  2. Further, the state argues how some of these games conducted online are manipulated and alludes to the players being repeatedly cheated upon. (it seeks to assert the virtues of life without betting and gambling, the immorality involved in gaming and the ill-effects of gambling on large swathes of the society, particularly those from the economically weaker and socially backward sections. The State claims that even suicides have taken place upon a punter losing his all by playing one card game or the other on the internet. The State refers also to the possibility and likelihood of manipulation in games conducted on the virtual mode and repeatedly alludes to players and others being cheated, without indicating any material or particulars in such regard despite the court's prodding)- Para 6 of the judgement.
     
  3. The State says that the very nature of the games which have been prohibited is such that an initial amount is deposited by the player following which the player keeps betting with more sums of money depending upon the fall of cards; and, given the addictive tendency that such games prey on, the player tends to raise his stakes in the hope of a bigger win. (Para 70 of the judgement). The State contends that the petitioners cannot assert any right under Article 19(1)(g) of the Constitution because the games offered amount to gambling/betting activity despite being a game of skill since it is being played for a financial or other stake.
     
  4. The state further argued on Prohibition where the power to regulate includes the power to prohibit. 4

Judgement
The court said Every game or like activity depends on an element of chance. Irrespective of what meanings are ascribed to these words in dictionaries, gambling is equated with gaming and the activity involves chance to such a predominant extent that the element of skill that may also be involved cannot control the outcome.

A game of skill on the other hand, may not necessarily be such an activity where skill must always prevail; however, it would suffice for an activity to be regarded as a game of skill if, ordinarily, the exercise of skill can control the chance element involved in the activity such that the better skilled would prevail more often than not.

The Court observed that gambling is equated with gaming and the activity involves chance to such a predominant extent that the element of skill that may also be involved cannot control the outcome. Whereas, a 'game of skill' on the other hand includes the exercise of skill that can overpower that chance element involved in the activity such that the better skilled would prevail more often than not. The Court held that games such as rummy and poker cannot be banned by the impugned legislation and that the legislation is 'manifestly arbitrary' and ultra vires of the Constitution.

My Opinion
Games like Rummy are games of skills as proven by the petitioner. It is very necessary to understand the difference between games of chance and games of skills. Some might argue that games like Ludo is a game of chance whereas I believe that it is a game of skill. A game of chance could be Snakes and Ladders where all a person does is roll the dice.

I completely agree with the court's judgement where they have pointed out how States often take a paternalistic point of view. It is indeed the state which can take actions when such games create a negative impact. In this scenario, the petitioners rightly proved how Article 19(1)(g) of the Indian constitution is being violated. As long as these games come under ' Games of Skills', they should not be banned and the Madras High Court rightly uplifted the ban on them.

End-Notes:
  1. R.M.D.Chamarbaugwala v. Union of India AIR 1957 SC 628
  2. State of Andhra Pradesh v. K.Satyanarayana AIR 1968 SC 825
  3. B.P.Sharma v. Union of India (2003) 7 SCC 309
  4. State of Gujarat v. Mirzapur Moti Kureshi Kassab and Others (2005) 8 SCC 534

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