During the Covid Pandemic, the gaming industry has witnessed tremendous growth and a lack of a comprehensive legal framework in India will not help this industry to grow at its full potential. Technology is growing so fast that it has outpaced regulation. Gaming in India is still covered under archaic laws which makes it difficult to apply them in the current environment. In addition to that, since it comes under the state list, there is a distinction in the laws of different states.
The Primary legislation for gaming in India is the Public Gambling Act, 1867. It is a colonial-era law that creates a lot of confusion by its vague words which can have different interpretations. Earlier gaming was under the union list but after the constitution came into force in 1950, Gaming became part of the state list under entry 34. Through section 12 of the Public Gambling Act, 1867 it is clear that only a game of chance and not of skill is considered as gambling. There are different regulations and rules which regulate gaming in India. The Central Law, which regulates everything, is the first. The second is the state laws, and the third, which varies depending on whether the game is played in person or online, and whether it is a skill or chance game.
GAME OF SKILL AND GAME OF CHANCE
A game of skill can be defined as a game in which the winner is determined mostly by the player’s better knowledge, training, attentiveness, experience, and dexterity. To put it another way, it is a game in which the player spends time training, learning, and honing his skill. Section 12 of the Public Gambling Act specifies that games of skills are not considered gambling and are therefore not illegal. In a game of chance, on the other hand, the eventual outcome of the game is more dependent on elements such as luck and unpredictability. These games are prohibited and considered gambling under the Public Gambling Act.
A primary difference between the game of chance and the game of skill is who the opposing player is. If it’s the casino itself then there is no doubt that such a game is a game of chance. But if the player is playing with other like-minded players then it is a game of skill. In a situation where a game involves both skills as well as chance then if it is proved that the skill is the dominant factor, involves the use of statistics and strategies, and luck only plays a small part then it can be classified as a game of skill. With the majority of games becoming online and modifying themselves with changing times, it is becoming difficult to classify which is the dominant factor- chance or skill. Many games like online rummy and ludo are trying to get themselves classified as a game of skill. The solution for this conundrum is that there are numerous judicial guidelines by various high courts and also by the Supreme Court of India on the distinction between games of skills and games of chance. It has been held in ManoranjithanManamyilMandram v. State of Tamil Nadu (2005) that whether a game is considered to be one of chance or skill is a question of fact to be decided on the facts and circumstances of each case. In the case of R. M. D. Chamarbaugwallavs The Union Of India (1957), the apex court said that it would not be called gambling if there was a certain amount of skill involved in the game.
ISSUES IN THE CURRENT FRAMEWORK
With just a phone/tablet and an active internet connection, the requirements of online gaming are very less but different legislations create a lot of confusion and detriment to its growth. States are having different views for physical and online versions of the games involving real money. For example, betting in rummy is allowed in physical parlours of Kerala but it is prohibited in its online form. States like Uttar Pradesh and Karnataka have intimated that they will soon bring legislation to regulate online gaming.
Online gaming is a lucrative sector that has the potential of creating income sources for many households. The multiplicity of legislations and divergent views are not a good sign as it does not promote growth in this sector. To attract gaming companies to operate in India, there should be certainty in what is permitted and what is prohibited. The existing framework is subjective which changes with every case and different judges with diverse opinions. There are no objective norms that a court must follow, and each game must be judged on its own merits, taking into account diverse judicial view points. These obstacles do not attract gaming companies. India’s current gaming laws are based on an environment that was prevalent in the nineteenth century and does not satisfy the requirements of current times which is the addiction to games. Since human nature is such that self-restraint cannot be practised, the government has to step in to regulate and monitor the gaming industry.
The growth of online gaming models is causing a paradigm change in the gaming business. Gaming companies do not consider India as a viable country for their business due to a lack of clarity around permissible activities. The Madras High Court has said that it is critical to have a regulatory framework in place to deal with online gaming. The concerned authorities can take a cue from Germany which is having very strict rules when it comes to gaming and gambling but it still provides elite facilities to the online gaming industry. It has recently introduced legislation that legalizes online gambling at the state level. This initiative is expected to lead to rapid market expansion. Because of the changes introduced in the last few years, Germany is on its way to becoming an emerging market for the online gaming industry. The Law Commission also recognized that imposing an outright prohibition on illegal gaming is impossible. It suggested that sports betting be regulated with suitable protections to encourage responsible gambling. Such a strategy would bring in tax revenue for governments while also helping in the identification of fraud and money laundering.
It is undeniable that we have progressed from colonial-era regulations to modern state-governed legislation but these changes are limited to only a few states. With continuous changes taking place and online games now gradually taking over physical games, at the national level, a set of rules and regulations can be developed that will lead to a rise in a growing market like India. Negotiations with relevant stakeholders can lead to smart decisions which can be advantageous to the country. A clear and organized set of laws is urgently needed, and with it, India’s online gaming market appears to be on track for phenomenal development in the future.
Author(s) Name: Ashish Chhabra (Rajiv Gandhi National University of Law, Patiala)