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Banning of Online Gaming in Tamil Nadu

July 8, 2021

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This article is written by Devagni Vatsraj who is pursuing a Diploma in Cyber Law, FinTech Regulations, and Technology Contracts from LawSikho.

Table of Contents

Introduction

Online Gaming is a budding sector in India and has shown dynamic growth on account of the increase in wireless internet and smartphone users. The COVID-19 lockdown has helped to accelerate the adoption of online gaming in the Indian market; this phase has further, changed the perception of gaming as a means of entertainment. Owing to a considerable number of people turning to game as a means of socialising; the need to interact and just having fun amidst the pandemic soon turned into addiction and citizens started betting money on games, turning online gaming into an element of gambling. Since then, the government has been minutely keeping track and projecting the circumstances, and therefore, a lot of developments have taken place recently in regulating online games like fantasy sports, rummy, poker, etc. This article is going to highlight the cause and effect of banning online gaming in the state of Tamil Nadu.

Online Gaming – a rising industry in India

Playing games online has been around for a long long time but we would mostly see this in the West. India, as a culture, is more outgoing and we, Indians as young kids, have always been the ones to play outdoors. However, there has been a paradigm shift towards adapting to the digital world. Some reasons for the industry to flourish are better connectivity, the attraction of youth, real-money making incentive, cloud gaming made possible through Gaming-As-Service, Platform-As-Service; affordability of smartphones, artificial intelligence and data analytics, advertising, and of course, effects of pandemic amongst a few others.

India’s soaring gaming industry is valued at $930 Million and is number one in the world. Maple Capital Advisors in its piece titled ‘Gaming — India Story’, states the Indian industry is expected to grow nearly 40% annually, with a market value set to value $3750 Million by the year 2024.

NortonLifeLock, a consumer cybersecurity brand has comprehensively researched, studied behavioural patterns and has penned down in their report, “India Digital Wellness Report”, how addiction to online gaming has lead to anxiety, nervous breakdown and consequences beyond imagination. “People could be drawn to online gaming for entertainment, but data shows that it is not all about fun and games. The virtual playing field comes with risks such as identity theft, cyberbullying, phishing, and credit card theft, to name a few,” said Ritesh Chopra, Director, NortonLifeLock. A few Indian states that have banned online gaming are Andhra Pradesh, Telangana and now, Tamil Nadu; and more could be on the way. The state of Tamil Nadu has enacted an ordinance that bans online gambling, and this ordinance includes massively popular games, played online.

Banning of Online Gaming in Tamil Nadu

On 20.11.2020, the state of Tamil Nadu passed an Ordinance namely, the “Tamil Nadu Gaming and Police Laws (Amendment) Ordinance, 2020.” The Ordinance amends the Tamil Nadu Gaming Act, 1930, the Police Act, 1988 and Police Act, 1859 and prohibits online gaming on games of chance in the state. Whether a game is of chance or skill is a question of fact to be decided on the basis of facts and circumstances of each case. The Indian courts have recognised that no game is a game of pure skill alone and almost all games involve an element, though extremely small, of chance.

The Hon’ble Supreme Court of India has interpreted the words “mere skill” to include games that are preponderantly skill-based and even if there is an element of chance, it would nevertheless be a game of skill. The Court observed in K.R. Lakshmanan (Dr) v. State of T.N., “The New Encyclopaedia Britannica defines gambling as “the betting or staking of something of value, with a consciousness of risk and hope of gain on the outcome of a game, a contest, or an uncertain event the result of which may be determined by chance or accident or have an unexpected result by reason of the bettor’s miscalculations”. According to Black’s Law Dictionary (6th Edn.), “Gambling involves, not only chance, but the hope of gaining something beyond the amount played. Gambling consists of consideration, an element of chance and a reward”. Gambling in a nutshell is a payment of a price for a chance to win a prize. Games may be of chance or of skill or of skill and chance combined….”

In the absence of a binding description and classification of a game of skill, the Supreme Court has time-and-again vide landmark judgements, such as, Dr KR Lakshmanan v. State of Tamil Nadu; State of Andhra Pradesh v. K Satyanarayana; and State of Bombay v. RMD Chamarbaugwala, laid down that a game of chance is where the element of chance predominates over the element of skill, whereas a game of skill is where the element of skill predominates over the element of chance.

The question that arises is that should a state be allowed to decide what games can it ban and which may be allowed to play by its residents? The answer to that is gambling and betting are state subjects – been mentioned in list-II of the seventh schedule of the Constitution, and therefore states are empowered to legislate laws on it.

This means that each state in India has its own “betting and gambling” laws, and hence even the online “betting and gambling” will depend upon those laws. The state of Tamil Nadu while amending the Tamil Nadu Gaming Act, 1930, inserted Section 3A, which states that, “No person shall wager or bet in cyberspace using computers, computer system, computer network, computer resource, any communication device or any other instrument of gaming by playing rummy, poker or any other game.”

In the Ordinance banning the game, the Governor said that due to online gaming; innocent people, majorly youngsters, are being duped, cheated, which leads to bankruptcy, depression and some even committed suicide. The state has therefore decided to ban online gaming to avoid such incidents and to protect innocent people from the ills and harms of online gaming. Any forms of betting in digital space by using any communication device and any electronic transfer of funds to distribute winnings or prize money have been prohibited.

This infers that the players in the state will not be able to purchase any add-on for the games they play, nor will they be able to go to gaming arcades or participate in online gaming tournaments. There has been some discussion and debate on whether online games are a matter of pure luck or based on skill; however, the financial component always creates matter more complicated and leaning towards wagering. Since there are no regulations in place for either online games or gambling, most players end up spending a lot of money on these games.

Is this a blanket ban?

The Ordinance comes in the consequence of the observations of the Madras High Court regarding the addiction of online games and its unconstructive effect on the people. In D Siluvai Venance v State, the Madras High Court sought to address the dangerous result of online gaming by resolving the regulatory void in the online and virtual gaming space. In Mohammed Rizvi v Union of India, it has been brought to the notice of the Madras High Court, that players end up incurring debts due to the addiction to online gambling activities and that there are instances of people committing suicide when they are unable to repay the debts. Given the number of deaths, the court indicated that the state government must take appropriate, adequate, and immediate measures; including bringing into force, legislation, to prohibit and/or regulate online gambling.

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”. Even when the Apex Court is of the opinion that Rummy, for instance, is 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 Tamil Nadu Ordinance, however, intended to apply the ban to all games, whether or not they are skill-based.

How does this ban affect the industry?

The Bill moved by the then Tamil Nadu Deputy Chief Minister, O. Paneerselvam, covers games of skill, if played in consideration of money, wager or any other stake. If an organization is found at fault, the organization as well as every person in charge and responsible for the conduct of its business at the time of the offence (from the owner, promoter, to the ambassador of the organisation), shall be deemed guilty.

Virat Kohli, Indian mens’ cricket team captain and Sourav Ganguly, President of Board Control for Cricket in India, were issued a notice from the Madras High Court (Madurai Bench) for their involvement in the promotion of online fantasy sports league applications. Notices were also issued to actors, Rana Dagubatti, Prakash Raj and Tammanah Bhatia and others for their involvement in the promotion of online gaming.

How does this affect us?

“…data shows that it is not all about fun and games. The virtual playing field comes with risks such as identity theft, cyberbullying, phishing, and credit card theft, to name a few,” said Ritesh Chopra, Director, Norton LifeLock, India. According to a survey conducted by them, with about 1,572 participants, 87% think that online gaming shapes their physical and mental wellbeing or discomfort. 76% think that action game addiction has changed their behaviour raising levels of anger, violence, depression and anxiety. Lastly, 70% of the participants think that spending more time playing online video games make them vulnerable to harassment and cyberbullying.

Frequent complaints against real money gaming activities have come to light, mainly because of the way they are advertised to the common public. The advertisements frequently create an impression that these games may become a source of income or profits as opposed to being a source of entertainment. Therefore, the Advertising and Standards Council of India has introduced a strategy to make real money gaming advertising safer and more responsible.

NITI Aayog has framed a few guiding principles to regulate online games; these guiding principles may come to effect, but gaming will still remain a state subject and each state will have the authority in the matters to be adjudicated as per each state law, thereby refusing the grant of immunity in states having stringent laws.

It is not a very feasible and practical approach to provide state-wise immunity from sanction and prosecution, and there will be a lot of challenges (in interpretation and enforcement) in absence of central, comprehensive guidelines. There should be bona fide and substantive uniformity in the working of gaming platforms across India. This can be ensured by proper legislative changes that will help create a uniform structure, which will be applicable in a standardized manner across all forms of games of skill.

This will ensure that the proposed self-regulatory body is not discriminatory and different games of skills are treated alike and adjudged in the same manner across all platforms. In my opinion, these proposed guidelines only cover within its ambit the proposal to regulate fantasy sports. Since the youth is spending more time in online gaming, this will lead to a generation of revenue, employment, as well as chances of prosecution.

Thus, these guidelines should be broadened to regulate all games of skills and to establish the regulation of all sorts of online digital games that are skill-based. Since there are many similarities in all these skill-based games, it is practical to revisit these draft guidelines, inculcate all online skill-based sports and regulations be framed accordingly.

Conclusion

Online Gaming is a sunrise industry. With the right measures and regulatory framework in place, the industry can create jobs for millions of people. Some controls were crucial, especially in terms of identifying and scraping out unscrupulous and illicit players but a total ban on online gaming will only help bad operators who promote illegal gaming activities.

In my opinion, in order to ensure proper representation of smaller operators in the industry and to moderate the scenario, that would so arise, policy should be framed to ensure uniform and adequate representation of the smaller operators in the decision-making process and such qualified individuals from the online gaming platforms’ industry be appointed as a member of the committee to ensure equal rights across all operators throughout the country.

There should be bona fide and substantive uniformity in the working of platforms across India. This can be ensured by proper legislative changes that will help create a uniform structure, which will be applicable in a standardized manner across all forms of games of skill. This will ensure that the proposed self-regulatory body is not discriminatory and different games of skills are treated alike and adjudged in the same manner across all platforms.

It is recommended that the Centre must come up with some final guidelines; since this is a state subject and eventually it is the state governments that will be implementing and enforcing these guiding principles, I opine that the suggestions should also be invited from state governments.