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November, 2023
The Madras High Court reviewed a petition challenging the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022, under Article 226, focusing on its applicability to games of chance versus games of skill. The Court determined that the Act should only apply to games of chance, not skill, and thus need not be entirely declared ultra vires, affirming the State’s legislative competence in prohibiting online gambling and regulating skill-based games. The petitioners also contended that the State lacked authority to legislate on online gaming, a Union subject, as per the Constitution's VII Schedule, and criticized the Act's failure to distinguish between betting and gambling. The Court upheld the State’s authority to legislate on games of chance but invalidated the classification of rummy and poker as chance games, citing Supreme Court judgments affirming their skill-based nature, and recommended the State develop reasonable regulations under Section 5 of the Act, addressing time limits, age restrictions, and other controls for online gaming.
April, 2023
The 2023 Amendment to the Rules issued under the IT Act, 2000, classifies providers of online games as ‘Online Gaming Intermediaries’ (OGIs). These intermediaries are subject to the general compliance requirements under Rule 3, along with additional obligations specifically applicable to OGIs that provide access to ‘Permissible Online Real Money Games,’ as defined under Rule 2(1)(qf). Such games must be verified by a self-regulatory body (SRB) designated by the Ministry of Electronics and Information Technology (MeitY). An online real money game can only be offered after obtaining verification from an SRB in accordance with the prescribed rules.
January, 2023
The case centered on Play Games 24x7, which operates online gaming platforms such as RummyCircle and My11Circle. The company faced issues with foreign investments from 2006 to 2012 due to delays in reporting and share issuance, violating the Foreign Exchange Management Act (FEMA). The Reserve Bank of India (RBI) withheld regularization of these violations pending clarification on whether the company's games were illegal gambling. The Department for Promotion of Industry and Internal Trade (DPIIT) claimed some games were gambling, but the court determined these games, introduced after 2012, were skill-based and did not offer monetary rewards. Relying on Supreme Court rulings, the court concluded that gambling requires a game of chance and a reward, which did not apply to Play Games 24x7’s offerings. Consequently, the court allowed for the regularization of the company's procedural delays through “compounding” and instructed the RBI to expedite the application process. Ultimately, the court affirmed that skill-based online games without real-money rewards are not classified as gambling, and technical FEMA violations can be rectified if the business is legal.
September, 2017
The petitioner sought to initiate criminal proceedings against an online fantasy sports platform, alleging that its operations amounted to illegal gambling under the Public Gambling Act, 1867. The petitioner contended that the games offered on the platform were merely games of chance, leading to his financial losses when his virtual teams failed to win in cricket and football leagues. The respondent maintained that the platform’s fantasy sports games are fundamentally games of skill. The court observed that participants must exercise considerable expertise in drafting virtual teams, evaluating players based on performance statistics, and strategically selecting captains; all of which require substantial knowledge, judgment, and experience. Drawing on established legal precedents that differentiate games of skill from mere chance, the court concluded that the element of skill predominates in the online gaming activities at issue and held that the fantasy sports games in question do not fall within the ambit of gambling under the Public Gambling Act, 1867.
