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High Court of Madras Strikes Down Amendment to Tamil Nadu Gaming Act, 1930 Prohibiting for Money Online Games of Skill

The High Court of Madras (“Court”) has struck down certain amendments1 introduced by the Tamil Nadu Gaming and Police Laws (Amendment) Act, 2021, (“Amendment Act”) as unconstitutional in the matter of Junglee Games India Pvt. Ltd. & Anr. v The State of Tamil Nadu & Ors2.

BACKGROUND

(i) Expansive definition of ‘gaming’: The definition of ‘gaming’ was been expanded to include ‘any game’ involving wagering or betting in person or in cyberspace, thereby taking within its fold even games of skill. As per the explanation to the definition, ‘wagering or betting’ was deemed to include activities typically carried out by an operator such as collection or soliciting of bets, receipt or distribution of winnings/prizes including through electronic means, in respect of wagers and bet, or any act intended to aid or induce such activities (“Explanation”).

(ii) Prohibition on wagering or betting in cyberspace/facilitating or organising wagering or betting: An express prohibition on wagering or betting in cyberspace, by playing Rummy, Poker, or any other game, or facilitating or organising wagers or bets in cyberspace, on such games was introduced5 under Section 3 A of the Amendment Act. The Explanation was made applicable to Section 3 A, thereby also prohibiting the collection, solicitation of bets, receipt and distribution of winnings, etc., in cyberspace, under Section 3 A.

(iii) Prohibition on games of skill in lieu of exemption: The exemption for games of skill under Section 11 of the TN Gaming Act was replaced with a provision to the effect that the prohibitions and penalties under the TN Gaming Act, as well as certain procedural provisions (relating to search and seizure, evidence, etc.) would apply to games of skill when played for wager, bet, money or other stakes6.

[There were certain other amendments introduced under the Amendment Act, which we have not discussed as it was not the focus of the challenge in this case.]

JUDGMENT

The Court upheld the challenge to Part II of the Amendment Act, and struck it down as ultra vires the Constitution in its entirety.

We have discussed the key holdings of the Court below:

Overall, the Court pointed towards several provisions of the Amending Act which contradicted each-other, and accordingly held that the overall wording of the Amendment Act was overbearing, thoroughly unreasonable, and manifestly arbitrary.

(i) Relevant entries of relevant State Power

(ii) Excessive restrictions on Games of Skill in violation of Article 19(1)(g)

(iii) Prohibitions under the Amendment Act disproportionate to object sought to be achieved

For the reasons discussed above, the court struck down the amendments to the TN Gaming Act introduced by the Amendment Act as ultra vires the Constitution in its entirety. However, the Court clarified that the State was at liberty to introduce another appropriate legislation conforming to ‘Constitutional sense of propriety.’

CONCLUSION AND TAKEAWAYS

The Court’s judgment was a welcome relief for the thriving online skill gaming industry in India, which had ceased to offer its games in Tamil Nadu, a significant market, in view of the prohibitions introduced under the Amendment Act. For the moment, online skill gaming operators may commence operations in Tamil Nadu. However, this may be a short-lived relief.

Soon after the judgment was pronounced, the Law Minister of Tamil Nadu, S. Regupathy announced that the State Government of Tamil Nadu would soon enact a new law to ban online Rummy in the State, along with appropriate justification, for the welfare of the public. While the indication at this stage is that the ban would only cover online Rummy, it would need to be seen whether the new law could also include other online games of skill.

The Court in its judgment has indicated that the State Government can derive legislative competence to enact such a prohibition on games of skill under alternative entries of the Constitution (i.e., apart from Entry 34 on ‘betting and gambling’) as discussed above. In view of the Court’s order, however, the onus would lie heavily on the State Government to justify the necessity of a total ban, and demonstrate how prohibiting a constitutionally protected activity is proportionate to the object sought to be achieved. This may be practically difficult for the State Government to demonstrate. If other skill games apart from Rummy are sought to be prohibited as well, the Government would have to demonstrate this in relation to the other games too.

Therefore, the skill gaming industry may not be completely ‘off the hook’ in Tamil Nadu.

FOOTNOTES


1 Part II of the Amendment Act amended the TN Gaming Act, whereas Parts III and IV of the Amendment Act deleted the gambling – related prohibitions from the Police Acts. Part II has been struck down by the Court.

2 WP Nos.18022, 18029, 18044, 19374, 19380 of 2020, 7354, 7356 and 13870 of 2021

3 Freedom to practise any profession, or to carry on any occupation, trade or business

4 Entry 34, List II, Constitution of India

5 3-A. Wagering or betting in cyberspace- (1) 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 or facilitate or organize any such wager or bet in cyberspace.

(2) Whoever wagers or bets 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 or facilitates or organizes any such wager or bet in cyberspace, shall be punished with imprisonment which may extend to two years or with fine not exceeding ten thousand rupees or with both.

6 11. Games of mere skill. — 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.

7 1996 AIR 1153

8 AIR 1957 SC

Entry 1, List II, Constitution of India

10 Entry 26, List II, Constitution of India

11 Entry 33, List II, Constitution of India

12 Article 19(6), Constitution of India

Nishith Desai Associates 2022. All rights reserved.National Law Review, Volume XI, Number 238
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 Tanisha Khanna Lawyer Nishith Desai Assoc. India-centric Global Law Firm
Technology-Media-Telecom and International Dispute Resolution Practice Group Member

Tanisha is an integral member of the Technology-Media-Telecom and International Dispute Resolution Practice Groups at the multi-skilled, research based international law firm Nishith Desai Associates.

Tanisha has advised clients on IP, gaming laws, general commercial laws, and on privacy issues.

Apart from transactional and advisory work, she has also been integrally involved in a number of litigations and arbitrations and pre- litigation strategy in a range of industries.

Tanisha has played a key role in the firm’s policy initiatives and representations to the...

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Gowree Gokhale Lawyer Nishith Desai Assoc. India-centric Global Law Firm

A practicing lawyer for 24 years, Gowree Gokhale leads the IP, Technology, Media and Entertainment, data protection law practice of research and strategy driven international law firm, Nishith Desai Associates. She has assisted several international businesses in India entry strategy, corporate and strategic deals, litigation and arbitration in TMT and Pharma sector. She has spearheaded several policy initiatives for the TMT and Pharma industry including for online content companies, gaming industry, IT industry as also for privacy and data protection laws.  She has also...

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