How the online gaming industry is playing the game of laws

Updated: November 28, 2020 4:38 PM

The courts and governmental agencies are trying to analyse the existing legal framework around online gaming and introduce the necessary changes

Eishan Agnihotri and Shoubhik Dasgupta.Eishan Agnihotri and Shoubhik Dasgupta.

By Shoubhik Dasgupta and Eishan Agnihotri

The integration of technology with day-to-day lives of people has been going on for the better part of last two decades globally. This has resulted into legislators introducing laws and regulations with an aim to address and regulate any challenges posed by the introduction of technology which otherwise would have remain unaddressed. While significant reforms have been made by the legislators to effectively regulate sectors such as the e-commerce sector, the online gaming and fantasy sports space in India largely remain unregulated. The courts and governmental agencies however are now trying to analyse the existing legal framework around online gaming and introduce the necessary changes if required.

While trying to understand the challenges which are posed by the online gaming and fantasy sports platforms in India, it is easy to use the two terms interchangeably without addressing the distinction. The test for a virtual platform (whether offering fantasy sports or games such as rummy, teen patti or poker) remains the game of skill v. game of chance test, formulated by the courts in India. To state simply, if the outcome for a player in a game is purely dependent upon chance without the application of any actual skills, the said game is considered as a game of chance and an act of gambling. While this deduction easily addresses common card or board games played in physical spaces, the fantasy sports and virtual space make the situation a bit more complex.

In India, the Public Gambling Act, 1867 (“PGA”) governs and prohibits gaming by individuals in ‘gaming houses’ with a view to derive profits out of the act of gaming but the PGA does not cover gaming done by individuals by participating through online platforms. To counter this, the governments of Sikkim, Nagaland and Telangana have amended their state gaming legislations to cover both conventional gaming houses and virtual gaming spaces.

In a recent order passed by the Gujarat High Court on September 29, 2020 in a PIL filed seeking restraint on online rummy in the state of Gujarat, the court acknowledged the lack of an appropriate legal framework to prohibit and regulate acts which would otherwise be treated as acts of gambling but couldn’t be as virtual gaming spaces are not covered under the state gaming legislation. Drawing the attention of the government towards the seriousness of the issue, the court cited the amendments made by the state of Telangana in its state gaming legislation to cover online/cyber spaces as well. In the order passed by the court, the court directed the government of Gujarat to look into the issue and take the necessary actions. The court also directed the state government to examine whether such games result in money-laundering or violation of laws relating to foreign exchange as well.

While more and more state governments and judicial bodies are taking a view that online card games such as rummy and poker involving real money are acts of gambling and appropriate steps should be taken by the state governments to curb these activities, the same cannot be said for the fantasy sports segment of virtual gaming. The biggest player in the fantasy sport market in India Dream11 has faced the test of being a game of skill or a game of chance in the past. The Punjab and Haryana High Court has held in the matter of Varun Gumber v. Union Territory of Chandigarh that the fantasy games offered by Dream11 are games of skill and that Dream11’s business has protection under the Article 19(1)(g) of the Constitution of India. This was upheld further by the Supreme Court of India. In a recent order passed on October 16, 2020 in a PIL filed before the Rajasthan High Court, the court has again reiterated that the fantasy games provided by Dream11 are games of mere skill and its business has protection under Article 19(1)(g) of the Constitution of India.

While Dream11 has seen favourable outcomes in the abovementioned instances, all is seemingly not well for the fantasy sports provider. On September 25, 2020, the Andhra Pradesh government led by YS Jaganmohan Reddy, passed an ordinance to amend the Andhra Pradesh Gaming Act 1974. This amendment not only imposes a ban on online games such as rummy and poker, but also covers fantasy games that involve financial transactions. Following this action by the Andhra Pradesh government, Dream11 amended its registration terms and conditions to state that:

“In the event a Participant indicates, while entering an address, that he/she is a resident of either Assam, Odisha, Sikkim, Nagaland, Telangana or Andhra Pradesh, such Participant will not be permitted to proceed to sign up for any match in the paid version of the Contest as described below”

With more and more people participating in virtual gaming and fantasy sports and the legislators and courts taking cognizance of the issues, it is certain that this is just the beginning of what will for sure be a complete overhaul of the gaming and gambling laws across India.

The article has been authored by Shoubhik Dasgupta, who is a counsel for Pioneer Legal and by Eishan Agnihotri, an associate of Pioneer Legal. This article is meant for informational purpose only and does not purport to be advice or opinion, legal or otherwise, whatsoever. Views expressed in this Article are personal views of the authors. 

Read Also: How ‘silent’ e-commerce is already underway in India

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