Gaming Legislation in India
Under the Constitution of India, the State Legislatures have been entrusted with the power to frame legislation to govern "Gambling". However, prior to independence, the then Central Government enacted the Public Gambling Act, 1867, which regulated gambling and other allied activities across India.
Certain states in India have enacted their own legislation to regulate gaming/ gambling activities within its territory ("Gambling Legislation") basis the Public Gambling Act, 1867. Most of these Gambling Legislation were enacted prior to the advent of virtual/ online gambling and therefore primarily refer to Gambling activities taking place in physical premises, defined as "gaming or common gaming houses".
Mostly, the term "Gambling" or "Gaming" is defined to mean "the act of wagering or betting for money or money's worth". However, Gambling under the Gambling Legislation does typically not include (i) wagering or betting upon a horse-race/ dog-race, when such wagering or betting takes place in certain circumstances; (ii) games of "mere skill"; and (iii) lotteries (which is covered under applicable lottery laws). Gambling Legislation expressly prohibit any person owning, occupying, using, permitting to use, managing and conducting the business of a "common gaming house" i.e. premises in which cards, dice, tables or other instruments of gaming are kept or used for profit or gains.
The Prize Competitions Act, 1955 was introduced for the control and regulation of prize competition. The Prize Competitions Act defines "prize competition" as any competition (whether called a crossword prize competition, a missing word prize competition, a picture prize competition or by any other name) in which prizes are offered for the solution of any puzzle based upon the building up, arrangement, combination or permutation of letters, words or figures. The Prize Competitions Act provides that no person shall promote or conduct any prize competition or competitions in which the total value of the prize or prizes (whether in cash or otherwise) to be offered in any month exceeds INR 1,000/- (Rupees One Thousand only) and a maximum of 2,000 entries are permissible in every prize competition.
Landmark Judgements – Game of skill v. Game of chance
In Dr. K.R. Lakshmanan v. State of Tamil Nadu1, the Supreme Court held that a game of chance is determined entirely or in part by lot or mere luck. "The throw of the dice, the turning of the wheel, the shuffling of the cards, are all modes of chance." The key differentiator being an element of uncertainty or doubtfulness. "No human mind knows or can know what it will be until the dice is thrown, the wheel stops its revolution, or the dealer has dealt with the cards."
A game of skill, on the other hand – although – the element of chance necessarily cannot be entirely eliminated – is one in which success depends principally upon the superior knowledge, training, attention, experience and adroitness of the player. Golf, Chess and even Rummy are considered to be games of skill.
There are few games, where the outcomes are determined purely by chance or purely by skill, and as such a game of chance is one in which the element of chance predominates over the element of skill, and a game of skill is one in which the element of skill predominates over the element of chance. For each game therefore, one would have regard to the dominant element of "skill" or of "chance" to determine the character of the game.
In State of Andhra Pradesh v. K. Satyanarayana and Ors.2 the Supreme Court held that "...Rummy requires certain amount of skill because the fall of the cards has to be memorised and the building up of Rummy requires considerable skill in holding and discarding cards. We cannot, therefore, say that the game of Rummy is a game of entire chance. It is mainly and preponderantly a game of skill...".
Bombay High Court, recently, in the case of Gurdeep Singh Sachar v. Union of India3 following the judgment of the High Court of Punjab and Haryana held that no betting or gambling is involved in the fantasy games operated by Dream11 and it can be seen that success in Dream 11's fantasy sports depends upon user's exercise of skill based on superior knowledge, judgment and attention, and the result thereof is not dependent upon the winning or losing of any particular team in the real world game on any particular day.
The Karnataka High Court in the case of Indian Poker Association and Ors. v. State of Karnataka and Ors.4 held that "...game of poker if played as a game of skill, license is not contemplated..." The Court also clarified that the enforcement authorities reserve the rights to take appropriate action, in accordance with law, if definite information is present with regards to illegal activities being indulged under the semblance of recreational activities.
Landmark Judgment – Prize Competition Act, 1955
In Bimalendu De v. Union of India (UOI) and Ors. ("KBC Case")5, the Calcutta High Court held that game shows on TV are not covered within the definition of a prize competition and that the Prize Competitions Act had a narrow and limited meaning and is not inclusive of skill games and competitions such as Kaun Banega Crorepati. The reasoning given by the court was that the Prize Competitions Act, 1955 only covers competitions in which prizes are given for solving any numerical or alphabetical puzzle and Kaun Banega Crorepati is not such a game.
As observed by the Calcutta High Court "...A perusal of Section 19(d) clearly shows that prize competition includes the puzzle based upon the building up, arrangement, combination or permutation of letters, words or figure, that is not here in this game. Here question is put with four options, out of which one is correct answer which has to be picked up by the participant, therefore this cannot be said to be a prize competition...The Prize Competitions Act, 1955 only defines the prize distribution which is analogous to Section 19(d) of West Bengal Gambling and Prize Competitions Act, 1957. As already mentioned above that the present programme does not fall in this definition therefore no useful purpose will be served by referring to the provisions of Prize Competitions Act, 1955..."
Indian States that prohibit gaming and/ or gambling in toto
The Gambling Legislations of Assam, Orissa and Telangana have a blanket prohibition on game of skill and game of chance, whether for profit or gain.
New Gaming Legislation in India
There are 2 states in India i.e. Sikkim and Nagaland which have detailed the procedures for applying for licenses for online gaming. The Sikkim Online Gaming (Regulation) Act, 2008 ("Sikkim Act") permits for certain games of chance and the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2015 ("Nagaland Act") only permits for online games of skill.
On analysis of the above legislations and judgements, it can be said that the principal determinant of whether a game constitutes a game of chance or a game of skill is the degree to which the player's skill determines the outcome of the game relative to the role played by chance.
Such skill is not confined to physical skill alone and includes the participant's knowledge of the game and skill in choosing when to act, and in assessing and responding to other participants' behaviour and actions. The inclusion of non-physical elements within the ambit of skill supports recognition of exhibitions of knowledge, attention and experience in the context of online gaming and merits their evaluation against the element of chance for the purpose of application of the dominant factor test to online gaming.
The complication that arises for many games is when they have to be tested additionally against the Prize Competitions Act, 1955 in India and specifically check for prohibitions under each State. Online gaming sites would be advised to put in place internal checks and balances to ensure that minors and residents of prohibiting States are not provided access to their website in order to avoid being caught on the wrong side of the law.
1 Dr. K.R. Lakshmanan v. State of Tamil Nadu and Ors., Writ Petn. (C) No. 665 of 1986
2 State of Andhra Pradesh v. K. Satyanarayana and Ors., Criminal Appeal No. 40 of 1965
3 Bombay High Court, Criminal Public Interest Litigation Stamp No.22 Of 2019
4 Indian Poker Association and Ors. v. State of Karnataka and Ors. Writ Petition Nos. 39167 to 39169 of 2013
5 Bimalendu De and Ors. v. Union of India (UOI) and Ors., Tender No. 1285 of 2000 and W.P. No. 2493 of 2000
Originally published in Agama Law Associates' Blog, 12 December 2019
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.