This is a part of 3 part post on gaming laws by our intern who is passionate about this topic. This is part 3 of a 3 part series.
Tussle between the legislature and the judiciary
There is a growing power tussle between the legislature of various states and judiciary on the subject matter of overlap of gaming and gambling laws. A recent example of the same reflects in the statement of the Tamil Nadu chief minister given in January 2022 that he will bring a complete end to online gaming where one could bet money. This statement came much after the decision of the Madras High Court in the aforementioned case of Junglee Games India Private Limited v. State of Tamil Nadu & Ors.1 where it held such gaming to be valid in the eyes of law and protected under fundamental right 19(1)(g).
The conflict becomes much more evident because in all instances the judiciary is differentiating between games of skill and chance and justifying the existence of monetary involvement in games of skill. However, states such as Uttar Pradesh, Tamil Nadu, Karnataka keeping in mind the concern of the masses about youngsters and teenagers losing their money in such games is determined to eliminate the existence of monetary angles from such games. Therefore, to a great extent, this on-going tussle takes the shape of legality versus morality debate where the state legislatures are approaching it from a moral angle.
Skill v. Chance
It is crucial to note that the Public Gambling Act of 1867 does not carry the definition of "Game of Chance" and "Game of Skill". Therefore, historically gambling was seen as a game that involves the risk of money. This perception continued until 1957 when the apex court differentiated between games of skill and games of chance.2 Therefore, presently considering multiple amendments that have been made in various state legislatures and the position of the court it could be concluded that games of skill are the ones in which the result depends upon the mental or physical abilities or skills of the player. The scope to date has been left quite broad to understand what ability falls under the skill and what does not.
On the other hand, the clear meaning of the game of chance (gambling) is the one where the result is determined purely on a random and unpredictable basis. Another rationale that has often been used by the judiciary is that in the games of skill there is a probability of the player getting better and better after every learning while in games of chance there is nothing to improve at.
For instance, in State Of Andhra Pradesh v. K. Satyanarayana & Ors.3 the Apex court decided that rummy is a game of skill because it requires memorizing the cards and this skill could be learned. Furthermore, in multiple states even poker is regarded as a game of skill there are many states where poker is considered as a game of chance. Ironically, in Kerala, rummy if played offline is considered legal while the same is banned when played online.
Therefore, whether a game is of skill or chance is decided on a case-to-case basis by understanding the nature of the game as held in Manoranjitham Manamyil Mandram v. State of Tamil Nadu and Ors.4
Lacuna in the law
In Varun Gumber v. Union Territory of Chandigarh5, the Punjab and Haryana High Court decided that the word "mere skill" in Section 12 of the Public Gambling Act, 1867 should be interpreted in a twofold manner, (a) competition where success is predominantly dependent upon the substantial degree of skills and (b) despite there being an element of chance, if it is preponderantly a game of skill, it would nevertheless be a game of skill. The Rajasthan High Court in Chandresh Sankhla v. State of Rajasthan6 also used the same proposition in a case against Dream 11 (Fantasy Game Company). The interpretation that can be drawn from this proposition based on uses of words like "predominantly", "substantial degree" and "preponderantly" is that for any game there is a combination of skill and chance involved. Therefore, how the court decides whether the game falls in either of these categories is based upon the dominance of either of these skills.
In Gurdeep Singh Sachar v. UOI7 as well, the same proposition was applied. However, in the given case, the working of "fantasy gaming" will have to be understood. The involvement of skills and chance in such games can be categorized into 2 sets. The first set is the pre-team selection - involvement of skill and chance. Here the players use their understanding and knowledge of the game and players to make a virtual team of their own. It is understandable that in this stage of the game to a great extent skill and knowledge are involved. However, the stage of post-team selection involves zero elements of skill because the points of the players are contingent on the happenings in the live match. Therefore, since in this stage no skill is involved, the result becomes purely a game of chance. It needs to be understood that the performance of the players in the original match itself is contingent on various external factors such as weather changes, field injuries, the player's luck, etc. Therefore, it needs to be questioned whether betting on a third person's result based on his skill or chance be treated as a matter of skill. For instance, A is playing the match and his skills and luck will determine A's result. Whether B is betting on the result of A's skill and effort be considered using his skill.
The other way to look at this proposition is whether participating or winning in fantasy sports is a form of contingent contract or wagering agreement. The difference between the two needs to be highlighted. Even though both wagering and contingent contracts are dependent upon the happening or not happening of a future event, what distinguishes them is the fact that (a) is a contingent contract, the event is not a part of the contract, it is mere collateral whereas in wagering it is the part of the agreement; (b) in wagering agreement, either of the two parties wins and gain wrongfully unlike in contingent contracts. Therefore, in the given context, it should be seen whether the real-time performance of the player, in this case, makes for a situation of a contingent contract between the players and the platform or that of wagering.
Lastly, it also needs to be highlighted that even though the rules of the game (Dream 11) ensure that not more than 7 players of the same team can be selected, if it were slightly different and 11 from the same team could be chosen, in that case, whether the involvement of skill would still be deemed prevalent and predominant if one using the understanding and skill selects the same team as the original team. If this question is answered affirmatively then using the same logic, betting on cricket matches and other sports should also be made permissible. However, if it is answered in the negative, it needs to be asked whether only change in the number of players from the same team make the act permissible since there is a high likelihood of a person making the same team as in real life on the usage of his skills and knowledge.
If we observe the stand taken by the judiciary on the subject matter of gambling and gaming, we will see no significant change because the principles and the yardstick that the judiciary is using to determine the difference between gaming and gambling has remained the same over roughly 70 years. The courts to decide the legality of the games are using the same "Test of Skill".
Way Forward
Even though the courts have broadly answered the question, for the time being, some intricacies need to be elaborated upon to develop a robust and uniform jurisprudence concerning gaming laws in India. To do the same, following are the suggestions:
- The courts should test each game on the percentage of its result depending upon skill and chance respectively. A test that checks the ratio of involvement of elements of skill and chance could be adopted.
- For fantasy games, a more comprehensive analysis is required to re-evaluate the ratio of skill and chance in the two stages of the game (pre-team selection and post-team selection).
In Sum
In conclusion, the legislature as well as the judiciary needs to keep in mind that the social mindset concerning gambling and other forms of betting has also changed drastically from the times when the Public Gambling Act of 1867 was implemented. Therefore, the new law should be according to the need of the hour. However, the reforms should not come at the cost of social hardships. The legislature must keep in mind the social cost involved and the consequences of such games because from someone as naïve as a child to someone as mature as a parent are risking their time and money on this. Just like any other game even these games are addictive and the fact that there are monetary costs involved, it somewhere becomes unhealthy form of recreation as it drains not only your wealth but also valuable time. Therefore, the judiciary must take a step forward to restrain unacceptable and exemplary loss of time and hard-earned money but at the same time also balance the legal progress in the field and adequate protection of the fundamental rights.
Footnotes
1. 2021 SCC OnLine Mad 2762.
2. Dr. K.R. Lakhshmanan v. State of Tamil Nadu & Anr., 1996 AIR 1153.
3. AIR 1957 SC 628.
4. AIR 2005 Mad 261.
5. CWP No. 7559 of 2017.
6. 2020 SCC OnLine Raj 264.
7. SLP (Crl.) Diary No. 42282 of 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.
