Abstract
The states in India are empowered to legislate on gambling laws which has resulted in a complex and especially confusing landscape for online gaming businesses offered pan India. Most states, however, have opted to enact legislation that prohibits gaming or gambling activities which involve the act of wagering or betting for money or money's worth and are dependent preponderantly on chance. Typically, these statutes exclude games of “mere skill” from its ambit, which the Supreme Court of India has held to include games having a predominant amount of skill, even if they involve an element of chance. It remains a question of fact whether a particular game satisfies this predominance of skill test.
Recently, the Indian Poker Association (IPA or the petitioner) as well as several clubs offering poker to their patrons filed Special Civil Applications (SCAs) with the High Court of Gujarat seeking a declaration that poker is a game predominantly of skill and, therefore, exempt under the Gujarat Prevention of Gambling Act of 1887 (the Act). These SCAs were filed after the local police commissioner rejected a request for a No Objection Certificate (NOC) made by the IPA on grounds that poker is a game of chance and therefore, an illegal activity under the Act. The police had also raided several clubs hosting poker rooms, confiscating money and other valuables as well as arresting players and club operators.
Oral arguments in this matter have concluded and are summarized below. The final order is scheduled to be heard on November 23, 2017. The order in this matter will be of significant interest to Indian and overseas poker operators, as this is the only case which has tested whether poker is a game of skill in the Indian legal context.
A Short Summary of the Arguments of IPA
The petitioners' primary argument was that their fundamental right to “practice any profession, or to carry on any occupation, trade or business” under Article 19(1)(g) of the Indian Constitution was violated due to the actions of the State of Gujarat and its police force. As only individuals carrying on legal business activities can claim such protection, the petitioners urged that poker is indeed a game predominantly of skill and therefore, not a prohibited activity under the Act.
The petitioners also briefly argued that, as there is no legal authority for the police commissioner to grant an NOC, there can be no legal basis on which he had the power to deny the NOC or declare that poker is a game of chance.
In support of the argument that poker is a game of skill, the petitioners cited the case of State of Andhra Pradesh v. Satyanarayan,
1
where the Supreme Court held that rummy played for stakes was a game of mere skill as it passed the predominance of skill test based on the multiple skills required to play it. While the Supreme Court acknowledged that rummy, like all card games, had an element of chance based on the fact that cards were shuffled and distributed to players at random, it held that such element of chance on its own was not sufficient to qualify the game as one predominantly of chance. The petitioners relied on this judgment to argue that like rummy, poker also involves a limited element of chance based on the dealing and playing of cards; however, the same is not sufficient to constitute poker as a game of chance. Further, they argued that similar to rummy, poker also requires players to use substantial skills, which help them determine the progress and outcome of the game. These skills include:
− logical thinking (based on information collected) and strategy − mathematics (probability and odds) − bluffing − memory and association of an opponent's playing style and past movements − psychology—the skill of gauging the reactions and responses of players − misdirection—the skill involved in acting/reacting differently in the same circumstances so as to confuse opponents − focus, discipline, patience, and emotional stability
The petitioners also relied on the Supreme Court's decision in Dr. K. R. Lakshmanan v. State of Tamil Nadu, 2 where the court held that betting or wagering on horseracing was a game of mere skill as it passed the predominance test because the players had to use substantial skill in assessing the horse and jockey based on factors such as training, pedigree, breeding, fitness, weight, structure, etc. in order to place successful bets. Importantly, the court also held that betting per se was not illegal. Based on this judgment, the petitioners argued that even though betting is an intrinsic part of poker, such betting is part of a larger game which requires players to use their skills to assess their opponents based on multiple factors like past experience, the size of the pot, how their opponents react as the game progresses, which cards have been played, etc.
In addition to comparing the skills involved in poker with those involved in rummy and horseracing, the petitioners also presented the court with statistics, expert testimony, and videos of professionals playing poker at tournaments to demonstrate: (1) how poker requires an analytical approach targeted towards optimizing one's own decisions, and making it difficult for others to do the same; (2) how skilled players use their judgment (assessment of the game and their opponents) to affect the outcome of the game and reduce the element of chance; (3) that the best hand only wins approximately 12% of the time; and (4) that skilled players win at a rate of 97% against unskilled players. The petitioners also referred the court to several books and college courses on how to play poker and argued that if the game was only one of chance, such books and courses would not be available.
Synopsis of the Counters Made By the State of Gujarat and the Respondents
The State of Gujarat, the leading respondent in this matter, argued that poker is not a game of mere skill and therefore is a prohibited gambling activity under the Act. The respondents relied on multiple Supreme Court precedents 3 to argue that illegal business activities, such as providing gambling services, were never intended to be protected under Article 19(1)(g) of the Constitution, and that as India is a welfare state, the government has a constitutional duty to protect its residents, especially its weaker classes, from the immorality and degradation associated with gambling.
In support of the argument that poker is not a game of skill, the respondents first relied on the case of MJ Sivani and Ors. v. State of Karnataka and Ors, 4 where poker in a video game format was held to be a game of chance. However, the petitioners pointed out that this ruling was with respect to video game poker which did not involve the skill required to be used by individuals playing in a physical setting like a poker room.
The respondents also argued that poker is a game almost entirely of chance because its outcome is dependent on the turning of cards, which is wholly based on chance. Specifically, with each opening of the card(s) (the flop, turn, and river, respectively) the luck of the players can change. Moreover, the game cannot be played without betting.
With respect to the skills identified by the petitioners as being necessary to play poker, the respondents argued that the petitioners relied on the unfounded assumption that all players would use such skills. In fact, they argued that poker would always be a game of chance when: (1) it is played by unskilled or novice players; (2) the game goes to showdown or heads up; (3) it is played a fewer number of times; and (4) smaller stakes are involved. The respondents also highlighted that tournament and “regular” poker are played differently. Therefore, while the petitioners seek a declaration that poker, in general, is a game of skill, this cannot be granted, as regular (non-tournament style) poker is not played using the same skills as tournament poker.
The respondents also differentiated rummy and poker by offering that the former requires players to use their skills in manipulating the cards in order to obtain the sequence required to win, while in the latter the players have absolutely no control over the cards they are dealt or the sequences they can put together. In fact, the respondents argued that a better comparison would be between poker and a card game called teen pati (brag/flash), which was previously established as a game of chance. Not only did the respondents use academic articles to argue that poker evolved from games like teen pati (brag/flash), but also that the same skills of bluffing, betting, exercising judgments, etc. were used in both games and, therefore, these skills did not amount to substantial or predominant skill. In response, the petitioners differentiated teen pati from poker by highlighting to the court that the former is a simple game where the players have very limited information on which to use their skills; however, in the latter, the dynamics of the game change with the opening of each card, which allows the players to use their skills much more substantially during each progressive round of betting.
The respondents also differentiated poker from horseracing by stating that the factors on which players base their bets, like breeding, weight, fitness, etc., are objective in nature, unlike the subjective factors poker players base their bets on. Further, while betting in horseracing is important, it does not affect the outcome of the race, while in poker, betting is not only intrinsic, but also affects how the game is played.
In addition, the respondents relied on several foreign judgments 5 and identified several countries where poker is considered to be a game of chance and amounts to gambling under the respective statutes. In response, the petitioners highlighted that the statutes and established tests applicable to each of the foreign judgments are different than the predominance of skill test laid down by the Supreme Court in India. Therefore, none of the foreign judgments could be relied on for application of law. However, the petitioners relied on these foreign judgments as well as three of their own to demonstrate that while poker was considered gambling in all instances because of the applicable legal regime, all the courts acknowledged that poker involves a certain amount of skill which, the petitioners argued, would be sufficient to meet the predominance of skill test in India.
Impact on the Future of Poker Business in India
Keeping in mind that neither the Supreme Court nor the high court of any other state has ruled on whether poker is a game of mere skill, the final order in this matter is highly anticipated. While the order will only have a binding effect in the state of Gujarat, it will have persuasive value in other states where the same question is likely to be presented before the relevant high courts. Further, although this matter only involves poker being played in a physical setting, the order may also have an impact on whether poker played online will be considered to be a game of skill or chance.