Central Law for Skill Games: Need of the Hour

Which Games are Really Games of Skill?

Since most state gambling laws exclude games of skill from their ambit, it becomes very important to ascertain which games are indeed games of skill. Only a few state laws have enlisted certain skill games (e.g., West Bengal, Kerala, and Nagaland). Judicial precedents have also recognized only a few game formats as games of skill. Interestingly, several gaming operators are attempting to take the shelter of the “skill” exclusion even for not so “skilled” games.

Unfortunately, there is no single machinery to test whether a particular game format is a game of skill for the whole of India. With the rise of innovation in the online gaming industry, the presence of such a machinery is gaining importance. Nagaland's skill license regime is the only regime under which a regulator confirms the skill element of the game while issuing a license to operators. However, the other states are not bound by its categorization.

For an industry that is constantly innovating diverse and unique games, operators cannot be expected to wait for a game format to be challenged, and the slow judicial machinery to then determine whether a game is a game of skill or not. To bring in certainty for the operators and for the players to indeed be exposed to only skill games, a gaming commission that is well equipped to make the determination is incumbent.

Can any State Government Declare Skill Games as Gambling Activities and Bar Them?

The Government of Telangana amended the Telangana (Gaming) Act, 1974, to (1) remove the exemption for games of skill entirely from the Act, and (2) amend the definition of “gaming” to the effect that games (including online games), when played for stakes, would amount to “gambling.” Thus, even skill games cannot be offered for stakes in Telangana. Interesting legal issues arise here and, in fact, this law has been challenged, inter alia, on the following grounds: whether the state has the legislative competence to prohibit games of skill, which are protected under “freedom of business” guarantees under the Constitution of India. In the absence of a stay on these amendments, operators have completely ceased to offer real money games in Telangana.

Whether a Player can Play Skill Games for Stakes

In State of Andhra Pradesh v. K Satyanarayana, ² the Supreme Court held rummy to be a game of skill. The court observed, however, that “if the owner of the house or club is making profit or gain from the game of Rummy or any other game played for stakes, the offence may be brought home.” Relying upon this observation, the Kerala High Court recently held that the game of rummy, when played for stakes, amounts to gambling under the Kerala Gaming Act, 1960. However, the aforesaid statement in Satyanarayana was primarily directed at the gambling operators, and not players playing rummy for stakes. In fact, several high courts have interpreted Satyanarayana and held that games of skill, when played with stakes, would not amount to gambling. ³

The Kerala Court also seems to have overlooked the fact that, after Satyanarayana, there was a larger bench judgment of the Supreme Court in Dr. K.R. Lakshmanan v. State of Tamil Nadu, ⁴ in which it was held that the Madras City Police Act, 1888, and the Tamil Nadu Gaming Act, 1930, did not apply to betting or wagering on horseracing, it being a game of skill. Arguably, following Lakshmanan, games of skill are saved from the provisions of the state anti-gambling laws, irrespective of whether stakes are taken or not.

Whether Online Operators can Make a Profit from Players for Offering their Games

Most state anti-gambling laws prohibit gambling in physical premises termed “common gaming houses,” which are used for the purposes of making “profit or gain” from gambling activities. One can argue that such prohibitions should not apply to the online medium. Keeping that argument aside as such, in relation to skill games, none of the prohibitions under the state anti-gaming laws should apply. However, in Satyanarayana, the Supreme Court of India seems to have taken a cautious approach and examined whether the club in question was profiteering from rummy and concluded that charging nominal “sitting fees” for playing rummy by the club in question did not amount to profiteering. In Lakshmanan, the Supreme Court didn't comment on this aspect. However, clarity is required on whether in fact the abovementioned provision should apply in relation to skill gaming operators.

Strong Need for Uniform Law

Recently, a public interest litigation (PIL) has been filed in Delhi High Court, seeking enforcement of state gaming laws, through MeiTy, by blocking gambling websites. However, the PIL also includes some websites and games that should be viewed as skill games.

As illustrated by the examples above, the erroneous interpretation of Supreme Court precedents by multiple states' gambling legislation and haphazard territory-wide bans are hampering business certainty for gaming operators. There is a dire need for strong federal legislation, prescribing uniform standards for all games pan-India. This legislation could identify which games qualify as games of skill, with standards to be maintained by operators, as well as player protection and responsible gaming provisions, among others.

The central law could also be supplemented by standards set by self-regulatory bodies. It is crucial for such bodies to play a role in the regulatory framework. Regulatory overreach by the state could stagnate innovation and competition. Due their keen insight on issues unique to the industry, such bodies are best placed to adopt new standards in light of evolving technology and trends.

In fact, even in the absence of a licensing regime, the industry has acted responsibly and has set up various self-regulatory bodies. These industry bodies have introduced measures to ensure transparency, responsible gaming, player protection, and financial integrity, among others. These exhaustive standards are intended to bring in international best practices customized to suit the Indian market.

While “gambling and betting” is a state subject under the Constitution, there are still some ways by which India can have a central gaming law, at least for an online medium.