Madras High Court upholds TN Online Gaming Act but says it cannot apply to rummy, poker, other games of skill

The Madras high Court Thursday upheld the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022 but ruled that its prohibitory provisions will be applicable only to games of chance and not to games of skill such as Rummy and Poker.

A Bench of Chief Justice SV Gangapurwala and Justice PD Audikesavalu said that while the State government was free to make rules to restrict the time one spent playing online games or to set age limits for both games of chance and of skill, it can ban only games of chance and not games of skill.

The Court further said that the Act cannot be invoked to ban games of skill like Rummy and Poker.

"Certainly, online gambling can be prohibited by the State. The State has ample power to enact a legislation to prohibit online gambling and it has also the power to regulate online games of skill in the State of Tamil Nadu. In stead of resorting to regulating online games of skill, in this case, rummy and poker, the State has simply prohibited the said games. The same was in excess of its legislative competence," the High Court said.

The Court's verdict came on a batch of petitions filed by the All India Gaming Federation and several online gaming companies challenging the constitutional validity of the Act.

The Tamil Nadu government had earlier told the High Court that addiction to online games was "destroying families" and that its new Act banning all forms of online gaming was necessary to protect the citizens of the State.

The Act that received the Governor's assent on April 10 this year prohibits all forms of online gambling and online 'games of chance' including online Rummy and Poker.

The petitioners opposed the blanket ban that the Act imposes on all online games irrespective of whether those can be termed as gambling or games of chance.

The Gaming Federation told the Court that the TN government did not ban physical games of Rummy and Poker but only the online format of the those two games was banned.

The State government justified such ban by arguing that when played online, even games of skill such as Rummy and Poker involved much risks as players and gaming companies employe "Artificial Intelligence (AI) and bots to manipulate" results.

The High Court however, dismissed the above argument made by the State after noting that the latter had failed to prove that AI and bots were employed by gamers and gaming companies.

The Court further said that several other High Courts and the Supreme Court had already clarified that Rummy and Poker were games of skill and the TN government had failed to establish how when played online, these games transformed into games of chance.

“The State, in the impugned Act, has already included the games of rummy and poker to be online games of chance merely on presumption. The same cannot be protected. The same would be contrary to the judgments of the Apex Court and of this Court, discussed supra. In view of that, it will have to be held that the inclusion of the games, rummy and poker, in the Schedule of the Act is erroneous, does not stand to reason and the said Schedule deserves to be set aside. The corruption or mischief in a game may not define the game. Of course, in an isolated case, if it is noticed by the State that the petitioners or any other online games servers, online games providers are using bots or have indulged in any illegal activity, it can take action against it. However, to dub online games of rummy and poker as games of chance would be against the dictum of the Apex Court and the various High Courts,” the Court said.

The Court went on to say that the State government was free to make regulations as contemplated under Section 5 of the Act to impose reasonable regulations on time limit to ensure a player did not go on playing endlessly, to impose strict checks to ensure that no one below the age of 18 was permitted to play these games online, and also to take action in any case where it did find that AI, bots, or any other illegal methods were being employed to manipulate players and results of the online games.

It accordingly, partly allowed the pleas filed by the Federation and the online gaming companies.

"In the light of the aforesaid, the writ petitions, as such, stand partly allowed. The prayer to declare the entire impugned Act of 2022 as ultra vires is negated. The Schedule of the impugned Act, including the games of rummy and poker, are set aside. Sections 2(i) and 2(l)(iv) of the impugned Act shall be read as restricted to games of chance and not games involving skill, viz., rummy and poker," the Court said.

Senior Advocate Kapil Sibal, Advocate General R Shunmugasundaram and Additional Advocate General Amit Anand Tiwari appeared for the Tamil Nadu government.

Senior Advocate Abhishek Manu Singhvi along with advocates Suhaan Mukerji, Abhishek Manchanda, Arun Mohan, Ashwini Vaidyalingam and Harsh Gursahani from PLR Chambers appeared for another petitioner, Gameskraft Technologies.

Advocates Akhil Anand and Himanshu Vij from DSK Legal appeared for petitioner companies Head Digital Works, Play Games 24x7, and Junglee Games.

Senior Advocates Saish Parasaran, V Raghavachari, Aryama Sundaram, Mukul Rohatgi, Sajan Poovayya and advocate Deepika Murali also appeared for the petitioners.

Senior Advocates Sundaram and Poovayya were briefed by Pradeep Nayak, Anupama Hebbar, Sankeerth Vittal and Karan Gupta of Keystone Partners on behalf of the lead petitioner, the All India Gaming Federation.

[Read Order]