Understanding the regulation of Online Gaming in India
Placing bets through online medium is a flourishing practice amongst gamblers in recent times. Gambling laws however do not cover online gambling. The problem arises when a server in a place where gambling is legal, makes dealing with users at places where it is illegal. It becomes difficult to trace extra territorial servers and penalize offenders. Moreover, the basic laws about online gambling itself are not legislated by the states. As of now there is no specific law in India which bans an individual customer from placing an online bet with a bookmaker based outside India even though the Acts such as Payment and Settlement Systems Act, 2007 and FEMA regulate payments made for participating in online betting. It is pertinent to note that Sikkim is the first State to legislate on online gambling vide Sikkim Online Gaming (Regulation) Act, 2008.
The Sikkim Online Gambling Rules, 2009 provide under Rule 3 for 13 games which may be played online in the manner provided under these Rules. These are, Roulette, Black Jack, Pontoon, Punto Banco, Bingo, Casino Brag, Poker, Poker Dice, Baccarat, Chemin-de-for, Backgammon, Keno, Super Pan 9. Rule 5(2) provides that the license granted shall be valid for a period of one year which may be renewed for a further period of one year on payment of a renewal fee of one lakh rupees. The rules deal with different aspects such as applications for operating gambling website and advertisement which can be put up on the website.
The most recent legislation on gambling came out this year in the State of Nagaland. The Nagaland Prohibition of Gaming and Promotion and Regulation of Online Games of Skill Act, 2016 (Gaming Act) issues a license to conduct “games of skill” (on websites, mobile platforms, television or any other online media) to a person, firm, company or limited liability company (LLC) incorporated in India which is substantially held and controlled in India. This Act also exhaustively defines ‘a game of skill’ as inter alia that “having preponderance of skill over chance.”
Gaussian Network Private Limited v. Monica Lakhanpal and Another:
The petitioner company proposed to launch a website offering 6 games viz. Chess, Billiards, Texas Holdem Poker, Bridge, and Snooker. Vide the petition filed before the Delhi District Court under Order 36 of the Code of Civil Procedure, 1908, the petitioner sought the Court’s opinion so as to ensure that they were not violating any laws by operating games which may amount to betting or gambling.
Amongst other contentions made by the parties, it was argued that there are World Championships organised for the games of Rummy, Chess, Poker, Billiards and Bridge which fortifies their claim that these are games of skills. It was further brought to the notice of this court that some of the top Management and Technology universities have recognized Poker as an accredited academic subject. The Massachusetts Institute of Technology (MIT), University of Maryland etc. are amongst the top ranking world universities, offer poker as an academic course.
The Court opined that when skill based games are played for money in virtual space, the same would be illegal and observed that the degree of skill in games played in a physical form cannot be equated with those played online as the degree of chance substantially increases because various manipulations including the randomness, inside cheating, collusion cannot be ruled out, when the same games are played in the virtual space.
It is pertinent to note that this decision of the District Court, was challenged before Delhi High Court. As part of the Appeal a copy of the RTI information has also been placed on record, obtained from the Government of Nagaland, Department of Justice and Law wherein the answer to the query was that the games of poker, rummy and bridge involve skill and are not gambling as per the provisions of the Gambling Act, 1867.
However, on April 21, 2016 the appeal was withdrawn by the plaintiffs and accordingly the High Court noted that the District Court’s above judgement would not survive.
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 District Court in Gaussian Network Private Limited v. Monica Lakhanpal and Another (Suit No 32/2012, Delhi District Court