Dawn of the Age of Gaming: Does the Order of the Madras High Court signal changing winds?

The gaming industry globally has seen several big changes in the past two decades. From formats and platforms on which the games are played to the introduction of monetary rewards and benefits for players, technological advancements have had a significant impact on gaming and the manner in which they are played by users across the world. This in turn, has given rise to several legal challenges. Since the law is always playing catch up with technology, lacunae in the existing legislative frameworks governing gaming in general as applicable and prevalent in various jurisdictions have become more evident. 

In India, the Public Gambling Act, 1867 (“PGA”), a legislation enacted by central government prohibits gaming by individuals in ‘gaming houses’ to derive profits out of the act of gaming. PGA was originally promulgated to tackle the problem of a growing number of common gaming houses or gambling houses where individuals would play games such as cards, dice, boards etc. by placing bets using money. While serving its purpose for which it was originally enacted, the PGA fails to address the issues posed by online games such as rummy, poker, teen patti, quizzes etc. as virtual gaming space is not recognized under the PGA as a common gambling house.

Further, since gambling is a state subject as per the Constitution of India, the states individually have also enacted several legislations to regulate gambling and betting within their individual territorial boundaries. However, most of these state legislations majorly incorporate the terms of PGA itself and therefore are also unable to address the issue of virtual gaming. Only the states of Sikkim, Nagaland and Telangana have introduced amendments to their state gaming legislations to regulate virtual gaming as well as conventional gambling houses.

The other challenge that PGA and several state legislations face, is the games themselves. As a general principle, Indian courts have established through various pronouncements over the years that games which are purely games of chance and are in no manner dependent upon any actual skill of the participating player and would therefore amount to an act of gambling if played to derive monetary benefits. While these are now well-established principles, this test has not really been applied to the various products offered by the virtual gaming industry such as different quizzes, board games, card games etc.

The only application of this test to a game in the virtual space was to the Indian fantasy league platform Dream11 wherein, Punjab and Haryana High Court held the same to be a game of skill in view of the fact that the result of the fantasy game contest is not at all dependent on winning or losing of any particular team in the real-world game. The player is required to exercise his own skill, judgment and discretion to assess the relative worth of each athlete/sportsperson as against all athlete/sportspersons who are available for selection. 

Courts are now beginning to take cognizance of this issue and the inability of existing regulations to effectively regulate and govern virtual gaming. 

In a recent order dated July 24, 2020, passed by the Madurai bench of the Madras High Court, the court observed that with the lockdown in place, and people being stuck at home owing to the pandemic, a large portion of the young population is becoming addicted to participating in virtual gaming involving monetary stakes. While discussing the legality of games and products being offered by various platforms, the court acknowledged the absence of laws and regulations to regulate virtual gaming. The court stressed upon the need of evaluating the existing legal framework and modifying it to ensure that merely because gaming is undertaken in the virtual space and not a designated common gaming/gambling house, that should not enable service providers to offer games which would otherwise be classified as gambling if the same were done through conventional/physical means.

The court also suggested that the regulation of online sports would attract investments in the sector and emphasized that the Government of Tamil Nadu should evaluate the situation and introduce an appropriate legal framework in this regard. The court also stated that since gaming sites and organizers also partake in this activity by taking ‘a slice on the winning hand’ they can be considered akin to a ‘virtual gambling house’. It was however, clarified by the court in the said order that while the court is not against virtual gaming, there should be a regulatory body to monitor and regulate the gaming activities irrespective of the same being undertaken in the real world or through virtual means.

Since the virtual gaming space is at a relatively nascent stage in India, it is just a matter of time before legislators start introducing more streamlined legislation well suited to tackle virtual gaming to ensure that the platform or rather the place of gaming is not used as a justification to bypass the scope of gambling regulations in general. When introduced, these changes would provide much-needed clarity on the subject matter, and companies and stakeholders involved would be able to evaluate their platforms within the framework to ensure that services being offered are in compliance with regulations.

With the increasing sensitivity shown by legislators towards issues such as regulation of digital and virtual spaces, data protection, privacy laws and cyber law infringements, one can be sure that this decade would witness significant legal changes to address and regulate the virtual gaming industry in India.