Political Economy

India's Big Gaming Bans Lack a Theory of Harm

The broad brush that is being applied to this sunrise sector is puzzling, considering the direct contribution to the economy roots from huge revenue generation creation of employment and tax payments.

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In India, an explosion of ‘online gaming’ – everything from games of chance to games of skill – has led to a quick reaction from authorities, seeking to regulate the space. We do not have common legislation dealing with ‘online gaming’ as such. For some reason, states have adopted the Public Gambling Act, 1867 (PGA) – an archaic law of the 19th century to apply to skill gaming activities of the 21st century with no resemblance to gambling or betting (an activity of pure chance).

Gambling is treated as res extra commercium (in Latin – a thing outside commerce) and hence one cannot claim a right to trade in it. The term ‘gaming’ when linked to ‘gambling’, can be misinterpreted as an activity that is restricted or prohibited by law.

In 2021, Tamil Nadu, Karnataka and Kerala outlawed online gaming itself. Why? Going by their object clause, the reasons are similar i.e “to curb the menace of gaming through the internet, mobile app, to enhance the punishment for gaming for the orderly conduct of citizens, and to wean them away from the vice of gambling”.

The Tamil Nadu government passed an amending Act that redefined ‘gaming’ to include any game involving wagering or betting in person or in cyber-space, except a lottery; enlarged the scope of prohibitions to include all online formats of skill games going beyond the Ordinance, making it a punishable offence. Likewise, the Kerala government amended the provisions banning online rummy in the state. The Madras and Kerala high courts quashed these amendments for being arbitrary and violative of the right to trade and commerce.

Soon the Karnataka government took its punt with the banning spree, hitting online gaming by way of an amended law that redefines ‘gaming’ to include all types of online gaming and making them non-bailable offences. Surprisingly, this law treats gaming on public streets more leniently by making it a bailable offence.

The successive amending Acts imposing a blanket ban on ‘online gaming’ have reinforced a particular aversion to all online games, considering them more harmful than the offline versions. The Supreme Court has been ruling in favour of skill-based games like rummy, horse racing and recently held that online fantasy sport is skill-based and there was no question of betting or gambling – this matter is no longer res integra (an open question).

In an erudite judgment, a Supreme Court bench ruled against blanket prohibition imposed on dancing girls, observing that it was excessive and disproportionate to the professed aim of the legislation. The court was of the opinion that less drastic measures could have been adopted to ensure the safety of women. Justice Nijjar eloquently said, “Morality and depravity cannot be pigeon-holed by degrees depending upon the classes of the audience” and aptly observed that “these are misconceived notions of a bygone era which ought not to be resurrected”.

supreme court

The Supreme Court of India. Photo: Pinakpani/Wikimedia Commons, CC BY-SA 4.0

A multi-dimensional view to assess real harm

Bans do not tackle the root causes of alleged dangers like addiction or suicide. The fundamental problem is one sided narratives lack an evidence-based theoretical framework. Therefore, the broad brush that is being applied to this sunrise sector is puzzling, considering the direct contribution to the economy roots from huge revenue generation creation of employment and tax payments. Applying the ‘selective audience test’, the courts have deprecated censorship imposed in order to protect the pervert or to assuage the susceptibilities of the over-sensitive.

When governments get swept away in moral policing  they forget that the first guardian of such behaviour ought to be the parents.

It would be presumptuous for anyone (much less a government or a gaming company) to claim to be the sole guardian of vague moral behaviour like ‘orderly conduct’. Without any material to show that the apprehended behaviour or crime is real and that the current laws and self-regulatory design are inadequate, legislations banning any activity that many people may choose to indulge in any way would be an exercise in futility for being unenforceable; the idea to regulate lotteries, cigarettes, alcohol is to impose reasonable restrictions while allowing those who choose to consume the same despite the warning.

We live in a country of cricket fans – who play as passionately in gullies as in stadiums. Various online gaming formats have opened huge opportunities for millions of sports fans to become professional champions, engage in team-building strategies, stay engaged in a variety of sports. Considering that the proposed law ostensibly brings skill games like rummy, chess, scrabble, online fantasy sports into the fold, the law deprives young and old of their right to creative expression of engaging in sports and entertainment.

Therefore, blanket prohibitions are excessive in nature besides being vague and imaginary, incapable of meeting its moral objectives.

Why have the new laws passed in Tamil Nadu and Kerala failed to pass the test of reason, and consequently held arbitrary and unreasonable by the courts?

For the last six decades, while considering different types of games, the courts have held that as far as gambling is considered it only applies to wagering on games of mere chance without the interference of skills. The settled position stands decided, in Chamarbaugwalla (1957) and Satyanarayana (1968) and K.R. Lakshmanan (1996) cases, ruling that (a) the competitions where success depends on a substantial degree of skill are not ‘gambling’ and (b) the expression “mere skill” would mean substantial degree or preponderance of skill.

The apex court in these judgments did not hold that rummy played for stakes is an offence. However, rummy if played, accompanied by side betting, comes within the purview of the Act.

The Madras high court found when it comes to card games or board games such as Chess etc. when played in the physical form or in the virtual mode, there is no distinction on the basis of the skill involved. Under the guise of legislating on ‘betting and gambling’, there cannot be any legislation on something which is not betting or gambling. Although, prohibiting side betting, is justified.

The Amending Act created a legal fiction, whereby even games of skill, which were otherwise permissible, would amount to an offence if any betting was involved, which turned ‘the existing statute on its head’.”

The Kerala high court observed that online rummy played either with stakes or without stakes remains to be a ‘game of skill’. As such playing for stakes or playing not for stakes can never be a criterion to find out whether a game is a game of skill.

Earlier, the Rajasthan high court, Bombay high court and the Punjab and Haryana high court (upheld by the Supreme Court in appeal) have held that fantasy sports involved rational decision-making based on the knowledge of the game and skill predominates that of chance.

However, with resistance from some state governments, the blanket bans create roadblocks for all skill game operators across cyberspace. Ignorance is not bliss when states disregard the force of sport engagement in building a sense of community, camaraderie, which unifies diverse cultures, ethnic and socio-economic groups.

Possible solutions for uniformity and predictability

The issue of classification under skill or chance: adopting a pre-constitution legislation, the PGA, 1867, meant for regulating “gambling” to apply to “gaming” where games and sports are not in the arena of gambling.

Linking terms like ‘gambling’, ‘sports betting’, ‘match-fixing’ to all formats of ‘gaming’ has created resistance from the Union and state government to enact a central framework that will bring clarity and avoid conflicting statuses of games across India. To tackle rampant match-fixing, a law governing sports betting was desired. However, The Sports (Online Gaming and Prevention of Fraud) Bill 2018 lapsed. The Law Commission of India had also recommended a central law for skill gaming, which has not fructified.

Legislative competence can be derived from the existing Entry 31 in List I (relating to wireless, broadcasting, and like forms of communication) of the constitution or introducing a new entry. The online platform has introduced creative new ways of education, watching media content, banking which have platform specific regulatory concerns. Therefore, self-regulatory mechanisms could address concerns of all stakeholders, give the required flexibility. However, to avoid mixing of issues relating to online and offline gaming formats and other regulatory challenges, the parliament could also use its exclusive power (Article 248) to make any law with respect to any matter not enumerated in any list. This legislative power is sui generis and outside the three lists in Schedule 7 of the constitution.

The debate on skill vs chance will go on as long as governments do not adhere to the rule of law settled by the Supreme Court. The crusader of the rule of law, Soli Sorabjee, who lives on through his lectures, said:

“The essence of the Rule of law is that exercise of governmental powers shall be conditioned by law. Its basic tenet is: However high you may be the law is above you. When John Adams used this historic phrase, ‘a government of laws and not of men’, he was not indulging in a rhetorical flourish but was flatly repudiating the idea of Rule by fiat or firman.”