Skill-based gaming notches another win in India after state court ruling
The stated goal of the law is to ban gambling and regulate the skill-based gambling industry in Tamil Nadu. However, in practice the law prohibits most games considered to be skill-based games in India, principally rummy and poker.
The court overturned the law’s prohibition on these games, writing that it was “arbitrary, void, illegal, and unconstitutional”.
The court added that, not only is the act against the Constitution if India, but the state does also not even have the authority to regulate these games if it wanted to.
This is because, since 2022, skill-based gaming has been regulated on a national level by the Ministry of Electronics and Information Technology (MEIT).
“The impugned act creates a charade, that is to suggest prohibition of gambling and to regulate games of skill, but it actually bans games which are held to be games of skill by various courts, including this court,” said the decision.
The decision was welcomed by industry federations, which in India set the skill-based gaming regulatory regime as well as represent the industry itself on a political level.
Roland Landers, CEO, All India Gaming Federation (AIGF), said: “We are truly grateful for this landmark decision by the Hon’ble Madras High Court upholding the difference between games of skill and chance in line with over six decades of jurisprudence on the subject.
“By reiterating that online rummy and online poker are games of skill, this decision by the Madras High Court is yet another validation of what the online skill gaming industry has always maintained in relation to online skill games being a legitimate business activity protected under the Constitution of India.“This also adds to a long line of judgments from the Supreme Court, Karnataka, Kerala and Tamil Nadu High Courts upholding the legitimacy of such games.”
The regulation of the skill based-gaming sector
The news is the latest in a series of wins for real-money skill-based gaming in India, which has been engaged in a process of regulation over the past year.
Skill-based gaming, which is permitted by the 1867 Public Gaming Act, refers to any game in which skill, rather than luck, is the winning factor.
While the definitions differ from state to state, poker, rummy, horse racing betting and daily fantasy sports are often considered to be games of skill. Cricket betting, which is immensely popular in the Indian grey and black market, is usually seen to be a game of chance.
The sector has enjoyed a period of greater legitimacy and regulation over the past few years, and has been dubbed a “sunrise sector” by national government owing to its high growth rate.
In April, MEIT finalised new rules setting out the regulatory conditions for the industry.
As opposed to setting up a national regulatory framework, the government handed over the responsibility for regulation to a series of “self-regulatory bodies” made up of gaming businesses themselves. The AIGF is an example of such a body.
The sector hit a stumbling block in July, when the Goods and Service Tax Council set a new 28% GST tax on skill-based games in India. This is paid at all gaming entry points, making it much more onerous than a revenue tax.
Following the news, Super Group announced its Betway brand would be exiting the market in October.
Despite this, the continued growth of the Indian real-money skill-based gaming sector has led to some international operators to eye the market as a site of potential growth.
Flutter, which is active in India through its Junglee brand, highlighted the market in its Q3 earnings call, though noted the new GST tax will impede growth.