From Pixels to Policies: The Interface of Internet Gaming and Law

Introduction

Indian law on internet gaming is a changing scenario determined by state legislation designed to address the peculiar factors of growth characteristics of this explosive sector. The laws of online gaming are based on the Public Gambling Act of 1867[1] That prohibits gambling on games of chance; however, games of skills are tolerated as long as specific conditions are met. Since every state has the mandate of coming out with its own laws related to gaming, diverse laws arise, which can be very different from one state to another. Presents judicial pronouncements that have more focused on resolving the line of demarcation between games of skill and of chance, which has had its fallout on the legal status of popular games like poker, rummy, and fantasy sports.
Recent legislative developments include the Online Gaming Intermediary Rules, which aim at responsible gaming and consumer protection. Only now, the Indian government is slowly waking up and taking the economic prospects of the online gaming industry seriously and “engaging various aspects including taxation, licensing, and regulating advertising”. However, the current complexity arises due to multiple state-level prohibitions, judicial wars, and efforts to curb organized illegal gaming, and the future of online gaming law in India is a subject of intense interest and continued debate.

Regulatory Scenario

Indian online gaming is highly regulated by such colonial-era legislation as the Public Gambling Act of 1867, which does not cover modern online gaming. Under the Indian Constitution, each state is at liberty to enact its version of rules, and therefore across the states, variations do occur in gaming policies. The operators have to contend with a complicated patchwork of laws, where the laws could be quite different.
At the state level.

State-Specific Laws

The Indian states have approached online gaming in an individualistic manner based mainly on the local political climate and social attitude. For example, some of the states, such as Sikkim, have evolved specific licensing regimes for online gaming. The Assam Game and Betting Act, 1970[2] prohibits wagering of all kinds irrespective of the degree of skill required to operate it. In Maharashtra, The Bombay Prevention of Gambling Act, 1887[3] prohibits all sorts of gambling but does not include the regulations regarding online gaming. In Tamil Nadu, online gaming is regulated by the Tamil Nadu Gaming Act, 1930,[4] and Tamil Nadu City Police Gaming Rules, 1949[5] which was later amended in 2021. In one of the north-eastern states i.e. Sikkim, online gaming is regulated by the Sikkim Online Gaming (Regulation) Act, 2008[6]. In Nagaland, Nagaland Prohibition of Gaming and Promotion and Regulation of Online Games of Skill Rules, 2016[7], demarcates between the game of skills and the game of chance and seeing that provides license to the games. Southern States like Karnataka, Andhra Pradesh, and Telangana have all-together banned online gaming that involves the risk of losing money. Tamil Nadu is still working on it to ban these types of games just like its neighbouring states. Such state-specific regulatory scenarios pose problems for the players and operators since they may face changing status under the law for almost identical activities from one place to the other.

Difference between Games of Skill and Games of Chance

There is a primary difference between games of skill and games of chance determines how one will go about determining his or her outcome. Games of skill, on the one hand, depend more or less upon the abilities, knowledge, and strategic choices a player has to ensure that one result is favored more than another. As such, skill accounts for most of the influence players have on the result in that the potential performance may be skilful through practice and experience. Such games include chess, poker, and competitive esports where skill prevails and therefore determines victory very often.

On the other hand, games of chance are based purely on randomness and luck; hence, there is much less influence on the player’s decisions in this. Some of the other instruments that determine whether a person wins or not by randomness, for example, rolling of the dice or shuffling of cards still require most of the decisions that determine the result. These traditional genres of gambling machines and lotteries fall under the umbrella wherein the winning is nearly unpredictable and relies more on chance than any technique. Understanding this difference has wide-ranging legal implications, especially in the area of regulations concerning wagering and gaming establishments that house games of chance and games of skill under broadly disparate constraints.

Recent Legal Developments

 The last two years have seen the most sweeping changes in the Indian online gaming legal space since embracing amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021[8] in April 2023. Initiatives like this translate into a framework that outlines measures for strengthening regulation while progressively refining the issues of today, like protection for the user and responsible gaming behaviour. The new rules also provide that online intermediaries engaged in gaming shall verify the user accounts and need to have redressal mechanisms for grievances.
Thus, a new set of rules emerges that increases transparency along with accountability in the industry. The recognition of online gaming intermediaries has given an actual shape to the industry where the control over the digital gaming platform may now be streamlined from a centralized body. The judicial side also brought in a new development as some judgments were passed to validate the legality of games like poker and rummy. Notably, the Madras High Court reversed this trend as it ruled in favour of real money games saying that these games involved more skills than chance and therefore could not be said as betting. The Gujarat High Court also followed the same stance as it found its verdict in favour of playing poker as a game of skill. Yet, there are several issues because every state in this country has its regulatory framework thus creating a fractured legal framework that significantly influences and directs access to online gambling in different territories. This is a call for a single regulatory authority that will ensure coherent standards are created to protect the users. This means the creation of standards that allow the growth of this industry even as the law continues to evolve.

PUBG: Banning on popular game

There was one of the very popular games in the country, PUBG (Player Unknown’s Battle Grounds) that was banned in India. Much debate was there that it got banned due to some other reasons but in reality, banning PUBG Mobile in India is such a complex issue that relates to all facets of national security and data privacy issues as well as its impact on society.

National Security Reasons

The primary reason a complete ban was ordered on PUBG had something to do with national security. According to the Indian government, there was illegal siphoning of data from users to servers in China, that could pose a threat to national interest. The Government approached this by trying to attain freedom from potential threats threatening the sovereignty and integrity of India through Section 69A of the Information Technology Act.[9]. Now that the tension is mounting in the geopolitical field between India and China, this case proves to be a sound step for the ban as part of the strategy to threaten Chinese influence.

Data Privacy and User Safety

The problem of data privacy was seen to be paramount during this PUBG ban. However, it has been widely opposed how these apps were sending user’s data and distributing it amongst third parties without the prior knowledge of the user. The government opines that the protection of citizens’ data is par excellence in this fast-digital world as such a ban creates a form of a protective screen from unauthorized mining of Indian citizens’ data. This appears to be a nascent global debate over data ethics and privacy where, probably for the first time, governments are being held accountable for citizen’s data security.

Social Impacts

The ban also had social implications in PUBG’s designs, most importantly regarding how this impacts the young. Wild assertions that the game was breeding addiction, profligacy through in-game spending, and even theft among children threw up even more eyebrows. Connecting violent crimes to PUBG gameplay only exacerbated controversy over safe gaming measures and the mental well-being of young gamers.

Regulatory Framework.

The PUBG ban highlights how a strict regulatory framework would be needed with respect to online gaming in India. Its suddenness brings forth the question of how fast-gamifying laws are to move in sync with avant-garde technologies and evolving issues socially. Even though national security and user safety are of utmost importance, the rules must be evident, reasonable, and clear, taking into view the rights of concerned stakeholders in the gaming industry is likely to rise ever-increasingly as the digital economy further assumes shapes.

Implications of Judicial Precedents

Judicial pronouncements have contributed immensely towards moulding the present scenario regarding the affair of online gaming in India.

Lakshmanan v. State of Tamil Nadu (1996)[10]

The Supreme Court verdict set the necessary line of demarcation between games of skill and games of chance. It was held that games of skill, knowledge, and discretion could not fall within the prohibition purview of the Public Gambling Act of 1867, though it has an element of luck. That was the principle for all the subsequent judgments pertaining to online gambling websites.

Varun Gumber v. Union Territory of Chandigarh[11]

In this first case, Punjab and Haryana High Court have decided in favour of Dream11 stating that it is a game of skill rather than a gambling-related one. Accordingly, the constituents of the game indulge in skilful thinking and judgment, which shifts the paradigm away from chance-based gaming. The verdict set up a legal defence of fantasy sports in India.

Gurdeep Singh Sachar v. Union of India[12]

In this case, the Bombay High Court restated the judgment in favour of Dream11 stating that it is a game of skill and thus cannot be a form of gambling. Therefore, the conclusion of a fantasy sports match is not based on chance but because of the discretion and skill exercised by participants.

Head Digital Works v. State of Kerala[13]

Kerala High Court, in the much-needed judgment, overturned the ban on online rummy with a ruling that the earlier decision of the courts that allowed rummy as a skill game was based on the competence of the game. In this respect, it was much needed to demarcate between games of skill and chance under present regulatory frameworks.

Future Trends

It would be a fair assumption that the regulatory environment of internet gambling in India would continue to transform and continue in this upward trajectory. Considering that the growth of this industry moves at a blistering pace, it demands to have thorough legal reform. That shall be able to keep up with the drastic change in technology, besides, can respond to market dynamics. The state law inconsistencies may only lead to a need for a unified approach towards it, robust enough to be able to provide uniformity in the framework for the gaming industry. Awareness of the intricate relationship between online gaming and the law by stakeholders in India may therefore best guide them towards evolution, compliance, and an environment that supports growth and innovation.

Conclusion

As India grapples with complexities arising in its online gaming legislation, several developments in the recent past are self-explanatory to the critical point of time that has arrived, when issues of innovation and regulation must be balanced forthwith. But then, amendments in IT Rules and more on self-regulatory bodies would make one think about whether these measures bring forth a safe and responsible gaming environment or become layers of bureaucracy in place of really talking to problems of addiction and consumer protection. Is this enough to remain in step with the high-tech state of affairs of the industry or is the case one of a struggle with out-of-date colonial laws? This patchwork quilt of state-specific regulations brings no comfort to many issues crucial for the legal framework; uniformity and clarity in it, for instance. How will the government ensure equal treatment of all players and operators in dealing across jurisdictions? Would this imperative for uniformity in law usher in greater uniformity or would the states resist it because their laws reflect their socio-cultural milieus? And yet, since real money is involved even games of skill may lead to an increase in cyber fraud and cyber-crime that needs to be regulated legally. Such questions remain paramount, inviting stakeholders policymakers, operators, or players to critically engage with the dialogue around what the future of gaming in India will be as that industry continues to grow.

References:

[1] Public Gambling Act 1867, Act no. 3 of 1867 (India).

[2] The Assam Game and Betting Act, 1970, Act of State Legislature of Assam (India).

[3] The Bombay Prevention of Gambling Act, 1887, Bombay Act No. IV of 1887 (India).

[4] Tamil Nadu Gaming Act, 1930, Act by Legislative Assembly of State of Tamil Nadu (India).

[5] Tamil Nadu City Police Gaming Rules, 1949, Act by Legislative Assembly of State of Tamil Nadu (India).

[6] Sikkim Online Gaming (Regulation) Act, 2008, Sikkim Act No. 23 of 2008, Act of Legislature of Sikkim (India).

[7] Nagaland Prohibition of Gaming and Promotion and Regulation of Online Games of Skill Rules, 2016, Nagaland Act No. 3 of 2016, Act of Legislature of Nagaland (India).

[8] Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, Notification by Ministry of Electronics and Information Technology (India).

[9] Information Technology Act, 2000, Acts of Parliament (India).

[10] Dr. K.R. Lakshmanan v. State of Tamil Nadu (1996) 2 SCC 226

[11] Shri Varun Gumber v. Union Territory of Chandigarh and Ors. CWP No. 7559 of 2017

[12] Gurdeep Singh Sachar v. Union of India ((2019) 75 GST 258 (Bombay))

[13] Head Digital Works Pvt. Ltd. v State of Kerala & Ors, WP (C) No. 7785/2021