Online Gaming

In Context

• The Tamil Nadu government has recently taken steps to promulgate an ordinance against online gaming.

Legislation related to online gaming in India:

• Gaming:
  • Law laid down by the Supreme Court in 1957 (Chamarbaugwala cases) — competitive games of skill are business activities protected under Article 19 (1) (g) of the Constitution.
  • Rummy and horse racing have been classified by the courts as games of skill that do not come under the purview of gaming laws
• Betting and Gambling: 
  • Gambling is a non-cognisable and bailable offence in India.
  • Betting and gambling can be found in Part II of the State list.
  • They have been mentioned in detail in the seventh schedule of the Indian Constitution.
  • In other words, this simply means that the state government can exercise full control over betting and gambling practices in their state.
  • They can also formulate their state-specific laws.

Significance of regulations:

• Addiction issues:
  • Many social activists, government officials and those in law enforcement believe that online games like rummy and poker are addictive in nature; and when played with monetary stakes may lead to other issues.
  • Backdrop of some persons getting addicted to virtual games, losing money and falling into a debt trap. Some of the victims took their own lives.
  • The study shows that online games are addictive whether these games really involved skill or mere tricks.
• Social Risks:
  • Reportedly, there have been a few instances where youngsters, faced with mounting debts due to losses in online games have committed other crimes like theft and murder.
• Manipulative websites:
  • Some experts also believe that online games are susceptible to manipulation by the websites operating such games and that there is a possibility that users are not playing such games against other players, but against automatic machines or ‘bots’, wherein there is no fair opportunity for an ordinary user to win the game.

Criticisms:

• Mixing Games of Skill and Games of Chance:
  • One of the primary grounds on which the new gaming laws in Karnataka, Kerala and Tamil Nadu has been challenged is that games of skill have been clubbed along with games of chance in the definition of gaming, if the games of skill are played for prizes or bets.
  • Rummy and horse racing have been classified by the courts as games of skill that do not come under the purview of gaming laws. 
• Legislative competence of states: 
  • It has been argued that states do not have “legislative competence” to prohibit games of skill and that only games of chance can be regulated for gambling and betting.
• Blanket ban:
  • An outright ban may not entirely curtail the playing of such online games, with or without stakes.
  • Telangana, which was the first State to ban online games for stakes in 2017 has seen a spurt of illegal or underground online gambling apps, most of which originate from China or other foreign countries, and accept payments from players through dummy companies or hawala channels. 
  • Both the Enforcement Directorate (ED) and local cybercrime authorities have tried to crack down on such apps but with limited success.
• Loss of revenue:
  • Shifting of users to grey or illegal offshore online gaming apps not only results in loss of tax revenue for the State and job opportunities for locals but results in users being unable to avail remedies for any unfair behaviour or refusal to pay out winnings.
• Recent position of Karnataka High Court:
  • Court held that rummy, fantasy sports and betting on horse racing to be games of skill. 
  • The High Court ruled that online games involving skill, regardless of whether money is staked on them or not enjoy the protection of the right to trade and commerce, unlike gambling or betting.
  • The court also held that playing online games could help in building the character of an individual and enjoying online gaming could also fall within the contours of freedom of expression and the right to liberty and privacy guaranteed under the constitution.

Way Forward:

• Licensing and Regulation:
  • Regulation of online games may be a better and proportionate solution rather than an outright ban.
  • One could look at licensing and regulating the industry with various checks and balances such as,
    • diligent KYC and anti-money laundering processes, 
    • barring minors from accessing real money games, 
    • placing weekly or monthly limits on the money that can be staked or time that can be spent, 
    • counselling for addictive players and allowing self-exclusion of such players etc.
• Realising the potential of the online gaming sector, the State and the Union Governments should work together in consultation with industry stakeholders to draw out detailed guidelines.
• It is left open for the State government to come up with new legislation dealing with betting and gambling in accordance with the provisions of the constitution.

Source: TH