Exclusive: Grounds by Tamil Nadu govt before SC challenging the Madras HC judgement

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The Tamil Nadu government moved the Supreme Court against the Madras High Court (MHC) order that struck down certain amendments introduced by the Tamil Nadu Gaming and Police Laws (Amendment) Act, 2021, as unconstitutional in the matter of Junglee Games India Pvt. Ltd. & Anr. v The State of Tamil Nadu & Ors.

The special leave petition (SLP) filed last Saturday raises a number of grounds/questions challenging the MHC judgement. The G2G Team got access to the voluminous petition filed by the Tamil Nadu government.

Gambling and Betting to read together

The MHC held that the word betting in “betting and gambling” in Entry 34 of the State List cannot be divorced from gambling and treated as an additional field for the State to legislate on, apart from the betting involved in gambling. In the SLP, the State alleged that the High Court had erroneously read Entry 34 in a very restrictive manner as if interpreting a provision of a statute and not a source of legislation in a list.

That High Court erred in holding that Entry 34 of List II in the Seventh Schedule to the Constitution of India does not empower the State of Tamil Nadu to legislate on the subject ‘betting’ per se, as a subject of legislation separate from betting involved in gambling.

Also read: Who are petitioners in the Karnataka Gaming Ban case before the High Court

The SLP stated that even if the State’s power to legislate cannot be traced from Entry 34, the legislation can be enacted on the subjects mentioned in Entries 1 and 26 of List III (Concurrent List) which further provide the State with authority to legislate on matters pertaining to “criminal law” and “other professions.”

The Petitioner State has wide powers under Entry 1 of List II of the Constitution to legislative on any matter relating to public order, which phrase includes public health; as also under Entry 26 of List II to legislate in regard to trade and commerce within the State

The distinction between ‘games of skill’ and ‘games of chance’

The Tamil Nadu government submitted that to apply the distinction between ‘games of skill‘ and ‘games of chance’ in the context of online games is necessarily futile since online games are invariably open to manipulation.

That the High Court of Madras ought to have considered that there exists no judicial pronouncement as on date that online rummy, poker, or any other games played in cyberspace using mobile applications and computer algorithms (as distinguished from their physical forms) are games of skill………..

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The law is reasonable and proportionate

The State submitted that the ‘legitimate goal’ of countering ruinous addiction to online gambling and of protecting vulnerable and underage persons who are at great risk of harm to their finances is achieved by the legislation. Since the games are played over the internet, operated by entities that may or may not be established within the State, no alternative measure would be as effective as the complete ban on wagering and betting in cyberspace.

Assuming without conceding that the respondents’ activities are protected under Article 19(1)(g), the impugned Act would not have disproportionate impact on such rights since it only restricts the respondents’ generation of business revenue from games played for wager, bet, money or other stake while preserving their revenue from other non-gambling activities.

Cyberspace is complex

The State relied on Liga Portuguesa de Futebol Profeissional (Case C-42/07), where the Court of Justice for the European Union upheld Portugal’s legislation prohibiting operators, which are established in the other European Countries, in which they lawfully provide similar services, from offering games of chance via the internet in Portugal.

………………..a ban on wagering and betting in cyberspace was the least restrictive measure available to the Petitioner in the context of the unique and unprecedented complexity of regulating, any activity that takes place over the internet and frequently from locales beyond the territorial jurisdiction of the Petitioner State.

The State submitted that the decisions so far rendered by the Apex Court dealt with Rummy, Poker, etc., in physical form and has not made any judicial pronouncements whether these games played in cyberspace using mobile applications and computer algorithms are games of chance or games of skill or games of mere skill.

………………..the case laws decided by the this Hon’ble Court in holding the game of rummy as “game of skill” will not be applicable to the Amending Act as the Amending Act deals with online rummy being played in cyberspace and the same is only prohibited which is punishable and hence the same is not contrary to the ratio laid down by this Hon’ble Court.

The SLP stated that the MHC had launched a de novo inquiry into the definitions of gaming, gambling and betting when the scope of judicial review is limited and there is a presumption of constitutionality for validly enacted legislation. The SLP refers to M.J. Sivani V. State of Karnataka, (1995) 6 SCC 289 where the Apex Court held as follows:

“15. For a commoner or a novice, it is difficult to play video game with skill. Ordinary common people who join the game can hardly be credited with skill for success in the game. The forecast is nothing better than a shot at a hidden target……………………..

“18………………The nature of the business and its indelible effect on public interest etc. therefore, are important elements in deciding the reasonableness of the restriction. No one has inherent right to carry on a business which is injurious to public interest…………….”

Games are a mixed game of skill and chance

The SLP alleged that the MHC fell into grave error by applying the predominance of skill theory which cannot be universally applied and not all the people who have downloaded the game can be seen as a person to have the skill to play the game. Therefore, it can only be seen as a mixed game of skill and chance and not a game of predominant skill.

That the nature of Online games like Rummy, Poker in asking for the player to deposit the money before the beginning of the game can be construed a gambling as the same is yet to be declared as protected under Article 19(1)(g) of the Constitution of India

In M.J. Sivani case, the Apex Court further held as follows:

20. It is true that the owner or person in charge of the video game earn livelihood assured under Article 21 of the 125 Constitution but no one has the right to play with the credulity of the general public or the career of the young and impressionable age school or college-going children by operating unregulated video games……………………

The SLP raises questions which inter alia are as follows:

  1. Whether a game of skill, when played for a financial or otherwise valuable stake, constitutes a gambling activity beyond the protection of Article 19(1)(g) of the Constitution?
  2. Whether a State has no legislative competence to regulate/prohibit a game of skill?
  3. Whether the right under Article 19(1)(g) is available to the corporate respondents, who are not individual citizens of India?
  4. Whether online rummy, poker, and other games played in cyberspace using mobile applications and computer algorithms (as distinguished from their physical forms) are games of skill or games of chance?