Meghalaya Gaming Rules impose 5-year experience and 2 crores annual fee for a license, no entry for locals

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Meghalaya Cabinet on Tuesday (14 December) approved the Meghalaya Regulation of Gaming Rules, 2021 (Rules). This enables the state excise department to implement the Meghalaya Regulation of Gaming Act, 2021 (Act).

This will enable the “state excise department tap the revenue potential of online and physical gaming and regulate gaming in the state,” said Chief Minister Conrad Sangma in a tweet. The Rules were published on the website on December 21, 2021.

The Act was published in the Official Gazette on March 26, 2021, making Meghalaya the third state from the northeast to enact a gaming regulation in recent times. Sikkim and Nagaland are the other two northeast states that have enacted laws to regulate gaming.

The Rules impose a prohibition of entry of locals into the physical gaming premises. This prohibition is similar to what the Goa government proposed and was subsequently upheld by the Goa bench of Bombay High Court in October.

Coming to online games, they can be played through intranet (terminals) which cannot traverse outside the State of Meghalaya. This is similar to the system currently offered in Sikkim. Only persons above 18 are allowed to play and operators cannot accept any payment above INR 25,000 in cash.

The enactment requires gaming entities to obtain a license which shall be issued only to an Indian citizen or a legal entity incorporated in India. An operator is required to set up a office in Meghalaya within 30 days from the date of issue of license.

A license once granted is valid for five years from the date of grant of the said license and can be renewed on application. The Rules state that the applicant must have a minimum of 5 (Five) years of continuous experience in conducting games of skill or games of chance.

The Rules mandate that an applicant for a license must be not be barred from conducting games of skill or chance in any part of India and must not be convicted for violation of foreign exchange laws. Licensee is required to pay Annual License Fee‘ of 2 (two) crore rupees and also 2% of the Gross Gaming Revenue (GGR) generated as royalty on quarterly. A licensee is required to execute a Bank Guarantee of 2 (two) crore rupees in favor of the Government as a security deposit which shall be renewed every year.

The licensed operators are required to pay “Gaming Royalty” from time to time at regular intervals as 2% of Gross Gaming Revenue which is a sum of the total amount of all bets made and the revenue generated from advertising, marketing, and promotion minus the value of all winnings and prizes, bonuses and discounts, and cash backs, as well as the payment gateway and banking charges in the course of the gaming period.

Lawyers, Chartered Accountants, Finance Experts, and IT Companies of repute possessing a minimum experience of 5 (five) years in their respective fields of work registered with licensing authority will assist in scrutinizing the applications.

The law will be implemented once the Rules are published in Official Gazette. Gaming companies like Dream11, My11Circle, JungleeRummy, RummyCircle, etc., currently do not operate in Sikkim and Nagaland that currently require a license. If the operators decide not to take a license, they will have to cease operations in Meghalaya. This will mean an exit in another State after Karnataka in recent times.

The Karnataka online gaming ban law notified in October prohibited all forms of gaming for stakes. The law was challenged before the Karnataka High Court which heard the parties at length and the judgement is currently reserved. Officially known as the Karnataka Police (Amendment) Act, 2021, the gaming ban law makes all forms of gaming for stakes, including online, a cognizable and non-bailable offence.