Real money online gaming in India: Laws, regulation and government

Published on:

When a 29-year-old Kerala youth named V.H Vineeth took his own life owing to the heavy financial losses he incurred due to his addiction to online rummy in early 2020, the incident sent shockwaves across the country, prompting authorities to take drastic steps to reign in the world of online real money gaming. Vineeth’s losses kept stacking up until he had run up a debt of over 20 lakh rupees.

As similar cases spiked up pointing to a worrying pattern in the larger scheme of things, online games involving real money like poker, fantasy sports and rummy came under fire and bans began picking up momentum, especially in the southern states.

In the wake of the pandemic when the horrors of unemployment and poverty became lived realities in the country, the propensity to real money games increased exponentially.

Courtesy of lockdowns, fast internet speeds and smartphone penetration, RMG have evidently bourgeoned into a billion dollar market. That was not the case a few years ago when such games in India were played offline and regulations were effectively enforced.
Real Money Gaming firms seek an identity that is separate from gambling despite multiple allegations and bans. They argue that these games are not merely based on chance but operate on a considerable amount of skill. Whilst the apex court of India has famously ruled that games of skill cannot be termed as gambling, many southern state governments in their capacity have taken a contrarian view and imposed restrictions or bans by amending the gaming acts in a bid to grapple with the depredations of financial risks associated with these games.

Kerala government’s move to declare online rummy played for stakes as illegal paved the way for other southern states to follow suit. A domino effect began taking shape as states like Telangana, Andhra Pradesh and Odisha began to weed out the concept of stakes-involving games being termed as “games of skill”. It is also noteworthy that cases appealing against the state-level bans are subjudice in Telangana, Andhra Pradesh, Tamil Nadu and Kerala.

India’s Online Gaming Market – A Sunrise Industry

Notwithstanding the apprehensions, India’s online gaming industry is expected to nearly triple, from $1.1 billion in 2019 to $2.8 billion by 2022, consulting firm Deloitte noted in a recent report. While these figures cover the broad online gaming category, it is notable that one of the fastest-growing sectors is still real money gaming.

India has clocked in over 300 million online gamers, with online rummy alone accounting for 30 million regular users. If these bans continue, the rising market can take a big hit as investors like Tiger Global, TCV and Falcon Edge have invested close to a billion dollars in real money gaming operators like Mobile Premier League (MPL), Dream11 and Games24x7.

Players of poker contend that it involves reading cues, betting patterns and body language, making it largely a game that needs practice. Hence, it is patently absurd to term poker a “game of chance”.

Online Gaming Laws in India

Gambling presupposes an element of chance which is not protected under most state laws. However the Supreme Court in 1967 (State Of Andhra Pradesh vs K. Satyanarayana & Ors) ruled that rummy requires a certain amount of skill because the fall of the cards has to be memorized and the building up of rummy requires considerable skill in holding and discarding cards. Fantasy cricket needs players to have prior knowledge about the pitch and weather conditions and a sound judgement of choosing a skilled set of players. On top of that, there is always a cap on how much one can play based on criteria laid down by the developer.

Once the skill element is established, they become automatically liable for protection under the fundamental right to do business and practice a profession, which is granted under Article 19(1)(g) of the Indian constitution.

However, some lawyers opine that the reading of Article 19 has to be more nuanced and it must be viewed in the context of the states’ social obligation. So if there are any games that can have an adverse effect by pulling the purse strings of a vulnerable population, the need of the hour is not a ban but regulation. The constitution of India does not allow an outright ban on any practice unless that is the last resort and the only solution.

Many industry observers and critics believe that online gaming companies can use artificial intelligence to make the game more addictive, ensuring that a gamer is shelling out more funds. Intrusive apps can also read incoming messages of a user’s salary being credited and play on their psychology at the crucial time.

In a bid to retain players, some online gaming firms have also gone as far as to mull the possibility of giving a cashback if players have lost extremely large sums of money. Strategies of roping in more and more players are continually deployed through television commercials and billboard advertising.

Online Gaming Regulation in India

In an interesting turn of events of late, gaming companies have themselves been calling for regulation. Many online gaming companies admit that there could very well be problems with this sector but the way to tackle them is not an outright ban.

What they are happily willing to comply with and welcome is central government regulation rather than dubious and ambivalent state-specific rules. A central body dedicated to overseeing this sector with audits, advertising regulations and taxation could be one possible answer to these prevailing concerns raised time and again.

The online rummy federation has its own set of rules which involve age-related restrictions. The self-regulation also states that certified members of the federation cannot allow bots to play against a human and employees are restricted from playing the same.

With our world evolving with rapid digitization, the new age has brought forth new forms of entertainment for people. We hope better sense prevails in the days ahead as our country ponders the fate of online real money gaming.