Challenge to online rummy, poker ban in Madras HC: Analysis of potential verdict and impact on online gaming

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The Madras High Court on Tuesday is expected to pronounce its judgment on the petitions challenging the Tamil Nadu government’s ban on online gaming with regards to online poker and rummy played with stakes. The Court’s ruling is bound to have widespread implications for India’s burgeoning online gaming ecosystem especially with several court battles being fought across states in the country and more on their way.

In an attempt to cut the clutter around the highly-anticipated verdict, G2G News on Friday hosted a room on audio drop-in platform Clubhouse to discuss the developments in the run-up to the judgment and the potential impact it is likely to have not just in Tamil Nadu but across other states in the country.

The hour-long chat saw Jay Sayta ( Lawyer & Advisor G2G News ), Siddharth Sharma (Head of Strategy, Head Digital Works), Akshat Gupta (Founder, G&J Partners), and Roland Landers (CEO, All India Gaming Federation) as speakers, with Ranjana Adhikari (Partner, Indus Law) moderating the conversation.

The discussion addressed several key aspects related to the matter, which included context around how the two parties landed in Court, the positions were taken by the State and online gaming companies during arguments, the significance of Thursday’s ruling, its impact on online gaming business in India and next steps that the State could opt for should the ruling go against it.

“The Tamil Nadu Gaming & Police Laws (Amendment) Act, 2021 was challenged on three grounds. One, the state did not have legislative competence to frame laws, and second, the law banning skill games like online rummy played for stakes was an infringement to the right to free trade and commerce guaranteed under Article 19(1)(g) of the Constitution. The third ground was that the law was manifestly arbitrary as it banned all kinds of games, played for stakes or wager and the law was too broad and vague. The court was prima facie not convinced on the legislative competence aspect and focused more on the other two grounds,” stated Siddharth Sharma.

Giving more color on the court proceedings, Jay Sayta informed the listeners that “The arguments in the matter went on for over 20 hours, six lawyers argued for the petitioner online rummy companies and AIGF, while the Advocate General argued for the Tamil Nadu government. The petitioners focused on the fact that banning online skill-based games violates the companies’ fundamental rights and law to curtail any harm must be proportionate and a complete ban should be only used as a last resort if other less intrusive options are not viable.”

He further added, that “The Advocate General, on the other hand, claimed that the state had the power to bring legislation and the law was only intended to ban games where players staked their money and not other types of prize competitions. He said that the law was brought in due to several suicides and cases of addiction after people lost money on online rummy and that the power to regulate an activity also meant that the state had the power to impose a blanket ban or prohibition”.

“The bench prime facie indicated that it was not convinced with the arguments of the state and noted that the law was vague and ambiguous and could lead to an absurd interpretation. The bench will pronounce its judgment on Tuesday 3rd August at 2 pm and a lot will depend on what is the exact contents of the judgment,” Sayta concluded.

While Akshat Gupta echoed the sentiments of Sharma and Sayta, Roland Landers touched upon the business-related aspect of the matter. According to Landers, states like Tamil Nadu and Telangana contribute significantly to the revenues of online gaming companies especially for online Rummy, hence a ruling in favor of them is likely to have a big impact on the economics of the business. He also added that he expects the impact of a positive ruling will be felt across states, where similar court battles are being fought.

All the lawyers part of the discussion, however, were unanimous with their opinion about the State not appealing the matter in the Supreme Court should the verdict go against it on Thursday.