The Madras High Court on Tuesday struck down in its entirety the amendment to the Tamil Nadu Gaming Act which banned online games including online rummy and online poker with stakes, in what many in India’s online gaming business described as a landmark verdict.
According to Bar and Bench the Court said that by imposing a wide-ranging, complete ban, the amendment has failed the least intrusive test and fallen afoul of Article 19 (1) (g) of the Constitution. Court noted that the challenged amendment was capricious, irrational, excessive, and disproportionate.
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The first bench of Chief Justice Sanjib Banerjee and Justice Senthilkumar Ramamoorthy observed that the doctrine of severability is also not applicable since the amended definition of gaming runs throughout the Act, concluding that the amending Act is disproportionate to the object and ultra vires the Constitution.
“Nothing in this order will prevent the government from introducing appropriate legislation on the issue conforming to Constitutional principles of propriety,” the Court stated.
Jay Sayta, a technology lawyer who appeared in the online gaming matter said, “The Madras High Court has struck down provisions of the Tamil Nadu Gaming and Police Laws (Amendment) Act, 2021 which prohibited and criminalized playing online games for a bet, wager, or other stakes. These provisions had obliterated the differentiation between games of skill and chance, which runs contrary to well-established jurisprudence laid down by the Supreme Court.
The court has accepted that running online games falls under the right to carry on trade and commerce guaranteed under Article 19(1)(g) of the Constitution and has asked the state government to introduce a proportionate, balanced, and least-intrusive legislation to regulate the online skill-gaming industry if they so desire. The historic verdict is a boost for the nascent and burgeoning online gaming industry.”
It will be interesting to see the reaction of the DMK-led state government to this verdict and whether they will choose to challenge it in Supreme Court
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.
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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.
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.