Madras High Court Quashes Online Rummy & Poker Ban in Tamil Nadu For the Second Time

In a much-needed respite for India’s beleaguered real money online gaming industry, the Madras High Court overturned the Tamil Nadu government’s ban on online rummy and poker today. The High Court affirmed that the prohibition would not extend to these games, recognizing them as games of skill and not gambling.

The ruling came from the first bench, comprising Chief Justice Sanjay Gangapurwala and Justice Audikesavulu, which partly upheld the appeals of online gaming platforms contesting the ban. The court, however, made it clear that the state retains the authority to regulate these games, including stipulations regarding the players’ age, permissible playing hours, and other such conditions. The complete order was yet to be updated on the Madras High Court website at the time of publishing this report.

In their petition, gaming companies asserted that a game’s legality should not hinge on whether it’s played physically or online. The companies argued they couldn’t be accused of facilitating gambling as they duly pay GST and retain only 16% of the game stakes for providing their platforms. Further, they maintained that while the state government may regulate online games, it cannot completely ban them.

In defence of the ban, the Tamil Nadu government argued that no individual player aggrieved by the online rummy ban has come forward to challenge it in court. It’s the companies profiting from these games that have taken legal action. They further argued that the Supreme Court has recognized that authorities can restrict rummy playing outside club premises. The state emphasized that online games operate around the clock without geographical limitations.

Moreover, the state expressed concerns over gaming portals luring players with incentives for profit and the potential use of bots masquerading as human participants in these online games.

This development marks the Tamil Nadu Government’s second failed attempt to outlaw online rummy and poker, skill-based activities previously targeted under the state’s Prohibition of Online Gaming & Regulation of Online Games Act, 2022.

In August 2021, the same court ruled that the amendments to the Tamil Nadu Gaming and Police Laws (Amendment) Act, 2021, introduced by the AIADMK government, were unconstitutional as they infringed upon the fundamental right to practice a profession, occupation or trade under Article 19 (1)(g) of the Constitution. This decision is currently pending an appeal before the Supreme Court, which has been combined with a related appeal from the Karnataka government.

Earlier in the year, online gaming companies such as GamesKraft, Play24x7, and Head Digital, among others, supported by the All India Gaming Federation (AIGF), had legally challenged the ban, arguing that their offerings constitute games of skill.

Roland Landers, CEO of the All India Gaming Federation, reacting on the Madras High Court`s landmark decision, said, “We are truly grateful for this landmark decision by the Hon’ble Madras High Court upholding the difference between games of skill and chance in line with over six decades of jurisprudence on the subject. By reiterating that online rummy and online poker are games of skill, this decision by the Madras High Court is yet another validation of what the online skill gaming industry has always maintained in relation to online skill games being a legitimate business activity protected under the Constitution of India.”

“This also adds to a long line of judgments from the Supreme Court, Karnataka, Kerala and Tamil Nadu High Courts upholding the legitimacy of such games. Being the apex industry body for online skill gaming and the voice of the MSME gaming startups, we at AIGF believe that this decision will be a great boost for this sunrise sector and generate more certainty among investors and the gaming community at large, and is a step in the right direction for this sunrise sector,” Landers further added.

Tamil Nadu Gaming Ban: A Quick Recap

In a renewed effort to regulate real-money online gaming, Tamil Nadu Chief Minister MK Stalin presented the ‘Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Bill’ in the state legislative assembly on March 23. The assembly passed the bill once more and forwarded it to Governor RN Ravi for his assent.

The governor gave his nod on April 10, which led to immediate legal pushback from stakeholders like the All India Gaming Federation (AIGF) and major gaming platforms, including Junglee Rummy, Head Digital, and Games24x7, who challenged this law in the Madras High Court.

While the gaming operators were initially petitioning for a temporary stay on the ban until the final decision, the High Court refused the request. The bench, then headed by Acting Chief Justice A Raja and Justice Bharat Chakraborty, refused to stay the law that barred real money play for games such as rummy and poker within Tamil Nadu.

On August 14, during the court proceedings, Senior Counsel Kapil Sibal articulated the state’s concerns, focusing on the addictive aspects of online gaming and the risk of non-human players, or bots, influencing the game.

The gaming firms argued against the ban, asserting the lack of substantial justification for the prohibition of skill-based games, and questioned the state’s overreach in imposing such comprehensive prohibitions.

The state government, on its part, stood firm, insisting on its prerogative to enact the ban, citing the welfare of its citizens as its prime concern.

The legal battle intensified on August 21, with Senior Counsel C. Aryama Sundaram and Senior Advocate Sajan Poovayya, representing AIGF and the rummy platforms, respectively, presenting their case against the ban.

Simultaneously, the Tamil Nadu government enforced the “Tamil Nadu Online Gaming Authority and Regulation of Online Games Rules, 2023,” which activated the bill’s provisions previously notified on April 21. In line with this, a five-member Online Gaming Authority was constituted to regulate the sector.

By August 24, the debate reached a new peak as Senior Counsel Dr. Abhishek Manu Singhvi, on behalf of Gameskraft, scrutinized the basis of the state’s prohibition, challenging the findings of the Chandru committee’s report on which the ban was re-introduced.

The Path Ahead

The recent decisions by the Madras High Court to strike down the ban on online gaming not just once but twice underscore the firm legal footing of online skill-based games. The government’s hands seem tied in restricting this industry’s expansion, with the only remaining tool being prohibitive taxation, as evidenced by the recent imposition of a 28% GST on player deposits for online gaming, casinos, and horse racing.

Last November, Home Minister Amit Shah, while commemorating the platinum jubilee of India Cements in Tamil Nadu, projected India to reach a $5 trillion economy by 2025. The government’s strategy for this ambitious economic growth hinges on pillars like inclusive growth, fostering a digital economy, encouraging fintech, leveraging technology for development, energy transition, and climate initiatives, along with a robust cycle of investment and expansion.

Yet, conspicuously absent from the government’s blueprint, is the real money online gaming sector. Touted by many as an industry brimming with potential, the RMG sector could be pivotal in propelling the nation towards its 2025 economic goal.

The critical question remains: Will the government be able to look past the short-term political calculations of the 2024 General Elections and recognize the true value that this burgeoning sector holds? Only time will tell if the RMG industry will be integrated into the economic fold as a key driver for India’s ambitious economic journey.

This is a developing story. Keep following PokerGuru for more updates!