Author: Akhilendra Singh Student at Symbiosis Law School, Noida
To the Point
The existing status of internet gaming in India is ambiguous because there is no overarching law on the matter and state laws do not align. The central problem lies in differentiating between the skill-based games which are mostly legal and the chance-based games which are gambling and often legal. Nevertheless, a significant number of internet games such as rummy, poker, and fantasy sports teeter in a legal void because they blend skill and chance. Citing financial exploitation, addiction, and suicide, Telangna, Andhra Pradesh, and Tamil Nadu have all outlawed online real money gaming.Other states like Sikkim and Nagaland have devised licensing systems to control and impose taxes on these games. This creates more disorder within the legal framework of the country.
The courts have upheld the position that skill-based internet games like fantasy sports and rummy are not gambling and cannot be banned without restriction. The courts have sided with regulation instead of limitation which supports the claim that a total ban would violate fundamental rights. Regardless of the lack of a cohesive national law, users, gaming companies, and law enforcement still encounter confusion.To adequately describe online games, establish licensing guidelines, protect consumers, stop illegal betting, and encourage responsible gaming, a centralized regulatory framework is essential. Without this, India runs the risk of suffering social harm from unregulated platforms as well as financial losses from businesses that are growing.
Abstract
The swift digitization of India has fueled the growth of online gaming platforms such as Dream11, RummyCircle, and MPL. However, this surge in popularity has once again sparked the age-old debate of whether online gaming should come under scrutiny, especially from regulatory bodies, because of potential monetary losses. The inability to distinguish between a game of skill and a game of chance, which determines if an activity is legal or illegal under Indian law, is the primary cause of legal conflicts. As different state governments impose diverse policies, some controlling the sector while others impose outright bans. India’s legal system is increasingly fragmented. This paper discusses the gaps and conflicts within the current framework of law and gaming, including the need for untapped judicial philosophies, and the formulation of a uniform policy to curb the issues of internet-based gaming and gambling.
Use of Legal Jargon
In Indian law, the statutory distinction between “games of skill” and “games of chance” is absolute. This differential decides legality of an activity under the Public Gambling Act, 1867, a colonial statute still active in much of India. While games of chance generally depend on chance or natural events, skill games are those where the player’s knowledge, skill, experience, and practice determine the outcome. In situations where skill outweighs chance, the courts have reiterated that gambling laws do not apply.
The res extra commercium doctrine is often used in court cases involving gambling. The doctrine implies that games of chance and betting are not subject to constitutional guarantee under Article 19(1)(g) (trade and profession) since they are not genuine economic activities. Yet, the same doctrine is disputed when it comes to online gaming that involves skill-based forms of games such as fantasy sports, poker, or rummy that corporations claim to be genuine businesses entitled to constitutional protection.
In judicial review, the proportionality doctrine is applied by courts to determine whether a limitation (such as a state ban) is disproportionate to the pursued objective. A total prohibition against online skill-based gaming would be likely to fail, particularly when it disproportionately impacts legitimate business and gamers’ autonomy.
Apart from that, Entry 34 of the State List (List II of the Seventh Schedule) of the Indian Constitution grants state legislatures exclusive authority to control “betting and gambling,” which has led to a patchwork of laws in India. Certain states such as Karnataka and Tamil Nadu have tried to prohibit online gaming platforms, whereas Sikkim and Nagaland have established licensing frameworks for regulating them.
The Proof
Empirical evidence and real-life events highlight the pressing need for well-defined regulatory standards. According to a 2024 report by the All India Gaming Federation, the Indian online gaming sector had more than 42 crore users, with revenues exceeding ₹20,000 crore every year. Still, legal uncertainty exists. Some of the states, such as Andhra Pradesh, Telangana, and Tamil Nadu, passed bills prohibiting online games with real money following several reports of suicides by youth due to losses in online rummy and other online games.
For instance, in Tamil Nadu, the government had justified the 2021 ban on grounds of increasing addiction, loss of livelihood, and psychological damage. But the Madras High Court subsequently struck down the ban on the grounds of there being no evidence to demonstrate that all online gaming results in damage and that the action of the state was disproportionate.
Additionally, the Dream11 fantasy sports site, which is among India’s biggest, has been repeatedly sued on charges of illegal betting. But courts, such as the Bombay, Rajasthan, and Punjab & Haryana High Courts, have all come in its support, highlighting the skill element in picking a team and strategy. Particularly, unregulated betting apps and online platforms serve as the chief conduits for money laundering, match-fixing, and tax evasion, adding to the enforcement challenge. Law enforcement agencies do not have the cyber infrastructure or legal instruments available to close down offshore platforms or trace illegal in-game transactions.
The threat has been recognized by the government. In 2023, new amendments to the IT Rules were proposed by the Ministry of Electronics and Information Technology (MeitY), which required online gaming firms to register with self-regulatory organizations and implement age-checks and addiction controls. However, until a comprehensive central law is enacted, legal uncertainty and enforcement issues will persist to undermine the harmony between innovation and protection.
Case Laws
D.R. K.R. Lakshamanan V State of Tamil Nadu (1996)
The constitutionality of horse racing and whether it constitutes as gambling under the Tamil Nadu Gaming Act was under contention in this case. Because it was deemed a gambling activity, the state had outlawed horse racing.
In accordance with the Supreme Court, horse racing is primarily a skill-based sport rather than a chance one. It does not, therefore, constitute as gambling. The Court clarified that a game should not be classified as gambling if talent plays a significant part, even if chance is also involved.
2. Varun Gumber V. Union Territory of Chandigarh (2017)
According to a petitioner, the fantasy sports website Dream11 should be prohibited by law since it engages in unauthorized gambling.The Court decided that because users need to apply strategy, knowledge, and statistical analysis to assemble their teams, Dream11’s fantasy sports style is a skill-based game. Dream11 does not constitute gambling because skill is more important to succeed than coincidence.
3. Junglee Games India Pvt. Ltd. V. State of Tamil Nadu (2021)
Citing public harm from addiction and financial losses, Tamil Nadu changed its legislation to outright forbid online games like poker and rummy. Gaming corporations contested the ban’s constitutionality. Rummy and poker are skill-based games, and the Madras High Court ruled that the ban was illegal because it violated Article 19(1)(g) (right to practice any profession or carry on any occupation, trade, or business). The Court determined that the law was irrational and out of proportion to the public benefit goal.
Conclusion
India is at the crossroads in shaping the legal destiny of online gambling and gaming. A total ban might seem an easy fix to stop addiction and financial drains, but it could drive these businesses underground, thus escalating the danger of unregulated and illegal operations. A single national law clarifying games of skill and setting up a regulatory body would be a practical remedy. The body would be able to provide for licensing, require transparency, levy tax liability, and enforce age-restrictions and spending caps to safeguard users. With the Central Government intending to introduce a Digital India Act to supersede the antiquated Information Technology Act, 2000, there is the chance to resolve the legal uncertainty hanging over online gambling. Regulation, not prohibition, seems to be the viable path ahead, reconciling innovation, personal preference, and public welfare.
FAQS
1. What is the legal difference between online gaming and online gambling?
Whether the game is considered as one of skill or chance is the primary legal difference. While games of chance, like betting or lotteries, are frequently forbidden because they are considered gambling under the Public Gambling Act, 1867, games of skill, like chess or fantasy sports (like Dream11), usually have permission under Indian law.
2. Are online fantasy games legal in India?
As they have been classified as games of skill by an array of authorities, including the Punjab and Haryana High Court, fantasy sports are, in general, legal. However, as gambling is a state topic under the Constitution, legality can continue to vary depending on state laws.
3. Can states ban online games even if the courts call them games of skill?
According to Entry 34 of the State List in the Seventh Schedule of the Constitution, states do have the authority to control or outright forbid gaming and betting. States can enact laws at their own discretion until courts overturn such prohibitions if they are deemed arbitrary or excessive.
4. What are the risks associated with unregulated online gaming ?
Addiction, monetary losses, child exploitation, unlawful betting, and invasions of personal privacy are among the risks. Users are frequently ignorant of the type of game they are playing in the absence of appropriate restrictions, and their options for redress in the event of fraud or abuse are restricted.
