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Summary: Meghalaya Regulation of Gaming Ordinance, 2021

The Meghalaya government has formally legalised gaming with stakes for both games of skill and chance, while explicitly stating that rummy, poker, teen patti, and even prediction of sporting events are games of skill. Companies can now offer both games of skill and of chance (includes roulette wheel of fortune) — both of which have been defined and recognised broadly — with the necessary permissions and oversight from Meghalaya government, which will set up a Meghalaya Gaming Commission and also appoint an adjudicating officer to manage and settle offences.

The Conrad Sangma-led government had first announced the cabinet decision to bring in the Meghalaya Regulation of Gaming Ordinance, 2021, in January. The move was aimed at increasing taxes coming into the state exchequer by having a regulatory mechanism for online gaming. After approving the bill, Cabinet minister James Sangma (who is also Chief Minister Conrad Sangma’s brother) had said that:

“In order to regulate gaming within the state and to bring revenue to the state government, we felt it necessary to enact a law for the same and therefore the draft ordinance was placed in front of the cabinet for its approval.”

Gaming has emerged as a global pastime, including in Meghalaya. Online gaming is an already large industry in the state, but functions without regulation, CM James Sangma had said

The Ordinance was promulgated by Meghalaya governor Satya Pal Malik on February 13 and published in the state gazette on February 17. The law comes as multiple states have proceeded to ban online gaming, including games of skill such as Tamil Nadu, Andhra Pradesh, and Kerala (which now considers online rummy illegal), with states such as Karnataka and Rajasthan looking at similar restrictions.

What are games of skill and chance?

According to the Ordinance, Games of skill are those with “preponderance” of skill over chance, including those where: 

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  1. Skill relates to strategising the manner of placing wagers or bets
  2. Skill lies in team selection, or 
  3. Selection of virtual stocks based on analyses, or  
  4. Skill relates to the manner in which moves are made

Games of skill will include deployment of physical and mental skill and acumen, where the success of the game depends on the existence of superior knowledge, training, attention, experience, and adroitness of a player. 

The Ordinance has laid down at least 20 games of kinds of games as games of skill (in Schedule A), including rummy, poker, solitaire, teen patti, betting on results of sporting events (including cricket, football, chess, horse racing), virtual sports, virtual team selection games, and even virtual adventure games

The Ordinance further explains that games of skill will can be card based, action or virtual sports, or adventure or mystery, and calculation, strategy, or quiz based games. The Schedule of skill games can be expanded to include

  1. games that have been declared as skill games by law or judicial decisions, or
  2. “games where there are domestic and international competitors and tournaments”, or
  3. Games “which can be determined” to be those of skill. 

What are games of chance? 

Games of chance are those with a preponderance of chance over skill. Games of chance include Wheel of Fortune, flush, roulette, and slots (Schedule B). 

Games can only be offered with licenses

Both games of skill and chance involving stakes can only be offered after obtaining licenses (both have the same licensing regime) from the state government. Games with stakes can be played — including via a “a telecommunication device, non-restricted geo fenced internet” — or using gaming instruments at physical locations,  without a license. 

Key points 

  1. Licenses will be issued by the State Government (which is the Licensing Authority under the Ordinance) only to an Indian citizen or legal entity incorporated in India.
  2. Companies will have to pay a licensing fee, as well as a gaming royalty, the amount for which will be notified by the state government from time to time. Gaming royalty will be a percentage (to be notified) of a gaming company’s Gross Gaming Revenue, which is a sum total of all bets made, revenue from ads ad marketing, minus the value of winnings, discounts, payment gateway and banking charges. 
  3. Licenses will be granted for five years at a time, after which it will have to be renewed. 

Additional permissions for promos, holding online tournaments

  1. Gaming companies will have to intimate the Licensing Authority of “all regular promotional activities, including registration bonus, bonus deposits, and free play”. 
  2. Companies can conduct tournaments and competitions online or at physical locations only with the permission of the Licensing Authority. For physical tournaments/competitions, the company will also have to secure approvals from the district administration and other authorities. 

Suspension

The Licensing Authority, on advise of the Commissioner, can suspend the license if the Commissioner has reason to believe that the company/licensee has acted in violation of the ordinance, or if the license has been obtained based on incorrect information. 

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Meghalaya Gaming Commission

The state government shall form a three-member Meghalaya Gaming Commission, to be chaired by a retired judge of the High Court, with a experienced person and a person from NGO/civil society as members.

The Commission can issue binding policy directions to ensure that games are played “in a fair and transparent manner”; monitor and report to the government on compliance of licensees, act as the Dispute Redressal body between players and companies.

Offences and penalties

A licensee/company can be punished with a penalty of a maximum of Rs 2 lakh if they have violated the Ordinance. If a player breaches any license conditions, he/she can be punished with a penalty of Rs 10,000 for the first three violations. In case of more violations, he/she will be prohibited from gaming for at least three years and will be banned from the physical premises of the company. 

  • Companies that have obtained a license with incorrect information can be fined with a maximum penalty of Rs 2 lakh. 
  • Failure to maintain or submit statement of accounts or giving incorrect accounts to the state government can be fined with a maximum penalty of Rs 2 lakh. 
  • Companies/licensees can be fined with misleading gaming advertisements with a maximum penalty of Rs 1 lakh. 
  • Operating gaming without a license can be punished with imprisonment of two years and a penalty of Rs 10 lakh maximum. This offence would be non-bailable, cognisable, and triable by a Judicial Magistrate of the First Class.
  • A company’s executives can be deemed guilty of offences by a company, proceedings can be carried out against them and they can be punished under the law.

Adjudicating Officer 

The Meghalaya government shall appoint an Adjudicating Officer not below the rank of Commissioner of Taxes to adjudicate the offences under and any violations of the Ordinance. The AO will have the powers of a civil court and can summon witnesses and examine them on oath, requisition any public records, issue commission for examining witnesses of documents, and so on. 

The Ordinance overrides the Meghalaya Prevention of Gambling Act, 1970, insofar as it applied to games of chance or skill. 

The state government has the power to make rules for executing the Ordinance including on: 

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  1. Fees and gaming royalty to be paid to the state government 
  2. Manner of maintaining of accounts relating to games of skill and chance 
  3. Restrictions with regard to player’s age in games of skill and chance 
  4. Restrictions on credit facilities that companies can provide to gamers 

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