Co-reported by Aarathi Ganesan and Sarvesh Mathi
‘My son wanted to be a doctor. He gave the NEET exam and scored 400 marks. But, we are daily wage labourers and didn’t have enough money to send him to college with that score. I told him we will take a loan and send him anyways, but he insisted on retaking the exam and scoring higher. But, unknown to us, he was lured into the world of online gambling by kids from the neighbouring villages. He pledged his mother’s jewellery, three sovereigns of gold, to get money to play these games,’ Periyasamy, father of 20-year-old Vengatesh from Dharmapuri, Tamil Nadu, told MediaNama. While Periysamy didn’t know what game his son was playing or on what platform, a police report seen by MediaNama mentions that Vengatesh played rummy on a platform called RXCE.
‘Eventually, my son started feeling like he was making one mistake after another. He was embarrassed about what he’d done. He felt what is the purpose of living without honour. Around 10:30 on a Saturday morning he consumed rat poison. He only told us about all of this at 5:30 in the evening so we took him to the hospital, but it was too late. He died five days later. He appeared for his NEET exam on April 12, 2022. By the next month, on May 12, he had passed away. In one month our lives changed,’ Periyasamy recounted with sorrow.
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Periyasamy’s loss is just one of many in the state. In Tamil Nadu alone, there have been 17 reported cases of death by suicide over the last three years due to the financial losses of online gambling addiction (particularly to online rummy). The victims are largely young and middle-aged men earning modest incomes from across Tamil Nadu. Many more have probably gone under the radar.
In Maharashtra, Goa, and Madhya Pradesh, there are almost 100 cases every month where parents have approached Responsible Netism (RN), a social organization that works for the online protection of children, complaining about their children’s online gambling addictions and suicidal tendencies, Unmesh Joshi, co-founder of Responsible Netism, told MediaNama.
‘I have handled a few cases where kids are spending between ₹70,000 to 1 lakh every month on various gaming platforms. Some of these students are also involved in criminal activities like drug peddling and sextortion to get money. Most of the cases are of high addiction, where children are playing these games for 10-18 hours a day,’ Joshi explained.
Back in Tamil Nadu, the government has faced mounting public and political pressure to address the harms related to online gambling platforms—gambling is a State subject and largely prohibited in its various forms by governments across India. ‘The government should completely ban online gambling. There is no question,’ says Periyasamy. In 2020, the Tamil Nadu government did just that, banning online gambling in the state through amendments brought by the Tamil Nadu Gaming and Police Laws (Amendment) Act, 2021.
The problem is, this regulatory attempt to curb the ills of online gambling didn’t work: in August 2021, the Madras High Court struck down the ban for being unconstitutional. While banning online gambling, it banned legal online skill-based games (like rummy) too—which the Court believed States don’t have the powers to do.
Why it matters: These platforms challenged the gambling ban in Tamil Nadu and similarly enacted ones in Karnataka and Kerala. However, with High Courts in these states overturning these bans on near-identical grounds, a regulatory vacuum emerges as well. Users are no longer protected from illegal sites, nor from legitimate harms even caused by legal skill-based gaming sites in India. On the flip side, legal platforms based in India struggle to operate in a country where regulation is decided on an ad-hoc basis by state governments and High Courts. This dents the prospects of the online mobile gaming industry, which had at least 433 million users in India and ₹13,600 crores in revenue in 2021, and is expected to reach 657 million users and ₹29,000 crores in revenue by 2025, according to a KPMG report.
Periyasamy’s story shows us that something needs to be done, and done soon, because these losses are real, painful, and cannot be recovered. A policy approach that protects users from harms, clarifies which ‘gambling’ games are legal and illegal, and enforces an oversight mechanism for companies operating in India appears to be the need of the hour.
Parsing through a centuries-old legal definition of gambling in India—that has been revised by the Courts time and again—may be the first step towards this. This is the precise policy question before the Tamil Nadu government today—or indeed any government looking to regulate the sector’s harms. ‘At present Tamil Nadu’s regulatory issues are primarily to do with a lack of clarity on the legality of fantasy sports and [what constitutes] “gambling” in the state,’ notes Ramaswamy Meyyappan, Advocate at the Madras High Court.
What is the status of online gambling in India?
As is the case with many Indian industries, online gambling (and online gaming) continues to be shaped by the complex after-effects of colonial laws.
‘The Public Gambling Act, 1867, has been adopted by many states with certain modifications,’ explains Jay Sayta, a Technology and Gaming Lawyer. ‘In fact, most of the statutes use the same phrasing as this British-era law. The law continues to be in effect to regulate common gaming houses and the physical scenario of gambling.’
A relic of a bygone era, the Public Gambling Act, 1867, was enacted to punish ‘public gambling and the keeping of common gaming-houses in the United Provinces, East Punjab, Delhi, and the Central Provinces.’ Common gaming houses are defined under the law as ‘any house, walled enclosure, room or place in which cards, dice, tables or other instruments of gaming are kept or used for the profit or gain of the person owning, occupying, using or keeping such house, enclosure, room or place, whether by way of charge for the use of the instruments of gaming, or of the house, enclosure, room or place, or otherwise howsoever.’
However, fewer words are spent within the text of the law—and in the State List of the Constitution—on defining what gambling actually is. So, Courts are left to interpret which games constitute gambling and whether they’re legal or not, which has repercussions down the line for online gaming bans too. ‘At the core of the definition of gambling is a distinction which courts have drawn between a game of skill and a game of chance,’ explains Samyak Gangwal, an independent Advocate.
A game of chance indicates that the outcome is completely out of a person’s control—and in the hands of a fate that cannot be influenced. Games of chance, which could include rolling dice or spinning a roulette wheel, tend to fall within the ambit of gambling laws and are either prohibited or regulated depending on the state.
On the other hand, ‘in skill-based games, the player can control the game’s outcome by applying his mind and intelligence,’ notes Sayta. ‘The Supreme Court has ruled that if a game predominantly requires an element of skill to win, or if skill used is higher than chance, then that game will be construed as a game of “mere skill”, which is the wording used in the 1867 Act too.’
For example, in State Of Andhra Pradesh vs K. Satyanarayana & Ors (1967) the Supreme Court ruled that games like rummy are skill-based. They involve skills like remembering which card is discarded and strategising about which cards to pick up. Such games of skill are held to be legal even if they’re played for stakes. As they don’t constitute gambling, they lie outside the State’s regulatory ambit, as Gangwal explains. ‘Courts have time and again held that wherever there is an element of skill involved that is outside the scope of gambling. Neither the Public Gambling Act, 1867, nor Entry 34 of List II of the Constitution [which lists betting and gambling as a state subject] includes any game where any amount of skill is involved—which means state legislatures can’t prohibit them.’
But, that’s exactly what many state governments have done over the last year in their efforts to curb the ills of online gambling sites. Their bans on online gambling target websites that offer online gambling as well as online gaming, collapsing the distinction between the two.
‘Telangana was the first state in 2017 to pass a specific legislation [the Telangana Gaming (Amendment) Act, 2017] that banned online gaming and gambling,’ recalls Sayta. ‘Crucially, the Telangana government removed the distinction between skill-based games and chance-based games—it essentially decided that any online game that involves playing for money will be banned.’ As MediaNama has past reported, the 2017 Act bans gambling ‘while explicitly defining rummy as not a game of skill’, in contravention of judicial precedent.
The same was the case in Tamil Nadu—the Tamil Nadu Gaming and Police Laws (Amendment) Act, 2021 banned ‘gaming’ which ‘includes any game involving wagering or betting in person or in cyber space’, targeting websites offering skill-based games for stakes as well as gambling sites. In March 2021, the Kerala government followed suit, banning online rummy for stakes through an amendment to the Kerala Gaming Act, 1960.
Karnataka was no less, with the Karnataka Police (Amendment) Act, 2021, banning online gaming with stakes. ‘There is no difference between a game of chance or skill as consequences of betting money are the same in both which is why the government does not see a need to treat them differently,’ the state government reportedly said when the law was challenged at the Karnataka High Court in 2021.
Skill-based online gaming companies filed separate challenges to the bans in all three states as and when they were enacted—arguing that the government’s actions were unconstitutional, and an infringement of their right to conduct a business under Article 19(1)(g). The states’ three High Courts eventually struck down the bans, reinforcing the need to distinguish between skill-based and chance-based games when developing a regulatory framework for the sector’s harms.
On the flip side, not all states have banned both online games of skill or chance either—some have chosen to legalise both types for revenue purposes, bringing them under the government’s scanner. Sikkim is one such state: in 2008, it passed the Online Gaming (Regulation) Act, 2008, the ‘first Indian legislation to expressly permit and regulate online gaming’. In 2015 it enacted the Sikkim Online Gaming (Regulation) Amendment Act, restricting the ‘offering of ‘online games and sports games’ to the physical premises of ‘gaming parlours’ through intranet gaming terminals within the geographical boundaries of the State.’ Nagaland also passed the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act in 2016. The law ‘legalised online gambling, albeit only “games of skills” .. [which] include, according to the Nagaland government’s definition, both rummy and poker, as well as chess, quizzes, and even virtual racing games.’ Meghalaya passed legislation legalising games of skill and chance for stakes in 2021—while ’explicitly stating that rummy, poker, teen patti, and even prediction of sporting events are games of skill’.
This leaves online gaming platform operations’ in a peculiar state of flux. How they are supposed to operate in India differs from state to state. More importantly, the lack of regulatory cohesion also leaves the harms of such platforms unattended—exacerbating their potential ill-effects on the Indian population.
So, where do we start with regulating games of skill and chance in India?
‘The harms caused by these platforms can range from addiction, to debt creation and debt traps, disassociation from personal life, family life and society, medical illnesses, aggression, and loss of life,’ says Meyyappan. ‘Personally, I’m of the opinion that in a state where TASMAC is [one of] the largest revenue generators, there is significantly less harm that is caused by these platforms,’ Meyyappan drily notes. TASMAC is a state-government-owned company that virtually controls the sale of Indian Made Foreign Liquor in Tamil Nadu.
Nevertheless, regulating the sector is clearly necessary to ensure that adults engage safely with trustworthy platforms—and that platforms are held accountable for mishaps. ‘If the sector goes unregulated, you’ll never know what kinds of gaming standards these platforms follow, what their privacy policies are, or whether they’re really very safe. There are no checks and balances preventing children from participating in these games,’ argues Gangwal. ‘So, there’s a legitimate need on the government’s side to regulate the sector, which is why some states may have banned these games. But that might be an overly paternalistic approach on their part, it might be motivated due to the internal politics of the state as well.’
For example, online gambling-related suicides have placed mounting pressure on Tamil Nadu governments of the past and present to act quickly, with the opposition heavily criticising the government’s alleged inaction. Much of the hastily-issued bans seen across India (or other attempts at regulation) similarly follow multiple reports of such harms—whether in Karnataka, Kerala, Andhra Pradesh, Telangana, Gujarat, or Rajasthan.
However, aside from outright bans, governments’ holding platforms liable for these wide ranges of harms may also be an infeasible option under the current legal regime. ‘These platforms are basically intermediaries providing portals for players to come together and play certain games on,’ explains Gangwal. ‘They are bound under the law to intermediary guidelines. They don’t have control over when a player on their site commits suicide [or other harms], nor is there a law that holds them liable. Unless there is a website which extends a line of credit to a person, asks them for their money back, and then does some offending act which abets or incites the person to commit suicide, it’s very unlikely that a platform will be held liable for suicide in the current model.’
Currently, some degree of self-regulation is how Indian-based online platforms offering skill-based platforms attempt to close this regulatory gap. ‘These associations’ charters also basically ensure that signatories will offer games of skill for money, not games of chance,’ notes Nehaa Chaudhari, Partner at Ikigai Law.
‘At the All India Gaming Federation (AIGF), all members abide by the Self-Regulatory Charter and are audited by the All India Skill Gaming Council (SGC), which is a body comprising of former Supreme Court judges, senior bureaucrats, data scientists, educationists, and phycologists among others,’ says Roland Landers, CEO of AIGF, one of India’s largest industry associations for skill-based online gaming platforms. ‘The games offered by these platforms are also certified by the SGC. We also ask our members to be audited by independent external third parties, to check their compliance with the charter. As part of our charter and best practices, all our member companies need to have a grievance redressal process, and if a consumer thinks there is no proper resolution, they can reach out to us and we take it up with the company, as an industry self-regulatory organisation (SRO). As a general industry practice, and at least among our pay-to-play [online skill-based games] members, [issuing] age restrictions, time spent warnings, RNG and no bot certificates, [and] prevention of cheating using AI/ML is standard.’
Gaming platforms themselves argue that they invest heavily in technology to ensure that skills are equally matched—which is why their offerings cannot be considered chance-based. ‘Our technology ensures that players of equal capability are matched,’ says a senior executive of a leading India-based online skill-based gaming platform. ‘We also detect bots and collusions to cheat through our systems, to ensure that players are not matched with them. Also, some [India-based online gaming platforms] partake in geo-blocking in states where games of skill played for money are banned, so users can’t access them.’
However, both the attempts at bans and self-regulation are piecemeal approaches to what appears to increasingly be a concerning national regulatory issue.
‘According to various reports, there are at least over 900 online gaming companies in India today,’ notes Landers. ‘AIGF is by far the largest industry body of online gaming in India and still has only around 10% of the industry as members [AIGF has around 55 members according to its website]. So including our members, and some other big platforms, maybe some 10-15% of the players follow self-regulation and best practices. However, there is no [one keeping] track of the other 90% of the industry.’
Indian-based online gaming platforms are clear on the way forward: they want the Union to issue uniform regulations for their sector, to avoid any more bans, no matter how well-intentioned. Most importantly, this regulation should also address what they believe to be the elephant in the policymaker’s room: offshore online betting companies, the supposed culprits perpetuating harms against Indian citizens. According to them, it is these companies that the government should be also targeting.
What do platforms want on the regulatory front?
‘[As per Ikigai’s research on the sector] Online gaming platforms are generally fine with the idea of regulation. The constant ask from their side has been for regulatory certainty and predictability,’ explains Chaudhari. ‘Otherwise, operations are difficult for them on two fronts. First, they don’t have clarity across different states as a patchwork of laws and regulations governs their operations. A game that may be legal to offer in one state, may have to be geo-blocked in another. Once you have this patchwork of different regulations across states, then courts are interpreting things differently. A single online game will be tested against different gaming statutes across the country—different High Courts will then have a view on whether the game is legal or not.’
‘The second level of uncertainty is that the legal position within states is still not necessarily settled,’ notes Chaudhari. ‘Courts have held that games of skill are not an issue—but then we see bans like the Karnataka government’s, introduced almost overnight, that included them within their purview. The Karnataka ban was also enforced through an amendment to the Police Act, which gives the police wide-ranging powers, leaving India-based gaming companies in a limbo. Founders suddenly found themselves wondering whether they need to shut down their offices, whether they may be arrested, or whether they may need to operate out of a different location. So, several platforms also feel that the Central government needs to step in and resolve this, because without that, this is a problem that never ends.’
Chaudhari’s comments are prominently echoed by AIGF. ‘The Central Government, who we believe are the one with jurisdiction to regulate online gaming, has constituted an inter-ministerial taskforce for regulation of the space (..) we hope that a progressive regulation, which is underlined by consumer interest will soon see the light of the day,’ says Landers. ‘[However]We are very clear that we only want skill-based games to be legal in India,’ adds the senior executive.
This stance is nothing new. Some platforms and AIGF have been pushing for Central regulation—or the legalisation of online gaming, at the least—for a while now.
- In 2019, AIGF requested the Bharatiya Janata Party (BJP) and Indian National Congress (INC) manifesto committees to include the issues in their election manifestos.
- By the end of 2021, India Tech—an industry association comprising some of India’s most prominent startups, unicorns, and investors—had written to the Ministry of Electronics and Information Technology (MeitY) pushing for national online gaming regulation that can be adopted by states.
- A few months later in January 2022, India Tech wrote to the Finance Ministry, seeking clarification that Rule 31A of the CGST Rules 2017 should not extend to games of skill (including fantasy sports). The letter further argued that ‘online skill-based gaming should be treated differently from gambling, betting and horse racing’.
- This June saw around 40 online gaming companies meet with Rajeev Chandrasekhar, Minister of State for Electronics and Information Technology, to discuss the industry’s pain points. Seeking a ‘soft-touch’ regulatory approach from the government, the industry representatives pushed for a Self-Regulatory Organisation to govern the sector, clear definitions between games of skill and chance, and strict action against offshore betting.
Where do platforms think the real problems lie?
The larger issue is not domestic platforms offering games of skills, but foreign companies registered in tax-haven countries like Malta and the British Virgin Islands which offer gambling apps to Indians, the senior executive told us. These foreign betting and gambling companies outnumber legitimate Indian players both in terms of revenues and players and are not bound by Indian laws, the executive added.
A risk assessment report by the Esya Centre also supports the executive’s views. ‘They often operate with impunity despite the fact that online betting and gambling are prohibited in India (barring Sikkim and Meghalaya). Many offshore gambling services also regularly violate content regulation, money laundering, and consumer protection laws too, harming Indian netizens in the process,’ we had written in our summary of the report.
So even if you ban Indian players, these foreign players stand unaffected, argues the senior executive. Unlike some registered Indian companies, these platforms don’t enforce any kind of limits on players, like sending notifications to users if they play for more than two hours, or allowing users to set restrictions on how much money they want to spend. ‘These news reports [on the suicides] don’t mention which platform they used. I wouldn’t be wrong if the deaths are linked to foreign players,’ the executive remarked. As noted earlier, in the case of Periyasamy’s son Vengatesh, the police report mentions a platform called RXCE. We couldn’t, however, discern the place of registration from its website.
Furthermore, these foreign apps are endorsed by celebrities in India and sponsor large sporting events too. Take the example of Parimatch, a Ukraine-based company endorsed by cricketer Dinesh Karthik, a prominent cricketer from Tamil Nadu. They also sponsor the Tamil Nadu kabaddi team in the Pro Kabaddi League (PKL). Parimatch has a clear betting and gambling section (in the form of an online casino), says the senior executive. There’s also Betway, a global gambling company, which sponsored the India-England cricket series that just concluded, the senior executive added.
The issue here with regulation is that state-led laws lack the jurisdiction to actually ban offshore betting sites. However, MeitY, which has the power to block these sites, also says it can’t block them because gambling is a state issue. This has resulted in a regulatory mess, the senior executive opined.
‘There is a menace of offshore gambling websites, which are targeting Indian users, and are also flagrantly advertising in newspapers, on OTTs, and the web. They are unfortunately also copying the disclaimer that is used by pay to play format companies. These gambling websites are a threat to the national economic and social security, and we hope the Central government will soon take strict action against these and the social and other platforms which are providing a space to these illegal sites and apps to advertise.’ — Roland Landers, CEO of AIGF
Currently, Tamil Nadu in particular does not have different compliance requirements for offshore gambling sites and gaming sites based in India, says Meyyappan. ‘What’s in place are ‘the RBI guidelines that are applicable to foreign money transactions under the Foreign Exchange Management Act, 1999, and the regulations thereunder.’
What can we expect going forward?
State governments that have had their bans overturned are currently figuring out other ways to approach the issue. The Tamil Nadu government has appealed the Madras High Court’s decision at the Supreme Court, although the matter remains pending. In June, it also set up a committee under retired Judge of the Madras High Court, Justice K. Chandru, to come up with recommendations on how gambling laws can be framed. The Committee is said to have submitted its report and a new law is expected anytime now, but we do not have an exact timeline. ‘It’s been reported that the Justice Chandru Committee is not looking to regulate gambling under Entry 34 of List II, but it may to regulate it as a public safety and public health issue,’ speculates Gangwal. ‘So they may come up with another Act considering it as a public health issue.’
At the Centre, the MeitY has been consulting with various stakeholders in the industry. In the June 2022 MeitY meeting, Chandrasekhar informed industry executives that the Union is indeed looking to draft a ‘uniform’ approach to online gaming. A committee has also been reportedly set up this year to draft a regulation for online gaming, comprising the NITI Aayog CEO, and Secretaries from the Ministries of Home Affairs, Sports and Youth Affairs, Information and Broadcasting, and Electronics and Information Technology. Its mandate: to identify a Ministry that can oversee a gaming policy that ensures the ease of doing business, provides a level playing field for companies, and protects users from harms like addiction. The Centre in June also came out with an advisory directing print, electronic, and digital media organisations to refrain from carrying any advertisements for online gambling websites.
Telangana is reportedly also reconsidering its ban on inclusively-defined gambling, with its government officials noting last year that ‘blanket banning is not a solution, one needs to have a distinction between games of skill and games of chance.’ Missed tax revenue and a hunch that offshore gambling sites might have a role to play in causing harms may be reasons for this change of heart.
These regulatory moves may offer much-needed clarity on which platforms are legal in India, as well as how those platforms should operate to mitigate harms to users.
Meanwhile, platforms and associations like AIGF are working with organisations like ResponsibleNetism to improve their efforts in tackling the issue. ‘We have done three roundtables with various gaming companies. Their representatives and people from mental health organisations and parent groups participated. We are coming up with a few regulatory frameworks which we can present to the government. So, these companies are also interested in doing some regulatory work, they have provided ideas on how technology can be used to identify threats on their platforms,’ Unmesh Joshi said.
‘Only the parents who lost their children to this will know the sorrow that it causes. For poor people, these games initially attract them by giving small amounts as winnings to make them feel like they are getting something back. But this is just to lure them in. After that there is no turning back. These games are manipulative. It makes these children steal from their own homes. They make even a responsible child a thief,’ Periyasamy said as our conversation was coming to an end. ‘I haven’t studied. But I put my children in convent schools in LKG itself because I wanted them to know English and have an education. From LKG to 12th grade, I made him study. I earn only to spend on their education. The money I can make back. But, can I get my son back? He was only 20 years old.’
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