Last week, a Madras High Court bench questioned why Tamil Nadu’s competence to ban online gambling was being doubted, given that states have the constitutional jurisdiction to regulate ‘betting and gambling’, reported Times of India.
Chief Justice Sanjay Vijaykumar Gangapurwala and Justice P.D. Audikesavulu were hearing the online real money gaming industry’s challenge against the online gambling ban (which also outlaws games like rummy and poker). In effect, since April, the ban comes after rising cases of gambling-related suicides in Tamil Nadu.
Why is the state’s competency being questioned?: Rummy and poker have been held by Indian courts to be games of skill (or non-gambling games), which are distinct from games of chance (gambling games). The industry argued in its petition that states cannot regulate skill-based online games (as they don’t constitute gambling), an argument repeated by their lawyer, Senior Advocate Manishankar, in response to the bench’s query.
“Once a game is declared a game of skill, the state loses its competency to regulate it,” he said.
Article continues below, you might also want to read:
- Roundup: What is the industry saying about the 28% GST on online gaming?
- Online Real Money Gaming Gets Equated with Gambling In Taxation
- May Write to Finance Standing Committee to Discuss GST Gaming Hike: MP Patnaik
On the flip side, the Indian government’s online gaming rules prohibit games involving wagering or betting on outcomes. This “takes care” of betting and gambling in games, submitted Additional Solicitor General A.L. Sundaresan appearing for the Centre.
Senior Advocate Kapil Sibal will begin arguments for the Tamil Nadu government on August 1. In its counter-affidavit, the Tamil Nadu government argued that nothing prevents it from framing laws on skill games involving betting on outcomes.
Recent tax hike complicates distinctions between games of chance and skill: The hearings also come after the GST Council’s recent decision to tax online real money gaming at par with gambling, essentially conflating games of skill and chance under India’s tax regime. This stance sharply differs from the Indian government’s recent rules regulating online skill-based games in India, brought by the IT Ministry in April. Multiple online real money gaming companies have moved the Indian government requesting them to consider the revised tax mandate. The GST Council and IT Ministry have reportedly held meetings since to resolve the different regulatory approaches.
STAY ON TOP OF TECH NEWS: Our daily newsletter with the top story of the day from MediaNama, delivered to your inbox before 9 AM. Click here to sign up today!