At first glance, gambling and online skill-based gaming might look alike, as they both provide entertainment and a chance to earn money. However, they have distinct characteristics that set them apart. Gambling and online skill-based gaming both require a combination of chance and skill, appealing to different types of players and following different regulations. As technology makes it harder to tell chance and skill apart, it’s important to know what makes traditional gambling different from online skill-based gaming.
Legal Status of Gambling in India
State laws regulate gambling in India, and states have the authority to formulate their own laws for gambling activities within their respective territories according to Clause 34 of the Seventh Schedule of Schedule II (List of States) of the Constitution of India, 1950
Most states in India, except Goa, Daman and Diu and Sikkim, have banned all kinds of gambling, betting and wagering activities. The Public Gambling Act, 1867 is a Central legislation that regulates these activities and has been adopted by some states like Uttar Pradesh, Uttarakhand, Madhya Pradesh, Haryana, Manipur and Punjab with slight changes. The majority of state gaming act are based on this Act. The only game of chance or probability allowed by the Public Gambling Act, 1867 is the lottery.
Distinctions Between Gambling and Skill-Based Gaming According to Law
Gambling and skill-based gaming represent distinct activities involving the wagering of money or other rewards. Gambling relies on chance, with outcomes determined by random events beyond players’ control, while skill-based gaming hinges on the abilities, knowledge, and strategies employed by the players.
According to Section 12 of the Public Gambling Act, games of skill are not classified as gambling and are exempt from legal restrictions against gambling in India. The legal distinction between games of skill and chance has been clarified through various judicial decisions. In the case of State of Andhra Pradesh v. K Satyanarayana, AIR 1968 SC 825, the Supreme Court determined that the thirteen-card game of rummy qualifies as a game of skill, permitting its play in clubs that do not profit from the stakes involved.
However, this exception does not apply in Assam and Orissa, where any game for money, regardless of its dependence on skill or chance, is prohibited under the Assam Game and Betting Act, 1970, and the Orissa Prevention of Gambling Act, 1955, respectively.
Online skill-based gaming, a variant conducted on digital platforms, requires players to showcase cognitive and physical abilities, strategic thinking, and in-depth knowledge. Such games often involve a participation fee and encompass diverse genres like fantasy sports (e.g., Dream11 and MPL fantasy cricket), casual games, and card games such as rummy or poker. In contrast, online gambling is characterised by chance or luck, with unpredictable outcomes independent of the players’ skills.
Regulations Governing Online Skill-Based Gaming
The regulatory landscape for India’s online gaming industry involves the Public Gambling Act, 1867, the Prize Competitions Act, 1955, and the Information Technology Act, 2000 at the federal level. However, varying state legislations take precedence over these acts. While there is currently no uniform federal law for skill gaming, online gaming is generally legal in India. Most states permit real money or stakes-based online gaming, with exceptions in Sikkim and Nagaland, where skill games require licences under their respective acts.
In December 2022, the Central Government designated the Ministry of Electronics and Information Technology (“MeitY”) as the primary ministry for matters related to online gaming. MeitY subsequently released draft changes to the IT Rules 2021 for online gaming on January 2, 2023, seeking public input. Based on feedback, MeitY issued the Online Gaming Rules as part of the IT Rules 2021 on April 6, 2023. These rules aim to regulate the online gaming industry uniformly, provide clarity, and enhance consumer protection.
Ethical Concerns Surrounding the Online Skill-Based Gaming Industry
Online gaming poses several ethical challenges that need to be addressed by the relevant stakeholders. Online games like rummy, poker, and fantasy sports, can lead to harmful outcomes such as addiction and mental health problems, financial losses and fraud, and security and privacy threats.
Done By: Adithya Menon, 5th year B.A, LL.B(Hons.)
Veltech School of Law, Chennai
For Origin Law Labs
