Analysis and implications of the Gujarat HC order on poker and skill games played for stakes [Read copy of the judgment]

Exclusive A single-judge  bench of the Gujarat High Court comprising of Justice Rajesh H. Shukla, in an 85-page judgment dated 4th December, 2017, in Dominance Games Pvt. Ltd. & Others v. State of Gujarat, has ruled that poker is a game of chance and amounts to gambling under the Gujarat Prevention of Gambling Act, 1887.

The court was hearing a bunch of petitions filed by poker clubs seeking non-interference from the police and other government authorities and seeking peaceful conduct of the game of poker. The petition also sought to challenge a letter dated 15th March, 2017 issued by the office of the police commissioner of Ahmedabad that said poker is a game of chance and falls within the definition of gambling, while rejecting an application by one of the clubs for a ‘no objection certificate’ to operate the poker room.

Justice Shukla in his order observed that ‘the submissions made by learned counsel contending that the poker should be held to be a game of skill, cannot be readily accepted nor it can be accepted that it would be outside the purview of the statutory provision of the Gambling Act‘.

He also noted that even games of skill played with stakes may be considered as gambling.

The following are the salient points covered in the detailed order of the Gujarat High Court:

Arguments of the petitioner clubs

Mihir Thakore, senior counsel appearing on behalf of the poker clubs contended that Section 13 of the Gujarat Prevention of Gambling Act exempts games of mere skill from the ambit of gambling. He noted that every game of skill has an element of chance and therefore a game having substantial and preponderant element of skill is exempt from the provisions of the Gambling Act. He placed reliance on the 1967 judgment of State of Andhra Pradesh v. K. Satyanarayana that held rummy to be a game of skill, 1996 Supreme Court ruling of Dr. KR Lakshmanan v. State of Tamil Nadu ruling horse racing to be a game of skill (that also reiterated the 1967 judgment) and the RMD Chamarbaugawala decision that held that games of skill enjoy constitutional protection of free trade and commerce.

Thakore also contended that a poker player can alter the expected outcome of the game by reading other players and analysing the hand strength. Other arguments pertaining to provisions in the West Bengal Gambling and Prize Competition Act, Nagaland Online Skill Games Act were advance and certain foreign judgments were relied upon.

Other counsels also contended that the refusal of ‘No Objection Certificate’ by the police without going into the merits of the game of poker and hearing the petitioner clubs was arbitrary, unreasonable and violative of principles of natural justice.

Arguments advanced by the state government

The government pleader ML Shah noted that gambling was a social evil and cited various religious scriptures to highlight the stigma attached with gambling. She further elaborated the format of the game of poker and noted that betting or wagering was an essential component of the game and there was betting at every stage of the game, during turn of cards.

Reliance was also placed by the government on Britannica dictionary to indicate that the game of poker can hardly be played without betting or wagering. Previous decisions of the Supreme Court alluding to the ills of gambling and how innocent children and people lose hard earned money in noxious activities like video games was also alluded to by the state government.

Ruling of the court and reasons

Justice Shukla while noting the ills of gambling and impact of gambling on the moral fibre of society noted that while certain countries like USA, UK and Australia had regulated sports betting, ‘one must not overlook the ground realities in India or the country like India, where the majority of the population is struggling for the basic necessity and there is lack of awareness amongst the people and if they are permitted by betting in the craze of easy money, they do not know what to do if the things go wrong.’

On the point of the right of petitioners to free trade and commerce and the denial of the right to organise poker games without the authority of law, the court noted:

The submission made by learned advocate, Shri Syed that the petitioners are having fundamental rights, which cannot be denied without any authority of law and it has to be shown that the game of poker is a gambling covered under the definition of Gambling Act, is misconceived. The authority has to implement the law and it is for the petitioners to establish that it is not a gambling and till the finding is given that the poker is not a game of chance or gambling, the authorities are within their right to implement the Gambling Act in exercise of statutory duty. It is again required to be stated that the petitioners have not conveniently challenged the validity of the Gambling Act and are only joining an issue with regard to the order/communication by the authority contending that it is a game of skill and, therefore, the authority should not prohibit without any justification.

The court also observed that the game of poker originated from flush or Indian teenpatti which has been held to be a game of chance and consequently, as a corollary, the game of poker also should be held to be a game of chance.

The court also stated that the game of poker depends on the game of circumstances of the player and the amount of money he can spend on the game.  It said that a person with good luck and/or money may have more temptation or inducement to play game even if he has average card. On the other hand, a person with consecutive upbringing with lesser amount of money would be slow while betting. Thus it will depend how deep pocket one is having on that day and/or flow of money.

The court even went as far to say that inducing players to bet  and lose their money through bluffing involves deception and could even constitute an offence of cheating or fraud under the Indian Penal Code.

Ultimately, the court also noted that the game of poker is different from rummy insofar as betting or wagering is not essential to the game of rummy while it is an important aspect in the game of poker.

Importantly, the court held that any game, even if it involves skill but is played with stakes would fall within the ambit of gambling.

Implications and analysis

The judgment of the Gujarat High Court is a setback for skill games and especially for poker and would have implications on both online and offline games of skill. While poker is clearly classified as gambling and cannot be played from the state of Gujarat (online or offline), the observation that any game of skill played for stakes can be considered gambling means that real-money rummy (both online and offline) and fantasy sports could also be interpreted to be within the ambit of gambling in the state of Gujarat.

The judgment however has several flaws and seems to have been based on moral, religious and social arguments rather than settling the legal principle of whether exemption of games of skill from the statute would mean that no part of the gambling statute would apply.

The court has also disregarded academic studies, legal and statutory precedents of other states and jurisdictions as well as statistical data. The matter is sure to be appealed before a division bench of the Gujarat High Court on several grounds and there is a strong case for getting the order overruled.

Note: A copy of the order can be accessed here.