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Business Legal & Regulatory

Jolt to poker players as Goa casinos change their policy, deduct TDS on tourney winnings + Goa govt notifies Anti Money-Laundering Guidelines

Major Goa casinos have recently changed their in-house policy on tournament winnings and will now deduct a 30% Tax Deducted at Source (TDS) on tournament winnings in compliance with Section 194B of the Income Tax Act, 1961. (See our earlier report here.)

Tanmaya Nanda, Public Relations Officer of  Delta Corp, a public limited company which owns Casino Royale and Casino Caravela, two major offshore casinos in Goa confirmed that TDS is being deducted on poker and other tournaments.   Regular players at Casino Carnival, another major offshore casino in Goa also confirmed that TDS is now being deducted on winnings.

It still remains a mystery as to why TDS was not deducted on winnings on tournaments until recently and why cash games are still not subject to tax deductions. The complex secrecy surrounding this glaring omission by casinos and its implications will be dealt in a subsequent post; however poker enthusiasts and insiders familiar with the developments believe that such a move would drive away regular gamblers as it would severely dent the amount of winnings/prizes that casinos usually offer.

Thus, if a player wins Rs. 50 lakhs in a poker tournament with a buy-in of Rs. 1 lakh, it would mean that around Rs. 16.30 lakhs would be straight-away deducted as TDS and the winner would be awarded the remaining Rs. 34.70 lakhs (which would amount to a reduced incentive and greater scrutiny).

Casino Royale, Goa

Bharat Agarwalla, Director of India Poker Series and a regular organiser of poker events in Goa casinos believes that it is necessary to educate players about the importance of deducting taxes as per the laws in India. Agarwalla further adds, “Tournament organisers are merely complying with the applicable laws by deducting TDS. Such taxes have global precedence and are deducted at source even in USA (form WG-2 as per IRS guidelines in USA requires withholding of 28% taxes in case of winnings over $6,000 and this varies for different games) and other European nations on poker tournaments. The rate of tax is certainly high but we can only hope that the government changes the rules and allows set-offs for losses/expenses and reduces the rate of TDS (or abolishes TDS) especially for poker…we can only urge the government for reforms and reduction of taxes…”

In a similar but unconnected development the Goa government notified guidelines for preventing money-laundering and black money in casinos following an amendment in the license terms and conditions for casinos in 2012 . (See our earlier report here.)

The Anti Money Laundering and Financing of Terrorism Guidelines, 2013 introduced by the government require casinos to follow stringent Know-Your Customer (KYC) norms for gamblers and verify sources of funds of Politically Exposed Persons (PEP) such as senior bureaucrats, politicians, judges etc.

Further, cash transactions above ten lakh rupees would have to be reported to the Financial Intelligence Unit (FIU) and suspicious transactions to circumvent this threshold also have to be reported to the FIU.

These guidelines are important measures in curtailing black money and money from criminal activities and come amidst concerns raised by politicians and civil society organisations regarding the role of black money in Goa casinos. However, experts closely following the gaming industry believe that such stringent guidelines preventing large cash transactions may also have an adverse impact on the revenue flows and business done by casinos.

Categories
Legal & Regulatory

How should law deal with gambling addiction?

gambling addiction russia
What should the government do when gambling addict citizens are throwing away their money and property on gambling, and probably hurting their family or children in the process?

A new law recently passed in Russia has a provision for declaring gambling addicts as “incompetent”, in the same way as alcohol or drug addicts. If someone is found to be a gambling addict and put his/her family in a difficult financial situation for the same, close relatives can seek “guardianship” from a court and get control over financial matters of the gambling addict including his income and property. In India, similar treatment is prescribed by law if a person is found to be of unsound mind.

Russia has declared a war on gambling, and has banned all gambling activities since 2009 in the country except in four legal gambling zones in Siberia.

Do you think this is a positive step or too much restriction on individual freedom? Is such a law desirable in India, if that would mean social gambling can be decriminalized?

Categories
Legal & Regulatory

Andhra High Court quashes life ban on Mohd. Azharuddin, decision exposes lacunae in sports and betting laws, download copy of the verdict [Exclusive]

Exclusive On November 5, 2012 a Division Bench of the Andhra Pradesh High Court quashed the life ban on former cricket captain Mohammed Azharuddin and criticised the BCCI for initiating arbitrary proceedings against the cricketer without following principles of natural justice.

While the BCCI contended that disciplinary proceeding were initiated against Azharuddin under Rule 38 of their internal regulations (BCCI being a registered society is governed by its own bye-laws) which permitted appropriate action against national cricketers for indiscipline and specifically excluded any challenge in a court of law; the advocates appearing for Azharuddin claimed that the proceedings did not permit cross-examination and rebuttal of witnesses and thus suffered from various infirmities and were in violation of principles of natural justice.

The court accepted Azharuddin’s contentions and severely criticised the BCCI for gross violation of principles of natural justice as well as procedure enshrined in Rule 38. Rule 38 authorises disciplinary inquiry to be initiated only by the President, who has to be part of a three member committee to adjudicate take appropriate action against any erring player.

According to the opinion given by Justice Ashutosh Mohunta the appointment of a commissioner to investigate allegations of match-fixing and betting against Azharuddin was illegal and bad in law due to the absence of President’s presence in the BCCI proceedings. Future, Justice Mohunta severely criticised BCCI for their shoddy handling of the inquiry contrary to principles of natural justice and in violation of constitutional provisions. The Supreme Court in Zee Telefilms v. Union of India (AIR 2005 SC 2677) had mandated BCCI and sports bodies to be fair and just in carrying out acts of public importance.

Mohammad Azharuddin: Former cricket captain and Congress politician

There was further discussion on the preliminary inquiry initiated by CBI in 2000 against match-fixing allegations but no criminal charges were framed against the accused as such match-fixing is not a criminal offence under any law in India  (the Public Gambling Act, Indian Penal Code, Prevention of Corruption Act etc. make no mention of match-fixing or cheating in sport).

Experts term this decision of the Andhra High Court as “disappointing” as the life ban was quashed merely on technical and procedural aspects without looking at the larger issue of rampant betting syndicates and match-fixing allegations and absence of any criminal sanctions against such cheating.

The shoddy handling of this as well as other recent allegations of match-fixing by BCCI indicates the urgent need for introducing penal sanctions on such cheating in sports which has shocked cricket lovers and cast a question mark on the sanctity of the gentlemen’s sport.

Perhaps this decision would embolden further cheating in sports as there is neither any sanction nor any firm message sent out by BCCI in the handling of this issue. There are indications that BCCI would not appeal against this decision but may take corrective action to prevent repetitive instances of match-fixing and spot-fixing. The only positive aspect of this decision is that BCCI and other sports federations would ensure full transparency, fairness and compliance with rules in taking any disciplinary measures in future.

However, faith of the billion-plus cricket lovers can only be reinstated by bringing a comprehensive law regulating sports-betting and bookies and making match-fixing or any kind of cheating in sport a criminal offence. Clearly, since the BCCI cannot be trusted with instituting a fair inquiry into serious allegations of match-fixing and money laundering, the Parliament has to take the initiative in cleaning up this mess. Such serious and consistent allegations clearly expose rampant betting, money-laundering and presence of criminal syndicates in Indian cricket. Regulating such betting would not only add revenues to the state coffers but also allow authorities to curb black money and income of criminal and terrorist organisations.

Readers can download a copy of the Andhra High Court decision here.

Special thanks to Mr. Nishant Gokhale, Advocate, Delhi High Court and Mr. Siddharth Rao Kondapalli, Advocate, Andhra Pradesh High Court for their kind inputs and comments.

PS- Readers may be interested in reading previous posts on the menace of match-fixing and Azharuddin decision available here and here.

A legal article written by Mr. Nishant Gokhale on the absence of any criminal sanctions for match-fixing would be an interesting read in the light of the recent quashing of charges against Azharuddin. The article titled “Fixing the Fixers: The Justification of Criminal liability for Match-fixing”  can be accessed on the NUJS Law Review website.        

Categories
Gaming Legal & Regulatory

Ambiguity in the legality of gaming software industry restraining new initiatives, regulations on gaming software providers need of the hour

While the government turns a blind eye to the thriving online gaming industry and refuses to either regulate or clarify existing laws concerning online gambling and betting, the ambiguity in online gambling laws is also affecting online casino, betting and gaming software providers, who do not necessarily deal with Indian clients.

Thus, while across the globe, gambling has moved online as opposed to brick-and-mortar gambling that was once the only form of gambling. Software has taken over the task of providing novel and entertaining gambling opportunities. Software based online and offline games is a multi-billion dollar market – while games that constitute betting or gambling constitute some of the most profitable niches within this market.

In India, regulation of gambling is marked by strict prohibition in most cases, while a large number of Indians continue to participate in underground betting and grey area of online gaming. In recent times, there have been some Indian online gaming service providers, while a large number of Indian online gamers are accessing foreign gambling websites.

Independent of the policy stand of various state governments to keep gambling banned in its various forms to a large extent, it is important to regulate manufacturing and provision of gambling software in India for the following reasons:

1. India is a powerhouse of software development. India has a strong online games industry, which includes games developed for computers, tablets, smartphones of all colours and shapes. Some of these are in the nature of gambling or betting games. Many of the Indian online gaming companies operate in the international market. No Indian law prevents them from operating or producing online games which fall in the category of betting or gambling outside of India. The gaming industry catering to international markets from India can be strengthened if minimum safety and integrity standards are set out for manufacturing and supply of gambling software by Indian companies.

2. In certain cases, gambling software companies have been persecuted by the police in India despite development of such software not being banned in India. In the past police have alleged abetment to gambling offences on part of software developers and booked them under gambling prevention law.

It is not always easy for a developer to distinguish between an international buyer and Indian buyer – especially since software is often bought online. Holding software developers liable as abettor to gambling offences is like booking the utensil seller for selling a knife to a killer. Unless it can be established that a software developer knew his software will be used in India in violation of law, he should not be held liable for gambling offences. Regulation and consequent recognition of the Indian gambling software development industry catering to the foreign market will help this niche to grow rapidly and leverage its global competitive advantage.

3. Gambling software can be a source of cheating or denial of equal opportunity betting to players. If India is to become known for software developers who make fair and equal opportunity software, then some regulation, even self-regulation through industry bodies can go a long way.

Practically speaking, one cannot be expect the government to take any positive step in the direction without significant pressure from the industry. A lot could be done to sort out misconceptions and misinformation surrounding the business of developing legal gambling software for foreign markets where such gambling is legal by industry bodies such as NASSCOM (which had recently organised a conference for the social gaming industry)   though we are yet to see any initiative in safeguarding interests of the software companies and online skill-gaming industry.

Another positive step that industry pressure groups should actively consider would be to approach appropriate courts to restrain police and law enforcement agencies from persecuting developers of legal gambling software.

Article written by Ramanuj Mukherjee, co-founder of this website with inputs from Jay Sayta.

Categories
Legal & Regulatory

India Today Group and other shopping websites conducting contests in violation of Consumer and Criminal laws

Online shopping website Bagittoday (of the multi-million dollar India Today group) and other websites such as 100bestbuy, Mydala and FS4i have been conducting contests, promotional programmes and schemes where a customer has to pay a token amount (say Rs. 50 or 100) to stand a chance to win expensive electronic and other goods worth thousands of rupees.

While some websites refund the amount in kind (through some kind of “shopping points system”), others assure a gift to unsuccessful customers in a bid to promote and publicise their products and brands.  The claims of these websites indicate that they are not making any profit or keeping the proceeds of the amounts received from participants of the contest and are reimbursing the entire amount staked by unsuccessful customers through gifts, shopping points etc.

It has been noticed that not only online shopping websites but various shopping outlets, mobile phone operators and other sellers are offering thousands of promotional contests and lottery competitions.

While such schemes have been popular and advertised widely, readers and citizens have expressed concerns over the legality of the same. While the schemes may seem attractive and have lured innocent consumers, they clearly violate the Consumer Protection Act, 1986 (CPA) and possibly even the provisions of the Indian Penal Code, 1860 (IPC).

 

 

Contests offered by shopping websites are illegal

A. VIOLATION OF CONSUMER LAWS BY THE ONLINE SHOPPING COMPANIES

The CPA is a law enacted to protect the interests of consumers against fraudulent or lucrative schemes offered by sellers and ensure fairness in supply of goods and services. With this intent, unfair trade practice is defined under the Act and sellers are prohibited from conducting any such activity detrimental to the interests of the consumers.

Section 2(1)(r) of the CPA classifies any form of lottery or prize competition with the intention of  promoting sales as an unfair trade practice.  Section 2(1)(r) is reproduced as follows:

“unfair trade practice” means a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice including any of the following practices, namely:

(3) permits-

(a) the offering of gifts, prizes or other items with the intention of not providing them as offered or creating impression that something is being given or offered free of charge when it is fully or partly covered by the amount charged in the transaction as a whole;

(b) the conduct of any contest, lottery, games of chance or skill, for the purpose of promoting, directly or indirectly, the sale, use or supply of any product or any business interest…

A bare reading of the provisions makes it clear that the contests offered by the online shopping websites fall foul of either Section 2(1)(r)(3) sub-clause (a) or (b) of the CPA. It is unclear whether the shopping websites are making a profit through the proceeds paid by the participants and hence sub-clause (a) might not be applicable. However, in any case, the websites are blatantly and clearly contravening sub-clause (b) prohibiting conduct of any contest or lottery for promotional purposes.

Though it may be argued by the shopping companies that there is no intent to promote any product or business interest, the nature of the contest and large scale advertisements about the same make it abundantly clear that these multi-million dollar companies are in no way conducting these contests for charity. A similar attempt to defend promotional contests conducted by Coca-Cola was unsuccessful and the National Consumer Disputes Redressal Commission ordered the cola giant to pay damages (Coca-Cola v. Amarjit Singh, 2010).  Other similar cases by various courts have also adopted a similar approach. [See: NR Swaminathan v. Union of India (Madras High Court 2002); Wimco Limited v. Liberty Match Co (Gujarat High Court 1988)].

Thus, the illegal competitions offered by the shopping companies and hundreds of other sellers across India can be stopped using the provisions of the CPA. A district consumer forum can order these websites to not only stop the contests and lotteries in future but also direct payment of compensation to consumers in terms of Section 14 of the CPA.  Hence, consumers may avail a civil remedy to stop such promotional contests and campaigns.

B. VIOLATION OF SECTION 294-A OF THE IPC BY SHOPPING COMPANIES

Section 294-A of the IPC (or other amended state laws in states like Maharashtra, Gujarat, Andhra Pradesh etc. where this Section is replaced with state-specific lottery regulation Acts) makes the keeping of a place for the purpose of drawing lots without authorisation from the state government illegal and punishable with imprisonment up to six months and/or an applicable fine.

Further, whoever publishes any information to pay any sum or deliver goods pursuant to such drawing of lots would be punished with a fine of one thousand rupees.

Thus, the picking of a winner through an automated computer programme on payment of consideration by participants would amount to drawing of lots and would consequently fall within the definition of lottery as envisaged by Section 294-A. It is thus highly likely that criminal prosecution against the companies or persons responsible for the contests/lotteries would be successful.

Though it may be argued that there was no physical office or drawing of lots and neither was there staking of money by participants; the scheme of the contests and manner of selecting winners would make it amply clear that computerised drawing of lots would still fall within the ambit of Section 294-A. Only absence of a physical drawing of lots would not mean that there is no office or place where the computerised process of selection of winners is conducted.

Further, while it may be argued that there is no stake or consideration from participants as the amount paid by the customers is returned or refunded in kind; it is apparent that no participant would have paid the staked amount merely for obtaining free gifts or points. The value of the gifts in kind refunded by the shopping websites is clearly less than the actual amount paid, clearly indicating the presence of mutual consideration; an essential element for proving an offence under Section 294-A.

The unfortunate conclusion that can be drawn from the above discussion is that shopping websites and other sellers have exposed themselves to both civil and criminal liability due to conduct of chance-based contests.  However, such action cannot be taken suo motu and may only go unchecked until an aggrieved party or public spirited citizen takes up the matter before the courts.

Categories
Legal & Regulatory Poker

Delhi Court opinion on online gaming: 15 new facts emerge through landmark opinion, download copy of the verdict

Exclusive The opinion of the Delhi district court on online gaming created a huge uproar with major media houses in India and abroad widely reporting the decision.

However, it has emerged that the observations of the court in this matter were merely the opinion of the court in a private matter between parties.

Here are the top 15 salient features of the opinion of Judge Ina Malhotra:

1. The opinion was sought by M/s Gaussian Network Pvt. Ltd. in an agreement with investors under Order 36 of the Code of Civil Procedure , 1908.

2. Under Order 36, opinion of the court can be sought on any legal ambiguities by agreement of parties. Decision of this order is non-appealable. However, the petitioners have already indicated that they are unhappy with this opinion. The petitioners have already approached the Delhi High Court demanding revision of the order of the learned Additional District Judge.

3. Opinion of the court in this matter is binding only upon the parties and shall not have any impact on other persons who were not involved with the matter, although this opinion might have persuasive value on any other related matter before any court.

4. Seven questions were placed before the court for its opinion. The questions involved legality of games of skill, legality of online games for cash, constitutional right to establish businesses of games of skill, penal provisions relating to online gambling, advertising online gaming and payment gateways for online games of skill.

5. The court held that online games of skill do not have the constitutional protection of Article 19(1)(g) and are outside the scope of trade and commerce.

6. The court also declared that online gaming or offering online games of skill may fall within  the ambit of “common gaming house” and has potential criminal liability, though it offered no further opinion on the interpretation of current laws relating to gaming.

7. The court differentiated between games of skill in the physical form and the same games played online. According to the court, skill involved six parameters: ability, strategy, physical co-ordination, technical expertise and knowledge. Since some of these parameters are lacking in case of online games, the court opined that even declared games of skill cannot be played for stakes/profit online, though there may be no bar on doing so physically. It was held that playing games through a ‘click of the mouse’ cannot be included under the ambit of skill.

8. Judge Malhotra clearly disapproved online skill games offering real cash prizes terming them as “no different from physical casinos.”

9. The court however held online websites offering games of skill without the element of cash to be legal as per Indian law.

10. The court also declared advertising on such websites to be illegal as per Indian law. Additionally the court disapproved advertisements of skilled game portals on other websites.

11. Payment gateways and Banks were free to not provide any services to these online gaming or skill games websites.

12.  The court also made adverse remarks against the Delhi government for not appearing in the matter despite being made a party. Strictures were passed against the government for the lacunae in existing laws regarding online gaming.

13.  The court refused to accept the argument that poker is a game of skill and was more inclined to hold poker under the ambit of gambling.

14. The court confirmed that physical poker games can be conducted in the state of West Bengal due to exemption provided in The West Bengal Gambling and Prize Competition Act, 1957.

15. Filing of writ petitions and other legal remedies are possible against the opinion of the Court to clarify the legality of hosting games of skill online.  Though this is a landmark opinion as various issues and grey areas in gaming law have been addressed by a court of law in India for the first time, there are various lacunae in interpreting the existing laws comprehensively.  Alternative interpretations to the observations of the court is possible.This verdict should therefore not be regarded as conclusive of the legality of poker and online gaming as well as skill games.

Further developments in this regarded are anticipated in the near future specially as the petitioners have already approached the Delhi High Court on this issue.

Note: A copy of this judgment of the court can be accessed here.

Categories
Legal & Regulatory Poker

Online games of skill cannot be played or offered for cash according to Delhi district judge

In a recent development, a District Court in New Delhi held that all online games, whether games of skill or chance involving cash are illegal as per the Gaming as well as Information Technology Act and  allied Rules according to a news report in Card Player magazine.

Additional District Judge Ina Malhotra in her opinion stated that games of skill including games like chess, poker, bridge and rummy do not enjoy the Constitutional right to freedom of trade and commerce  guaranteed under Article 19(1)(g) of the Constitution as per a report in The Asian Age.

According to Judge Malhotra, conducting such games for profit was res extra commercium  and hence fell outside the ambit of the guaranteed right under Article 19(1)(g).

The court tried to draw an artificial distinction between games of skill played in the physical form and online, holding that games of skill or chance where the websites charge a slice of the winnings as fee or rake is illegal as per Indian law. Further, the court also held that  RBI and banks were free not to permit payment gateways for such websites and portals.

Interestingly, the court also held that advertising or sponsoring such websites is illegal under the penal provisions of the gaming Acts.

The court gave this decision in response to a petition filed by an internet start-up firm comprising of IIT-Delhi graduates. Delhi government was also made a party to this petition, but court proceeded ex-parte after the Delhi government failed to make its pleadings.

This decision is likely to impact the online gaming industry, especially a host of websites offering “skill games” for cash.  However since the decision is given by a District court, it is not binding on any court or forum in India. Hence, though this verdict may not have an immediate impact on online gaming websites especially since the matter of whether games of skill can be played for stakes and profit is pending before the Supreme Court in Mahalakshmi Cultural Association v. Director General of Police.

However the decision may change the RBI policy on allowing payment gateways for skill, though it is understood that decisions taken by the RBI in this regard can also be challenged in courts.

The legal basis for giving this verdict is unclear and decision may have been given without appreciating the well settled position of law and scheme of the Gaming and Information Technology law.  Online gaming companies are said to be unhappy with this decision and are contemplating further legal recourse on this issue.

Categories
Legal & Regulatory Poker

New York federal court rules that poker is a game of skill, decision expected to have implications on the Indian gaming industry

In August 2012, a New York federal court held that poker is a game of skill and cannot be punished under the Illegal Gambling Business Act. The judge in the court discussed various statistical evidence and research data to come to the conclusion that poker is a game of skill separate from gambling.

Though the binding value of the judgment in terms of other gaming Acts or in the Indian context is in doubt, it is without question that the decision elaborately analyses statistical and other expert evidence relating to gambling before reaching the verdict. This will set a precedent in all courts across the globe including Indian courts to seriously consider the great degree of skill involved in the game of poker and exclude it from the ambit of gambling.

Since there is a huge debate in India regarding the legality of poker and degree of skill involved in card games like rummy and poker,  the elaborate and exhaustive opinion by federal judge Weinstein, taking into account testimonies of expert statisticians and economists, will have a great deal of persuasive value on Indian and other courts in deciding the fate of poker.

Experts believe that this is the first step in the skill v. chance debate concerning poker. It is learnt that the US government has not ruled out the possibility of  appealing against this decision. However the well reasoned judgment shall still make an impact on the gaming industry across the globe.

Note: 1. A copy of the United States of America v. Lawrence Dicristina decision can be accessed here.

2. The column by Professor I. Nelson Rose titled “Court Rules that poker is a game of skill but…” published earlier on this post has been taken down due to confusion relating to publication rights.  The column will be published in a print issue of iGaming Business. Interested readers can read the same in the print issue of the magazine.  Inconvenience if any is deeply regretted.

3. A research paper published in leading journal NUJS Law Review regarding the Indian position and debate on poker and games of skill may be of interest to readers and can be accessed here. However, the paper was published before the US federal court and Madras High Court decisions (pending appeal in the Supreme Court) and hence may not reflect the latest developments.

Categories
Gaming Legal & Regulatory

Parrikar introduces Goa Public Gambling (Amendment) Bill 2012 to limit influence of casinos: Download copy of the Bill

Goa Chief Minister Manohar Parrikar has introduced the Goa Public Gambling (Amendment) Bill 2012 in the legislative assembly, which is likely to be passed in the coming week. As per promises and representations already made by Parrikar before winning the elections in March 2012, the Bill will limit entry to casinos only to non-residents of Goa and establish a gaming commission to regulate all aspects of offshore and onshore casinos.

The Bill has made radical changes in the manner of operation of casinos in Goa. The Bill proposes to establish a gaming commission in Goa which would oversee the operations of casinos in Goa and ensure all conditions are complied with. Among the changes mentioned in the Bill are limiting entry to casinos only to non-locals above 21 years of age having obtained tourist permits from the Gaming Commissioner. The gaming commissioner has been given powers to impose fines and initiate prosecution in case of non-compliance of any rules made by the state government.

Wide powers have been given to the gaming commissioner under the new amendments to oversee all games and activities conducted in offshore as well as onshore casinos. Transfer of  gaming licenses except with the permission of the government has been prohibited.  Through these amendments, the government may also by notification  limit the area on which vessels may be parked for running casinos.

Note: A copy of the Goa Public Gambling (Amendment) Bill 2012 is available here.

Update: The Goa legislative assembly passed this Bill on 8th August 2012. A copy of the Goa Public Gambling (Amendment) Bill as passed is available here.

Categories
Legal & Regulatory

Reprieve for rummy players: Supreme Court temporarily stays Madras HC decision on rummy, to further hear appeal

In a major reprieve for rummy players, the Supreme Court stayed the Madras High Court decision that prohibited Mahalaxmi Cultural Association (MCA) from making a profit (or permit stakes) from the game of rummy.

The Supreme Court stayed paragraphs 25(1), 25(2) and 25(4) of the earlier division bench decision of the Madras High Court. This means that there is no bar on MCA to offer rummy for stakes. However the Supreme Court has not taken a decision on whether games of skill can be played for stakes or whether profit can be made from such games. Advocate Venkateswara Rao appearing for MCA said that the stay order is only applicable to the rummy games offered by Mahalakshmi Cultural Association and not a blanket order permitting rummy for stakes in the whole of Tamil Nadu.

Rao further said that police may decide to take action against other organisations offering rummy for stakes until this matter is finally decided by the Supreme Court. According to Rao the appeal against the Madras High Court decision is still in its initial stage and arguments will only be heard after the respondents (Chennai police) are given notice. It is believed that it will take at least a couple of years to have a final verdict on this matter.

This pending appeal is extremely significant as the decision of the Supreme Court will decide whether games like rummy, golf etc. can be played for stakes and whether organisations can make profit by offering such gaming services. Online rummy websites said to be worth over Rs. 200 crores will be keenly monitoring developments in the Supreme Court as any such verdict of the Supreme Court will apply uniformly across India. The fate of the ‘skill game’ industry will hinge on the verdict given by the Supreme Court in this appeal.

Note:

The Supreme Court stay order can be accessed here

The judgment of the division bench of the Madras High Court can be accessed here

This development was first reported on Games24x7 Blog.