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Gaming Legal & Regulatory

Andhra Pradesh MLA calls for banning online rummy

After Chief Minister YS Jaganmohan Reddy’s assertion last month about banning online rummy in Andhra Pradesh, an MLA belonging to the ruling YSR Congress Party raised the issue of online rummy and its perils in the ongoing session of the legislative assembly of the state.

Malladi Vishnu, a YSR Congress Party MLA while speaking in the house mentioned that many families are being disturbed due to online rummy and that he was receiving requests from various people to bring a strict law against online gambling and rummy.

He further urged the government to seriously consider strict action against online rummy websites.

The speaker presiding over the legislative assembly called upon the concerned minister to reply to Vishnu’s suggestion. Since the minister concerned, i.e. the Home Minister was not present in the House, the Deputy Chief Minister responded saying he had noted down the request made by Vishnu.

Last month, it was reported that the state’s Minister for Tourism, Culture and Youth Advancement, Muttamsetti Srinivasa Rao alias Avanthi Srinivas had raised the issue of online rummy and gaming spoiling the lives of many educated as well as unemployed youth and demanded a ban on online rummy, at a conference of District Collectors and Superintendents of Police in the presence of Chief Minister Reddy.

On being told by the state’s Director General of Police (DGP) that, at present, Andhra Pradesh does not have any specific legislation against online rummy, Reddy reportedly stated that the state government will soon introduce a new law to ban online rummy.

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Gaming Legal & Regulatory

Andhra may follow Telangana in banning online rummy

The Andhra Pradesh government may bring a new legislation to ban online rummy and gaming in the forthcoming session of the legislative assembly, as per reports in the local press last week.

According to the reports, State Minister for Tourism, Culture and Youth Advancement, Muttamsetti Srinivasa Rao alias Avanthi Srinivas raised the issue of online rummy and gaming spoiling the lives of many educated as well as unemployed youth and demanded a ban on online rummy, at a conference of District Collectors and Superintendents of Police in the presence of Chief Minister YS Jaganmohan Reddy.

As per local press reports, after Srinivas raised the issue, the Chief Minister immediately asked Director General of Police (DGP) Gautam Sawang for an explanation. It is learnt, that Sawang stated that online rummy websites cannot be blocked due to absence of proper laws governing it.

Reddy is immediately said to have reacted to the assertion by stating that the state government will introduce a new legislation to ban online rummy in the legislative assembly of the state. The newly elected Chief Minister also instructed the police heads of every district to strictly stop all illegal activities, including card rooms and rummy clubs operating in the state.

In 2017, Telangana had become the first state in the country to pass a law to ban all kinds of online games played for real money or stakes, including games of skill such as rummy.

Several online rummy companies had immediately challenged the state government’s ordinance (and subsequent Amendment Act) in the High Court. However, the hearings in the court have not seen much progress in the last two years and the rummy companies have failed to get any substantive relief so far.

Last year, the then Chief Minister of Andhra Pradesh, N. Chandrababu Naidu had also spoken about the focus, coordination of mind and skill involved in card games while warning about the harmful effects of such games, including the possibility of addiction.

It remains to be seen whether Chief Minister Reddy actually introduces a new legislation to ban online rummy in the winter session of the legislative assembly and whether such a legislation, like Telangana, would include a ban on all games of skill played for stakes.

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Gaming

Andhra CM talks about skill involved in card games, also mentions harmful effects

Andhra Pradesh Chief Minister N. Chandrababu Naidu in an interview to a media outlet on 27th February, dropped clear hints that regulation or ban on card games like rummy and poker might be on the pipeline.

Naidu, who was speaking to media house Andhra Jyothy on the completion of 40 years in politics, curiously made two major references to card games in his interview.

Naidu, during the course of his interview stated that he used to play card games in his childhood and win money. He noted that card games requires focus and coordination of mind.

In the same interview however, Naidu also mentioned that card games could also turn out to be an addiction and that every person has some kind of addiction. He noted that for him traveling and attending conferences or seminars is an addiction but for some playing card games is.

The points made by Naidu could possibly be construed as broad hints that some kind of strict regulations or ban on skill games (and particularly online rummy) could be on the horizon in the state, especially since neighbouring Telangana (which was part of the undivided state of Andhra Pradesh until it was granted separate statehood in 2014) passed two ordinances in June 2017 that banned all kinds of skill games, including online games played for stakes or wagers.

The two ordinances were later replaced by the Telangana Gaming (Amendment) Act that was passed by both the houses of the Telangana legislature in November last year.

It remains to be seen whether Naidu’s specific statements on card games would translate into a legislative or policy decision of the state government. However, the Chief Minister’s comments clearly indicate that the government is seized of the matter and is mulling some regulatory measures.

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Legal & Regulatory

SC to hear challenge to Telangana ordinance, simultaneous hearing to continue in HC

The Supreme Court on Friday said that it will continue to hear the writ petition filed by Krida Sports and Games Pvt. Ltd. on whether it is legal to play rummy for stakes.

Krida Sports had filed a petition in the Supreme Court in May 2017 and amended the its plea in July and August to challenge the constitutional validity of the two Telangana ordinances that banned rummy and all other games of skill played for stakes.

A division bench comprising of Justices Madan Lokur and Deepak Gupta gave two weeks to the parties to complete their pleadings. The bench also stated that the petition will not impact the cases filed by online rummy companies in the Andhra Pradesh and Telangana High Court.

The order passed by the court also notes that there will not be any stay in the proceedings pending in the High Court.  The tentative date for the next hearing as per the Supreme Court website is 18th September.

In the meanwhile, the Andhra Pradesh and Telangana High Court has continued the partial interim relief granted to Ace2Three and other Hyderabad-based rummy websites that enables them to continue offering services to customers located outside the state.

The court has extended the interim relief granted to the rummy websites until 15th October. The matter is slated to be taken up again on 3rd October.

Interestingly however, certain women’s groups have intervened in the rummy matter in the High Court and supported the move by the Telangana government to ban online rummy. The women’s organisations claimed that online rummy had destroyed many families and their husbands had lost their earnings while playing on rummy websites.

The division bench comprising of Acting Chief Justice Ramesh Ranganathan and Justice J. Uma Devi adjourned the matter and stated that the concerns of the women’s organisations would be taken into consideration in subsequent hearings.

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Legal & Regulatory

Petition in Supreme Court challenges Telangana gaming ordinances, police interference in rummy games in 3 states

Krida Sports and Games Pvt. Ltd., a Chennai-based company that wants to start rummy operations in Tamil Nadu, Telangana and Andhra Pradesh has filed a civil writ petition in the Supreme Court. The petition states that rummy should be allowed to be played for stakes without any interference from the police.

As per records available on the Supreme Court website, a total of 19 parties have been made respondents by Krida Sports including the states of Telangana, Andhra Pradesh and Tamil Nadu and the Director General of Police of the three states.

The writ petition, filed in May 2017, came up for hearing before a bench of Justices Madan Lokur and Deepak Gupta, twice, on 3rd July and again on 8th August. While the petition was filed before the Telangana government passed two ordinances to amend the Gaming Act which made playing rummy for stakes illegal, the court allowed the company to amend their petition to challenge the constitutional validity of the two ordinances.

The Supreme Court has also issued notice to the respondents and will hear the contentions of the three state governments. Eminent jurist and former Attorney General of India, Soli Sorabjee, appeared for Krida Sports in both the hearings. The matter is likely to come up for hearing again on 1st September.

Saravanan Subramanian, Director of Krida Sports and Games confirmed over phone that his company had indeed filed the petition but refused to give further details of the points raised in the petition and the reasons why his company took the extraordinary measure of filing a petition directly in the Supreme Court, instead of approaching state high courts separately.

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Legal & Regulatory

HC to continue Telangana gaming ordinance hearing on 3rd July, grants partial relief to Ace2Three

A division bench of the Andhra Pradesh and Telangana High Court heard the petitions filed by Head Infotech Pvt. Ltd (Ace2Three)., Play Games 24×7 Pvt. Ltd (Rummycircle). and Junglee Games Pvt. Ltd (Junglee Rummy). on Tuesday and Wednesday.

AK Ganguly, the senior counsel appearing for the rummy companies submitted that the Telangana State Gaming (Amendment) Ordinance, promulgated by the government was unconstitutional and violated the rummy companies’ fundamental right to carry out trade and commerce.

The counsel for the petitioners further stated that rummy has been held to be a game of skill by the Supreme Court and the ordinance issued by the government classifying it as a game of chance, was impermissible and outside the state’s legislative competence.

The division bench of the High Court comprising of Acting Chief Justice Ramesh Ranganathan and Justice T. Rajani observed that rummy companies based in Telangana could service customers based outside the state and that would not amount to an offence under the new ordinance.

The Advocate General agreed to the suggestion of the bench while reserving his right to fully respond to the contentions raised by the rummy. Accordingly, the bench directed that rummy companies based in Telangana like Ace2Three can accept customers from outside the state while continuing to prohibit players from within Telangana.

Companies like Rummycircle and Jungleerummy that are based outside Telangana had not shut down their all-India operations but had only barred players from Telangana. These companies have not yet got any relief from the court and will have to continue to prohibit players from Telangana.

Ace2Three consequently has resumed games for players outside Telangana, Assam and Odisha.  It is understood that around 40% of Ace2Three’s players come from the state of Telangana.

The High Court is expected to hear the submissions of the Advocate General of Telangana on 3rd July.

Meanwhile, Canada-based Clairvest Group, which is now a major shareholder in Head Infotech, the company that operates Ace2Three issued the following update to the Toronto stock exchange:

Clairvest Group Inc. (TSX:CVG) (“Clairvest”) is providing an update on the previously announced regulatory issues with respect to its investment in Head InfoTech India Pvt. Ltd. (“Head InfoTech”). On June 17, 2017, the Telangana (India) state government issued an ordinance which, among other things, made it illegal to operate an online gaming platform within the state (providing services to customers within the state and operating such a business within the state serving customers outside the state) (the “Ordinance”). Head InfoTech, which operates an online skill based gaming platform, immediately shut down its operations in response to the Ordinance.

Head InfoTech, along with other online rummy companies in India, are challenging the validity of the Ordinance in the Indian courts. While final resolution of the court challenge is pending, on June 28, 2017 the High Court for the State of Telangana made an oral observation that serving customers outside Telangana should not entail any violation of the Ordinance to which the advocate general representing the state government was agreeable while reserving the right to respond fully in arguments scheduled for next week. Accordingly, Head InfoTech has resumed operations for customers outside of Telangana. Revenue from customers outside of Telangana represented approximately 60% of Head InfoTech’s overall revenue.

There is no assurance that Head InfoTech will ultimately be successful in its court challenge or that interim relief (consistent with the above mentioned oral observation) will be granted following next week’s court proceedings.

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Legal & Regulatory

Rummy operators challenge Telangana gaming ordinance in HC, matter may come up for hearing tomorrow

At least three rummy companies, Head Infotech Pvt. Ltd. (Ace2Three), Play Games24x7 Pvt. Ltd. (Rummycircle) and Junglee Games Pvt.  Ltd. (Junglee Rummy) have filed writ petitions in the Andhra Pradesh and Telangana High Court, challenging the constitutional validity of the Telangana State Gaming (Amendment) Ordinance, 2017.

The three rummy companies have contended that the ordinance impinges on their right to free trade and commerce guaranteed under Article 19(1)(g) of the Constitution.

The companies have further argued that rummy has already been declared to be a game of skill by the Supreme Court and the explanation inserted in the ordinance stating that rummy is not a game of skill overrules an express judgment of the Supreme Court. The petition argues that such overruling of a Supreme Court judgment is not permissible.

The petitions of the rummy companies have also challenged the ordinance on various other legal and procedural grounds. The companies have asked that the ordinance should be stayed immediately so that they can continue operations until final determination of the matter.

It is understood that the petitions of the rummy companies were listed before a bench of Acting Chief Justice Ramesh Ranganathan and Justice T Rajani yesterday and today but did not come up for hearing. The matter may come up for hearing tomorrow and the petitioners are likely to press for interim relief and a stay on the operation of the ordinance, as per sources.

After the issuance of ordinance, Ace2Three, which is based out of Hyderabad has stopped its real money operations in entirety and has put up a message to that effect on its home page.

Other non-Telangana based websites such as Rummycircle and Junglee Rummy have stopped accepting players from Telangana and put a disclaimer to that effect on their websites.

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Legal & Regulatory

Andhra HC rejects rummy clubs plea for police non-interference

The Andhra Pradesh and Telangana  High Court in an order dated 13th April, rejected the plea by four clubs from Andhra Pradesh and Telangana, seeking non-interference from the police.

A single judge bench of the High Court comprising of Justice A Ramalingeswara Rao dismissed the petitions filed by MLAS’ Colony Residents Welfare and Cultural Association, Hyderabad, Advocates’ Recreation Club, Karimnagar, Navodaya Sports and Cultural Association and ABS Town Hall as there was no real evidence of any harassment by the police, but the clubs had merely filed the plea based on apprehension of unnecessary interference.

The police interestingly claimed that rummy is not a total game of skill and involves an element of chance, a stand at variance with Supreme Court and High Court judgments.

Justice Rao, agreed with the assertion of the police that whether games of skill or other games are being played at clubs can be ascertained only when the police is given the right to enter the premises of rummy clubs in accordance with the Andhra Pradesh Gaming Act, 1974.

The judge in his order noted, “It  is  difficult  for  anyone  to  say  what  is  happening  inside  the premises.  When the fish is in water it is commonly said that it is difficult to prove whether fish is drinking water or not.  In such circumstances, the better option for the Courts is to apply the law only whenever the cause of action arises on the facts of a particular case in the light of the provisions of the Act, but not on mere apprehension, assertions and denials.” 

The judge also indicated his disagreement with a 2015 order of the same court as well as earlier precedents, where directions were issued to the police to not interfere in the game of rummy, irrespective of whether it was played for stakes or otherwise.

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Legal & Regulatory

Andhra HC reiterates that rummy for stakes cannot be stopped, directs rummy clubs to install cctv cameras to ensure no illegality

In a first of its kind directive by a court in India, a single judge bench of the Andhra Pradesh & Telangana High Court directed rummy clubs to install video/closed circuit cameras within their premises and link it to the nearest police station and the office of the Superintendent of Police having jurisdiction in order to ensure that illegal activities or other gambling games are not conducted in the garb of rummy.

Facts and case laws

Friends Cultural and Sports Society Club and some other recreational clubs had approached the Andhra High Court by way of  writ petitions asking the court to direct police and law enforcement authorities to not interfere with lawful conduct of the game of rummy.

Justice AV Sesha Sai in the order elaborated the relevant case laws applicable to the game of rummy, including the 1967 Supreme Court judgment of  State of Andhra Pradesh v. K. Satyanarayana which held rummy to be a game of skill as well as the landmark 1996 Supreme Court in Dr. KR Lakshmanan v. State of Tamil Nadu, that affirmed the above 1967 ruling and further held that betting on horse races requires a substantial degree of skill.

Justice Sai also noted that two previous orders of the Andhra High Court D Krishna Kumar v. State of Andhra Pradesh and Executive Club v. State of Andhra Pradesh, have held that playing rummy even for stakes or money does not violate provisions of the Andhra Pradesh Gaming Act, 1974.

While rejecting the Home Department’s reliance on the division bench judgment of the Madras High Court in Mahalakshmi Cultural Association, the Court remarked that the observations of the Madras High Court against rummy for stakes have already been withdrawn by the Supreme Court and hence reliance can no longer be placed on the High Court order.

Rummy clubs to now have CCTV cameras
Rummy clubs to now have CCTV cameras

Final verdict and implications

The Andhra High Court reiterated the previous position that the game of rummy cannot be interfered with by the police and law enforcement agencies irrespective of the amounts staked or wagered. To ensure that other games of chance like kotha mukkalu and three cards are not conducted by the rummy clubs, as alleged by the Home Department, Justice Sai directed all rummy clubs to install video cameras, i.e. CCTV cameras and store at least a fortnights’ footage. Further, to ensure that police can monitor any illegalities committed by clubs,  the footage of the cameras is to be linked to the nearest police station and the office of the Superintendent of Police having jurisdiction.

The court has further given authority to the police to enter the premises of the rummy clubs in case there is any information of illegalities being committed by them. The single judge bench also noted that non-compliance of the directives, including the direction with regard to installation of CCTV footage by the clubs would mean that they are in violation of the orders of the court.

The decision of the High Court is a landmark one as it is for the first time that a court in India has evolved a unique mechanism to deal with allegations of running gambling dens in the name of rummy. Police are frequently known to allege that poker and rummy clubs run other games of chance and there are various charges made, which are difficult to verify. The judgment of the Andhra High Court will ensure that rummy clubs can operate legitimately without fear of being charged of running other gambling activities.

It is likely that rummy and poker clubs will use this judgment as a precedent both in Andhra Pradesh/Telangana as well as other jurisdictions to get similar directives from High Courts to restrict police interference and unnecessary harassment.

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Gaming

Andhra government mulls proposal to legalise casinos in bid to boost tourism

Reports in the media indicate that the Andhra Pradesh government led by Telugu Desam Party (TDP) chief N Chandrababu Naidu has received a proposal to develop casinos in the port city of Visakhapatnam  (Vizag) on the lines of offshore casinos in Goa. The Andhra government reportedly wants to develop Vizag as a global tourism destination and attract visitors from India and abroad.

A report in Deccan Chronicle indicates that casino operators from Goa have put proposals before the Andhra government. Those familiar with the matter indicate that the proposal was put forth by Delta Corp Chairman Jaydev Mody. It is believed that a large portion of gamblers in Goa casinos belong to the Andhra Pradesh-Telengana region and contribute a large sum to Goa’s tourism revenues. A cash-strapped Andhra government reeling under the impact of Cyclone Hudhud is facing a fiscal crisis due to various populist schemes introduced by it. Promoting tourism and developing Vizag into a global tourist hub with state of the art recreational facilities and casinos could be the ideal way to attract tourists from across the globe.

Vizag to be next casino destination?
Vizag to be next casino destination?

Some reports also indicate that the Andhra government is keen to allot land near Vizag to have a Disneyland in the state on the lines of the Disney park in Paris. While it is understood that the Andhra government has neither accepted nor rejected the casino proposal, Naidu is likely to assess the sentiments of the locals and impact on those living in the state before taking any final decision.  It may be recalled that states like Maharashtra, Haryana, Odisha, Jammu & Kashmir etc. have considered proposals to legalise casinos but have rejected the idea because of opposition from political and social groups. More recently the government of Punjab was considering allowing casinos in Ludhiana as part of a tourism project but later dropped the plan because of opposition from religious and social groups.

Sources however indicate that the Andhra government might not be in any hurry to react to the proposal. It remains to be seen if Naidu, who is seen to be a pragmatic and astute politician would be able to allay local apprehensions and clear the project, given its obvious benefits.