Categories
Legal & Regulatory

PIL filed in Delhi HC to stop online poker & betting websites

Exclusive A Public Interest Litigation (PIL) has been filed by social activist and chartered accountant Avinash Mehrotra in the Delhi High Court seeking directions to the Union Ministry of Information Technology and the Reserve Bank of India (RBI) ‘to bring illegal and illicit online gambling/betting/wagering/gaming to an end.’

Mehrotra in his petition states that the problem of illegal and illicit online gambling is a rising menace that has ruined the lives and financial security of several persons.

He states that several websites are encouraging the country’s working population to part with their hard earned money on games of chance such as poker, teenpatti, sports betting, election betting etc.

The petitioner contends that some of the websites offering such games are based in India while others are based abroad. The websites named in the petition include offshore betting websites such as Betway, BetRally India, 1xBet, Royal Panda, Dafabet etc. and domestic poker websites such as Adda52, PokerStars.in and Khelo365.

The petition contends that ‘these websites seem to encourage the horrible habit of gambling amongst youngsters, and are doing so solely with a view of making large amounts of profits at the cost of these unsuspecting citizens of our great nation.’

It further avers that the popularity of fantasy sports is rising, where unsuspecting players are betting large quantities of money on the individual performance of players.

The petition further submits that while games of skill are exempted from the ambit of gambling under the Public Gambling Act and state laws, in card games such as blackjack, poker, teenpatti the success demands solely on the turn of cards and no skill is involved.

Similarly, it states that sports betting is dependent on the performance of individual players and there is no skill involved on part of the person placing the bet.

The petition also challenges the provisions in the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2016, contending that ‘the State Legislature has permitted people to lay waste to their fortune, hard earned money, and possible inheritance, by permitting them to play games of pure chance, under the garb of calling them games of skill.’

Mehrotra states that the Nagaland online skill gaming law cannot have a pan-India operation and that these activities remain illegal in the rest of the country.

The petition also alleges that large sums of money are being placed using foreign currency on offshore betting websites leading to exodus of foreign exchange leaving India, which amounts to a violation of the Foreign Exchange Management Act and rules.

It also points out that many of the online gaming websites do not appropriately deduct tax at source and neither do the players pay taxes on winnings from such websites, leading to loss of tax revenue under the Income Tax Act.

Mehrotra also submits the behavioural and psychological risks associated with gambling, and online gambling/betting in particular.

The petition finally asks for a direction from the Delhi High Court to ask the Union Ministry of Information Technology to ban/prevent online gaming websites under Sections 67 and 69 of the Information Technology Act, 2000.

It also urges the court to issue direction to the RBI to check the exodus of foreign exchange on online gambling websites. It further asks for a direction to the Ministry of Finance to recover taxes due from players and operators as well as prosecution of operators and promoters of online gaming websites.

The matter is scheduled to come up for hearing before a division bench of the Delhi High Court comprising of Chief Justice Rajendra Menon and Justice Anup Bhambhani on 29th May, 2019.

Read more about gambling laws in India.

Categories
Poker

Khelplay to shut down operations by 15th March

Mumbai-based Sachar Gaming Pvt. Ltd. has announced that it would be shutting down operations of its poker website Khelplay.com by 15th March, 2018 as part of a ‘business restructuring process’.

The company through an announcement made on the Khelplay website stated that players can withdraw their balance amount on or before 15th March, after which the amount would be transferred to their Khelplayrummy account.

It is understood that while Sachar Gaming would be shutting down their poker operations, they would continue operating their rummy brand, Khelplayrummy.

The reasons for shutting down the website are not immediately clear and Sachar Gaming’s representatives did not respond to Glaws’ request for comments. It is however understood that the reason for the closure of the website is the company’s failure to attract players in an increasingly competitive market.

Khelplay, which is connected to lottery conglomerate Sugal & Damani Group and has a license from the Nagaland government to operate online skill games, was part of International software provider Microgaming’s India Poker Network (IPN), which also had Essel Group’s Pokernation and Lucknow-based Club Empire Tech’s Pokeryaar.

Industry observers indicate that Microgaming’s India platform has failed miserably in building any substantial player pool, getting liquidity or traction in India. With only Pokernation and Pokeryaar now left in IPN, it seems that Microgaming’s India experiment is likely to fail.

Categories
Legal & Regulatory

GST Council decides dual rate structure for lotteries: 12% for state-run lotteries, 28% for state authorised private lotteries

Union Finance Minister Arun Jaitley  announced a dual GST rate for lottery tickets in a press conference after the GST Council meeting today.  Jaitley noted that GST on lottery tickets was one of the most contentious and hotly debated topics in the GST council and several hours were spent discussing the issue.

While the government of Kerala which conducts its own lotteries, without involving private lottery distribution companies, wanted the highest GST rate of 28% on lotteries (to deter private operators from selling lotteries within Kerala), some other states wanted a lower GST rate.

Finally, the GST council decided that there would be a dual rate of charging lotteries, wherein lotteries operated by state governments without the help of private distributors or marketing agents would be charged a 12% GST rate, while lotteries operated by private distributors would be charged the highest tax rate of 28%.

At present only the state of Kerala operates its own lottery schemes without involving any private companies. Other states like Maharashtra, Goa, Sikkim, Mizoram, Nagaland, Punjab, West Bengal etc. have authorised private distributors to sell and market their lottery schemes.

Jaitley also announced that GST would be charged on the face value, i.e. the price of lottery tickets and not on the margin retained by the government or distributors.

Previously, the central government has sought to levy service tax only on the margin retained by private lottery companies. Lottery companies have noted that the higher rate of 28% and that too on the face value of the tickets would spell doom for the business.

It seems that the GST Council has taken a conscious decision to impose a high rate of tax on private lottery companies to make the business unsustainable. Private lottery operators have often been accused by law enforcement agencies of committing fraud and evading taxes.

Categories
Business Poker

Pokerhigh ropes in Arjun Rampal as their brand ambassador

Delhi-based online poker website Pokerhigh has announced that actor and model Arjun Rampal would be joining them as their brand ambassador.

This would be the first poker website that Rampal would be endorsing.  Rampal, has in the past worked in several popular Bollywood movies such as Rock On!!, Don, Chakravyuh and Aankhen.

Pokerhigh has also announced a Rs. 1 lakh knockout bounty tournament on 11th June on their website. Pokerhigh is of the companies that received the Nagaland Online Skill Games license, in December 2016.

Speaking on the association, Mithun Rebello, Co-Founder & Managing Director of PokerHigh, said, “We are proud to associate with Arjun Rampal who truly reflects the modern, aspirational and fun persona of the PokerHigh brand and its users. Arjun is also a genuine embodiment of the brand philosophy, ‘Dimag lagao, Dil Se Khelo’.

He understands poker as a sport and is a true ambassador of the game. We are committed to delivering a memorable online entertainment experience to India and believe that this association with Arjun will enable us to take our brand philosophy to new heights.”

“I am excited to be associated with PokerHigh. After a day’s work, you want some me-time and little victories that keep you going everyday – PokerHigh does just that! I am excited to work with the brand and look forward to a great journey ahead,” said Rampal in a press release.

Categories
Business Gaming

Government likely to set 28% GST rate for lottery tickets

It seems that the central government has made up its mind to put lotteries in the highest GST slab of 28 per cent, as per a recent report in the Economic Times.

The report quotes sources as saying that both lotteries and gambling would be kept in the highest tax bracket. The model law for GST passed by the Parliament places actionable claim (Supreme Court judgments have stated that lottery tickets are actionable claims) in the category of ‘goods’ and not ‘services’, making it likely that the highest rate of tax will apply to lottery tickets.

Earlier, Revenue Secretary Hasmukh Adhia had indicated that gambling and betting would be taxed at a rate higher than 18 per cent.

GST rate of either 12 per cent or 18 per cent would be applicable on services, while some categories of demerit goods are likely to face a GST rate of 28 per cent or more. It is also understood that the central government is likely to charge GST on the ‘face value’ of lottery tickets and not on the operators margin, as per the report.

The fitment of goods and services into different categories of rates is likely to be finalised in the GST Council meeting in Srinagar on 18-19th May.

Most private lottery operators however have opposed the move to include lotteries in the highest GST rate and the proposal to charge GST on the face value of lottery tickets.

However, Kerala Finance Minister Thomas Issac has supported the move to levy a higher GST rate, saying that private lottery operators do not conform to the Lotteries (Regulation) Act, 1998 and Rules framed thereunder.

“A higher tax regime would drive these people out of business. I am prepared to lose some revenue because of higher GST slab on lotteries. It will eliminate a big law-and-order problem around lotteries in our country” he added.

Incidentally, the Comptroller and Auditor General of India (CAG) in its recent performance audit of lotteries operated by the Mizoram government and report on the Nagaland government finances has severely indicted private companies for defrauding customers and the state governments.

The CAG reports indicate that some private companies have collectively not deposited dues worth over Rs. 26,000 crores to the Mizoram and Nagaland governments.

The scathing reports, unsparing in their criticism of lotteries operated by these companies, further point out the possibility of rigging or manipulation of the winning numbers by private companies, flagrant violations of the Lotteries (Regulation) Act and Rules, vulnerability of computer systems of the private operators conducting lotteries and rampant tax evasion.

It is possible that the central government has taken cognisance of these CAG reports and decided to impose a higher GST rate on lottery tickets, to discourage the appointment of private companies as lottery agents and distributors.

Categories
Legal & Regulatory Poker

Khelplay gets sixth Nagaland online skill games license

Exclusive Sachar Gaming Pvt. Ltd., which operates rummy website khelplayrummy.com and poker website khelplay.com has received the sixth license for operating online skill games.

Sachar Gaming is the first company to have taken the ‘bouquet of games license’ for multiple games such as poker, rummy, quizzes, auction, binary options, virtual team selection games and virtual sport fantasy league games. All other five companies have taken the license for only one game, i.e. poker. Baazi Networks Pvt. Ltd. had been the last company before Sachar to have been issued the Nagaland skill games license, a couple of weeks ago.

PK Jain, Head of Operations of Sachar Gaming Pvt. Ltd. confirmed the development and said, “We are pleased to have received the license for online skill games from the Nagaland government. The license will bring greater credibility to our brand and ensure that our players feel safe and secure while playing on our website.

The licensing regime will also enable us to aggressively expand, market and advertise our games. It will also allow us to add newer games and products, which we aim to launch soon. The license will also help us achieve our vision of being the leading skill games operator in the country.”

Categories
Legal & Regulatory

Sports Law & Policy Centre publishes white paper on games of skill, read critical analysis and full report

The Sports Law & Policy Centre, a Bengaluru-based independent think-tank (formed by the Go Sports foundation and law firm LawNK) has published a white paper titled ‘Games of Skill in India: A Proposal for Reform’

The white paper prepared by sports lawyers Abhinav Shrivastava, Shan Kohli, R. Seshank Shekar and Anirban Saikia complete with an indicative map on states where games of skill are permitted and a table of state gambling legislations, provides a detailed and comprehensive information on the legality of games of skill, case laws on rummy and poker and the Nagaland Online Games of Skill legislation.

The paper goes on to point out the fallacy of the Supreme Court judgment in State of Andhra Pradesh v. K. Satyanarayana where the apex court ruled that rummy being a game of skill can be played, but if the organiser is making a profit from the game (over and above reasonable administrative fees for running the club), then it is likely to be classified as gambling and fall within the penal provisions.

The paper also delves on the recent regulations issued by the Malta Gaming Authority and the criterion set by the Maltese government for recognising games of skill.

The paper goes on to make three major suggestions for improving the business scenario for the games of skill industry: the first is to evolve guidelines for classifying games of skill, the second is to provide for an administrative mechanism for advanced rulings and the third is providing for central legislation and guidelines on the issue of regulation of games of skill.

Constructive criticism

While the research report is a great effort in providing a one-stop understanding of the legal issues relating to the games of skill industry, there are a few points which either may not have been covered in the paper or may not be practical:

1. Subsequent rulings after the Satyanarayana decision: While the last paragraph of the Satyanaryana decision leaves the issue of whether rummy or other skill games can be played commercially and for profit ambiguous, several subsequent High Court decisions while interpreting the Satyanarayana have noted that games of skill like rummy can be played irrespective of the stakes or profits involved. This indicates that it is likely that the restriction on earning profits on skill games mentioned in passing in the Satyanarayana decision may be termed as obiter dicta, i.e. not a relevant or operational part of the judgment.

The white paper may also have missed mentioning the litigation that ensued in the Supreme Court (that was subequently withdrawn) relating to the legality of rummy and online rummy for stakes as well as similar litigation in the Delhi High Court on the legality of online poker.

2. Kerala notification on games of skill: The white paper in its detailed analysis seems to have missed noting that apart from the state of Nagaland, even the state of Kerala has published a notification way back in 1976, mentioning a list of games of skill (which includes games such as rummy and dart) and detailing how they can be played subject to the condition that side-betting (that is, speculation on the outcome by non-interested third parties) should not be permitted on such games.

The notification has been issued by under Section 14A of the Kerala Gaming Act, 1960 which empowers the government to notify a list of games where skill predominates chance alongwith the restrictions or regulations under which such games can be played.

3.  Central legislation or advanced ruling mechanism may not be practical: The paper in its recommendations notes that the central government ought to come up with either a legislation or a set of guidelines on classification and regulation of games of skill. The paper goes on to note that entry 34 of the state list only deals with ‘gambling and betting’ and not games of skill. Consequently, the paper notes that the central government may have the power to regulate games of skill under its resudiary powers.

Unfortunately that may not be a correct position of law. Even assuming that games of skill do not fall within the entry ‘gambling and betting’, it would certainly fall within another entry of the state list (entry 33), which inter alia deals with sports, entertainments and amusements. In other words, the power to regulate and license skill games in any eventuality would vest with state governments and legislatures.

Thus, given the complexity of centre-state relations and quasi-federal nature of India’s polity, it would be very difficult for the central government to issue regulations on a matter clearly vested with the state.

Similarly, the creation of a separate advanced ruling authority to provide opinions on which games involve skill may not be practically possible. A better approach possibly would be to leave it to individual state governments to formulate laws wherein they could by way of a circular or executive notification classify and regulate games of skill, similar to the manner in which the Kerala Gaming Act has allowed the government to notify games which involve skill.

Note: The full copy of the white paper can be accessed here.

Categories
Legal & Regulatory Poker

Pokerbaazi receives fifth Nagaland online skill games license

Exclusive Baazi Networks Pvt. Ltd., the company which operates online poker website Pokerbaazi is the fifth company to receive a license to operate online poker games from the Nagaland government.

The license issued has been issued under the the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2016 and the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Rules, 2016. The Nagaland Act and Rules clarifies the legal position that online skill games can be played with stakes or real money across India, unless other states through legislative or executive order prescribe otherwise.

Khelo365, Pokabunga, Pokerhigh and Club Empire are the other four websites that have received a license from the Nagaland government to operate poker games. Navkiran Singh, Director of Baazi Networks and co-founder of Pokerbaazi confirmed that his company has obtained a license for only one game, i.e. poker.

Commenting on the development he stated, “We wanted to take every step necessary to safeguard the players and their interests and we take pride in being extremely transparent. PokerBaazi is India’s most trusted poker website. Our organisation already offers the best promotions, good customer support, proper TDS process and the smoothest withdrawal process; so after updating our software, this move is in keeping with our aim to give the best experience to players in every possible way.

PokerBaazi.com is now India’s most trusted legal website. The license will help ease fears among players who feel unsafe in depositing money on online poker platforms. The license officially allows us to operate Texas Hold’em & PLO poker games in states permitting skill based online games and players can play without any apprehensions of legality.”

Categories
Gaming

Serial entrepreneurs launch real money quiz gaming app

Paavan Nanda, the co-founder of popular travel apps Zostel and Zo Rooms along with three other partners has launched a new real-money quiz and puzzle app ‘TicTok Games’, wherein people can stand a chance to win prizes by paying a monthly subscription fee of Rs. 500.

As per a press release issued by the company, users can download the app on Android or iOS platform and play games by paying a subscription fee.  Each quiz offers a particular prize displayed on the screen, lasts for 15 minutes and includes five-six trivia questions. Right after the quiz period expires, the gamer giving all correct answers in the minimum possible time is declared as the winner. Users get to reach higher levels and play for bigger and bigger rewards by continuing to give correct answers for various quizzes at each level. These ‘Levels’ can be redeemed anytime by paying a nominal price, typically 3% of the MRP of any product, to claim the reward.

Commenting on the launch, Nanda in a press statement noted, “We are excited to launch TicTok as India’s first mobile gaming app that gives users a chance to win unimaginable prizes from the real world just by playing games in the virtual world. India is poised to become one of the leading markets in the gaming sector. Our main idea behind launching TicTok Games is to provide a platform that offers a combination of entertainment and knowledge while helping them realize their dreams. It will appeal to the youth as well as the rest of the population alike. We are targeting to achieve 150,000-200,000 app installs in the first month.”

The press release adds that the games are not available in Assam and Odisha. Although the manner of providing deposits and prizes of the quiz game is complicated, it is likely to be construed as a game of skill offered for stakes. It would be interesting to see if this knowledge-based game becomes the next big thing in the gaming industry after poker, rummy and fantasy sports.

Interestingly, the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2016 expressly mentions quizzes as one of the skill games that can be offered for stakes or real money through a licensing regime.

Categories
Legal & Regulatory

Two more companies receive Nagaland online skill games license [Updated]

As per news reports and a post on the Pokerhigh Facebook page, Quantumskill Gaming and Tech. Pvt. Ltd., which operates the online poker website pokerhigh.com has received the third license from the Nagaland state government to operate online games of skill. Another company, WYZ Games Pvt. Ltd. which operates the poker website pokabunga.com has also obtained the license from the Nagaland state government, taking the total number of companies to have obtained the license to four. All four companies have obtained the license only for one game, i.e. poker.

The license is for only one game, i.e. poker, but this could not be independently verified at this stage. A statement on the Pokerhigh Facebook page reads as follows:

Quantumskill Gaming & Tech Pvt. Ltd., the holding company of www.pokerhigh.com is proud to announce that we have been issued a license for online poker (No limit Texas Holdem & Pot Limit Omaha) under the ‘Nagaland Prohibition of Gambling & Promotion and Regulation of Online Games of Skill Act 2016.’

JOIN US IN CELEBRATING this new Act that is a groundbreaking moment in poker history.

We at Poker High are dedicated to bringing this challenging mind sport out of the shadows, giving poker and its growing community of accomplished players the recognition and respect they deserve. The license is a huge boost to our efforts and creates a more accessible gateway to your gaming horizons.

The news could neither be independently verified at this stage nor was a copy of the Nagaland online skill games license posted on the Pokerhigh website. Mithun Rebello, Director of Quantumskill Gaming and Tech Pvt. Ltd. did not confirm the news of award of license at the time of writing this article (despite repeated attempts to reach out to him) and chose not to answer queries raised by Glaws, unlike extensive statements given by other license holders.

Update 1: Mithun Rebello has replied to the questions raised by Glaws and added that the delay in reverting was because he was travelling. Following are his comments on the license:

Quantumskill Gaming & Tech Pvt. Ltd., (QSG) the holding company of www.pokerhigh.com has been issued a license for online poker (No limit Texas Hold em and Pot Limit Omaha) under the Nagaland Prohibition of Gambling & Promotion and Regulation of Online Games of Skill Act.

We are proud to have been issued a license under the Ground breaking Act which certainly goes a long way in legalising and promoting skill based gaming in India.

We launched PokerHigh.com in May 2015 and have been committed to providing poker players a seamless, fair & genuine poker experience. True to our commitment we launched our new and improved product in September this year which is smooth, feature rich and certified by Itech labs Australia.

Our stellar team of poker professionals have been involved in promoting education and awareness of poker in India with the intention of bringing this awesome mind sport out of the shadows.

The License gives a huge boost to our efforts and creates a more accessible gateway to skill gaming horizons. The Act provides much needed clarity on the legalisation and regulation of poker and other skill based games in India. The efforts of the Nagaland government must be truly appreciated and applauded.

Update 2: Gaurav Gaggar, Director of WYZ  Games Pvt. Ltd. confirmed the development and commented as follows:

Yes we have received a license for poker right now and intend to get for the bouquet of games soon. This is a game changer for India as it allows serious and ethical companies to cater to clients as differentiated from other fly by night operators. Clients and other stake holders of the industry gain with more transparency. Regulation ensures player protection and relative safety for payment gateways. Over all a historic move for skill based gaming industry in India. Exciting times.