Legal & Regulatory

Nagaland select committee set to discuss Online Skill Games Bill on 2nd March

After the previous meeting of the skill games select committee scheduled on 10th February was adjourned, the Nagaland legislative assembly secretariat has indicated that the legislators are now set to discuss the Online Skill Games Bill on 2nd March 2016 at 11 am at the committee room of the assembly secretariat. A press release issued by K. Sekhose, Additional Secretary of the Nagaland Legislative Assembly has also urged all select committee members to attend the meeting.

The proposal to pass a special law to regulate online games of skill like poker, rummy and fantasy sports in Nagaland has been stalled several times since July 2015 owing to reservations by social groups, media and the church. If the select committee approves the Bill to regulate online skill games, it will in all likelihood be taken up for passage in the budget session of the legislative assembly starting on 15th March. The next couple of months will be crucial for the poker and rummy operators.

Legal & Regulatory

Select committee to meet on 10th February to discuss Nagaland online skill games bill

As per local media reports, a meeting of the select committee constituted to examine the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Bill, 2015 has been convened on 10th February, 2016 at 11 am in the Committee Room of the state assembly secretariat. The committee headed by MLA Khriehu Liezietsu is likely to consider all aspects including impact of allowing real-money skill games om the local population. The Bill once approved by the five-member Select Committee is likely to be tabled in the upcoming budget session of the legislative assembly.

It may be noted that the Nagaland Online Skill Games Bill which seeks to regulate and license online poker, rummy, bridge, sudoku, fantasy sports and other similar games was tabled in the legislative assembly by Chief Minister TR Zeliang in July 2015. However, due to opposition from the church and local media, the Bill was referred to a five-member Select Committee.

Interestingly, since all MLAs of the state are part of the ruling coalition (with all opposition members having defected to the ruling benches late last year), the suggestions of the Select Committee are likely to be final. If the government musters the political will to table the Bill, given the political dynamics of the state, there is not going to be much difficulty in ensuring smooth passage and implementation.

Legal & Regulatory

'Opposition mukt' Nagaland assembly unlikely to pass skill games bill in winter session

The Nagaland legislative assembly is unlikely to take up the  Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Bill, 2015 for consideration and passage in the current winter assembly starting December 14. Sources familiar with the matter indicate that the Bill may be taken up in the budget session in February or March next year.

It may be remembered that Nagaland was the first state in India to introduce a special legislation to regulate and license online skill games such as poker, rummy and fantasy sports. However, the Bill could not be taken up and passed in July due to opposition from the local media and powerful religious groups like the Nagaland Baptist Church Council (NBCC), who asserted that regulating skill games would increase corruption and lead to detachment, depression and addiction.

Due to resistance from some quarters, the Bill was ultimately referred to a select committee of MLAs for its opinion.  The legislative assembly may either choose to make changes to the Skill Games Bill based on the select committee recommendations or shelve the idea completely depending on opinion from various stakeholders.

Interestingly, the TR Zeliang-led Nagaland government has support of all the 60 members of the legislative assembly as opposition MLAs recently crossed over to the Naga People Front (NPF)-led ruling coalition.  Consequently, there should be no difficulty in getting the Bill passed if the government chooses to put it to vote.

If the Skill Games Bill is passed it will be sent to the Governor for his assent. The Governor by convention normally accords his assent to a Bill but has the option of sending it for reconsideration of the legislative assembly or referring it to the President (and therefore the Central government). Thereafter the state government can start the process of framing rules and the licensing procedure.  Therefore, the entire process of regulation of online skill games is at least a year or two away from becoming a reality.


Will Bihar restart lotteries to offset liquor revenue loss?

Newly re-elected Chief Minister of Bihar, Nitish Kumar recently announced a complete ban on sale of all alcoholic beverages in the state of Bihar starting 1st April 2016, making good one of the promises he had made before a bitterly contested election campaign earlier this year. While the move has been hailed by social activists and woman self help groups as one that will reduce health problems and plaguing alcohol addiction in one of India’s most populous and backward states, economists and bureaucrats term the move as illogical as it would dry up one of the state’s most important source of revenue.

It is estimated that the state government would loose over Rs. 4,000 crores annually from the ban on sale of alcohol. Of course, experience from booze-bans imposed by states like Andhra Pradesh, Haryana, Gujarat, Mizoram and Manipur show that prohibition is never successful and apart from causing a stress on the exchequer, it only increases bootlegging, criminal activities and health hazards due to sale of illicit liquor. However, since Nitish Kumar appears to be firm on going ahead with prohibition, he would have to look at other avenues of filling up the state exchequer, failing which there would be no funds to fulfill his other promises of building roads, schools, hospitals and other infrastructure facilities.

And Nitish has limited alternatives to fill-up the state’s coffers. One feasible and immediate option before the Chief Minister however is for the state to start lottery schemes to bridge the fiscal deficit. Two other states that have imposed prohibition, Nagaland and Kerala (Kerala has announced phasing-out of most forms of alcohol starting this year), rake up huge amounts of revenues from lottery sales. The turnover from sale of Kerala lotteries is expected to cross Rs. 6,000 crores this year (with the profit or net revenues for the state at least expected to be in the range of Rs. 500 crores), while a small state like Nagaland also easily earns Rs. 15-20 crores every year.

Bihar can easily cover up a portion of its loss due to prohibition by restarting a few lottery schemes, which have been banned in the state since 1993. Further, to prevent addiction and craving for lotteries, the government can decide the number of schemes to be run and the purpose of such schemes. This is statutorily governed by a central legislation, the Lotteries (Regulation) Act, 1998 which stipulates that a lottery scheme has to be run for a specific socio-economic purpose and no such scheme can have more than one draw per week (a state can run multiple lottery schemes not exceeding 24 per week).  The state government can also consider allowing other forms of betting and gaming as also consider taxing and regulating online gaming and skill games to offset the revenue loss caused due to the liquor ban.  Ultimately however the decision lies with Nitish Kumar on whether he prefers pragmatism or bankruptcy.

Legal & Regulatory

UPDATE: Nagaland skill games Bill sent to select committee by legislative assembly; committee to submit report in 3 months

The Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Bill, 2015 was referred to a five member select committee by the legislative assembly on Monday for further fine-tuning and deliberations as well as to study the type of skill games that can be included in the Bill. The 5 member panel is headed by ruling Nagaland People’s Front (NPF) MLA Khriehu Liezietsu  with other legislators Mmhonlumo Kikon,  B.S. Nganlang, L Khumo and Dr Imtiwapang Aier as members.

The five member panel has been asked by the House to submit its report on the implications of the Bill within three months. It remains to be seen whether the government  is able to pass the Bill in its present form or accept changes in the next assembly session (likely to be in December). The  government also has an option to put the Bill in cold storage or withdraw the Bill and is not bound to accept the suggestions of the selection committee.

The Bill in its present form provides for a licensing authority to regulate and license online games of skill which are offered for revenue (either through advertisements, rake, fixed fee or otherwise). Significantly, the Bill allows license holders to offer certain listed skill games to any jurisdiction in India which has exempted games of skill from the ambit of their gaming statutes. A list of games such as chess, poker, rummy, bridge, nap, solitaire, virtual sport fantasy league games and virtual sports have been classified as games of skill.   It would be very interesting to see the suggestions of the Select Committee and reaction of the state government. More updates on this soon.

Legal & Regulatory Poker

Local publications fail to understand significance of Nagaland Online Skill Games Bill, raise concerns based on misconceptions

Some regional publications including a recent opinion piece in Nagaland Post titled ‘Online gaming: skills and chance’, indicate that the time may not be ripe for the passage of the Online Skill Games Bill (the Nagaland legislative assembly is scheduled to vote on the Bill tomorrow as per local media reports). However, the Nagaland Post article (and some other media reports) have based their conclusion on a few flawed assumptions:

  1. Painting poker and roulette with the same brush:

The article states that, “The debate over only gaming and gambling continues primarily, since games of skill such as poker or roulette have been described as ‘game of chance’(gambling) while in other places, it is labelled as game of skill…It remains to be seen if the Online Games of Skill is an innocuous bill that hides the agenda of offering online games such as poker, roulette etc. The fact is that such cash for skill games could turn out to be another way of operating gaming casinos online.”

However, the games of poker and roulette are as different as chalk and cheese. Roulette is purely and clearly a game of chance and no sane person has ever claimed anything to the contrary. Poker on the other hand is a game that stimulates the intellect and has practical applications in the field of game theory, economics, statistics and business negotiations.   Eminent economists, businessmen and chess grandmasters have hailed poker as a game that requires considerable mental intellect, knowledge, experience and skill. In fact the prestigious Massachusetts Institute of Technology (MIT) has recently introduced a free online course on improving poker skills as theory and analysis of the game can be applied to investment management and training.

Although no court in India has directly and conclusively held poker to be a game of skill, International precedents and statistical evidence will make a compelling case before the courts and it is likely that courts will accept the proposition that poker is a game involving a substantial degree of skill.

  1. There is no difference between playing games of skill online or offline:

The article goes on to state that, “In view of various court interpretations in various states, it was observed that only Games of skill and that too played in physical form have been held by the courts to be valid and falling within the ambit of various enactments, dealing with Gaming, in India. However, as far as, on-line Gaming is concerned, the courts are of the view that on-line Gaming could not be compared to real game being played and would, therefore, not be allowed until ‘skill’ test is passed by it…”

In my opinion however, this is a factually inaccurate statement. No court in India has stated that online gaming cannot be compared to real games played physically. The Delhi District Court in its non-binding opinion seems to suggest such a theory as a passing observation, without going into the merits of the issue. However the Delhi Court’s opinions have no legal significance and have been challenged in the High Court.

For playing games of skill, the medium, venue or amounts wagered is irrelevant as such games have been exempted from the ambit of gambling. Whether a particular skill game is played online, in a club or at a private house does not really matter. For instance, it would be inconceivable for any court to accept a proposition that the game of chess is a game of skill if played offline but becomes a game of chance if it is played on the internet.

It is also difficult to imagine that any skill game like chess would become gambling if a person decides to pay a fee to enter a contest with a hope of winning a prize based on his superior acumen and  intelligence.

  1. Problem of addiction and manipulation:

The article goes on to add that allowing licensed games of skill would increase the problem of addiction and manipulation (presumably of the software). This again is a popular misconception. There are ample opportunities for people to waste their money even in unregulated or underground markets. Bringing a regulatory regime will ensure that there are checks and balances on gaming companies and certain restrictions on allowing people to place their money. For example there may be restrictions on allowing minors to place bets on the websites or ban on persons below the Income Tax bracket who do not possess a valid PAN card from playing with real money, which would reduce chances of addiction and misuse.

Further, regulatory conditions such as the requirement of certification of the gaming software and oversight by an independent regulatory body would ensure that cheating and manipulation does not occur.

The initiative by the Nagaland government could be a first step to herald regulation of skill games in India. The usually neglected state of Nagaland has a historic opportunity to pass a legislation which could be used by other Indian states as a role model.

Legal & Regulatory

Breaking news: Nagaland set to become first Indian state to pass a law on online games of skill

In a move that is bound to shake the Indian gaming industry, Nagaland is set to become the first Indian state to pass a specific law on online games of skill as per local media reports. As per reports by regional news agency  The Morung Express, Chief Minister TR Zeliang of the ruling Nagaland People’s Front (NPF) introduced the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Bill, 2015 in the floor of the legislative assembly on 23rd July and the Bill is likely to be passed by the assembly in the next few days.

Given the comfortable legislative majority of the ruling NPF, the passage of the Bill is a foregone conclusion. Following is the extract of The Morung Express report:

According to the statement (of the Bill), “Gambling means and include wagering or betting on games of chance but does not include betting on wagering on games of skill.”

“Games of skill” shall include all such games where there is preponderance of skill over chance, including where the skill relates to strategising the manner of placing wagers or placing bets or where the skill lies in team selection or selection of virtual stock based on analyses or where the skill relates to the manner in which the moves are made, whether deployment of physical or mental skill and acumen.

In the statement of objects and reasons, Chief Minister stated the object of the Bill is to give effect to the provisions of the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill 2015” in order to regulate and promote the conduct of online “Games of Skill” under issue of licence by the Government of Nagaland.

The statement stated that the sector of online games of skill is already well developed and established in India and other parts of the world. However, it is yet to be regulated in the country under a formal legal framework by any state of union territory, although there is no law that presently bars the conduct of online games of skill. The law as established in this country by rulings of various courts, including the Apex Court, clearly distinguish “Games of Skill” to be not gambling, and playing “Games of Skill” with or without stake to be a genuine business venture and not amounting to gambling since winning such games depend more on skill than chance.

“The Bill seeks to regulate and promote the conduct of online “Games of skill” with the primary objective of earning revenue for the state government by way of licensing fees and royalty,” the Chief Minister stated.

It is understood that games like poker and rummy will be included within the ambit of the new Bill and a tax will be imposed on license holders. This move of the Nagaland government will add credence to the proposition that games of skill can be legally played for stakes, whether online or offline. Nagaland government’s initiative may prompt other states to regulate and license games of skill and earn revenues from the activity. Further this law once enacted would also give strengthen online rummy companies’ arguments in the pending Supreme Court  Mahalakshmi Cultural Association matter that games of skill can be legally played for stakes across India, though state governments may be at liberty to impose some regulations and fees.

[Note: We are trying to get a copy of the Bill and more details on its contents. We will post latest updates and analysis on this issue very soon].