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Legal & Regulatory Poker

In historic verdict, Bangalore High Court says poker is a game of skill, decision to open floodgates for gaming industry

In a historic observation passed by the Karnataka High Court in Indian Poker Association v. State of Karnataka, (WP Nos.  39167 to 39169 of 2013) the Court ruled that playing skill games like poker in recreational clubs is permitted and no license is required for the same on 8th October 2013.

Justice AS Bopanna of the Karnataka High Court in a matter concerning arrests and raids in various Bangalore clubs for organising poker games observed, “Having taken note of the fact that in respect of the game of poker if played as a game of skill, license is not contemplated and further keeping in view the fact that permission in this case had been obtained in that regard, the petitioner would be entitled to conduct such games provided, the same is in accordance with law.” The order further directed the police not to interfere with lawful activities of the club.

KN Suresh, Secretary of Indian Poker Association (IPA) who has been leading the crusade for conducting poker games in Bangalore claims that the police raided a club affiliated with IPA on 29th July 2013, despite having obtained a NOC from the Deputy Commissioner of Police (DCP) in 2012 only to harass patrons of the club. He further intends to pursue disciplinary action against police officials who acted illegally by conducting raids despite IPA having obtained permission by “way of abundant caution”. The FIR filed by the police against the club for conducting poker games on 29th July would also be fought separately and IPA would move to the court to quash all charges, he added.  The letter from the DCP states that “NOC is hereby granted to IPA to conduct poker games.”

The observations of the Bangalore High Court are remarkable and come as a triumph for the skilled games industry in India, and would certainly benefit the pending Delhi High Court decision on whether poker is a game of skill and whether it could be played for stakes. However, neither the judgment nor the police permission has gone in the substantial merits of whether poker is a game of skill (as the matter was disposed of at a preliminary stage) and hence the passing observations have limited applicability. Further, both the Court decision and permission only permit poker for “recreational purposes” and hence whether the game can be played commercially for profit or stakes could be called into question in future.

Despite the limited applicability of the High Court verdict, the decision is a welcome first step in recognising poker as a game of skill and would open floodgates for online and offline poker specially in Karnataka.

Categories
Poker

Mirch Entertainment Pvt Ltd to launch real money Indian poker website with open source software from Sweden despite legal ambiguities

Swedish software development company Cubeia has announced a collaboration with Indian gaming company Mirch Entertainment Pvt. Ltd. to make a foray into the Indian skill games market by launching a real money poker website as per the company’s official press release.

Commenting on the development, Aditya Oberoi, Director of Mirch Entertainment  said that they are expecting to launch “Thrill Poker Network”, the company’s real-money online poker portal within the next one or two weeks. Oberoi added that their company had built on the open source code from Cubeia to launch their unique software which would be accessible on all platforms and browsers.

Oberoi was confident that the proposed structure of Thrill Poker Network and Mirch Entertainment was legal as per Indian laws and added that several attorneys in India have clarified the position that poker is a game of skill. Interestingly however, a Delhi district court opined last year that poker was not legal as per existing laws and the matter pending before the Delhi High Court in revision. The Supreme Court is also currently deciding whether skilled games like rummy can at all be played for stakes.Both these pending matters are seen to hold the key as to whether skill games will be legal in India.

Oberoi however pointed out that despite legal ambiguities several gaming websites offer rummy and poker services. He further commented, “Just as these other companies operate, we at Thrill Poker Network (TPN) are going to function within the regulatory guidelines of taxation on gaming in the country, and ensure that all winnings are taxable, all deposits are made with full KYC of customers, taxes are deducted at source for all earnings from poker (over the stipulated level) and deposited by us to relevant governing authorities. We all realise that one day soon poker will be regulated online in India and I am sure I speak for everyone in the business in India when I say we look forward to that day. Our nation does require a regulatory authority to ensure fair play and protection to customers and operators alike.

We aim to bring to India the same levels of gameplay and network performance as customers have access to internationally, and build a robust network that competes on the same scale as international networks. When regulation for online poker (specifically) comes to the Indian market, we’ll accept it with open arms. Until then, we will operate well within the existing frameworks that apply. We need another week or two at the most before we go live.”

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
Business Gaming

Essel Group aggressively enters gaming industry with world rummy tournament, is poker next on their list?

Essel Group, a multi-billion dollar business conglomerate which runs the famous Playwin lotteries popular in many states has launched a rummy website and a high stakes World Rummy Tournament (WRT). Playwin has launched both online cash games and rummy tournaments in clubs across India.

The tournament seems to be modeled along the lines of the World Series of Poker (WSOP) which hosts satellite tournaments in various locations online and offline as qualifiers for the final event. WRT satellite events are hosted in a similar fashion with the final tournament to take place in Goa. The total prize money being distributed by the WRT (world rummy tournament) is Rs.1 crore while the prize for the winner is Rs.20 lakh.

 

World Rummy Tournament launched by Playwin

 

Playwin which also holds a provisional online gaming license issued by the Sikkim government is interested in expanding its presence in the gaming industry which is apparent from the fact that it has gone ahead with this high stakes rummy tournament even when the matter as to whether rummy can be played for stakes is pending before the Supreme Court. The rummy industry has already received a setback as the Madras High Court ruled that playing rummy for stakes is a criminal offence.

Though it is highly likely that the Supreme Court will overturn the Madras High Court decision and allow rummy for stakes, the fact that a large conglomerate like Playwin has aggressively entered this space is an indication of the growth that this sector is likely to witness in the near future. (Playwin has been careful not to offer cash rummy games or tournaments in Tamil Nadu and Pondicherry after the Madras High Court verdict).

What is however interesting to understand is that Playwin will waste no time in taking a legal risk and enter the poker industry as well.  Playwin has also waited for an appropriate time and allowed smaller companies to test the waters before making a foray. Similarly some companies have already launched poker. Poker has already received considerable media attention and is fast becoming the most popular card game in India.

The next logical step for Playwin after promoting rummy tournaments would be launching similar poker tournaments on the premise that poker is a game of skill.  One can expect many interesting developments in this sphere in the next couple of years.

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.

 

Categories
Legal & Regulatory

Portions of Assam and Odisha Gaming Acts might be unconstitutional, games of skill should be permitted across India

It is interesting to note that all websites offering “games of skill” including websites offering rummy, chess, poker, golf and other such games have been careful not to offer their services to residents of Assam and Odisha (and more recently after the Madras High Court decision outlawing rummy for stakes, even in Tamil Nadu and Pondicherry, the regions where the territorial jurisdiction of the Madras High Court extends to).

The interesting reason why these websites do not permit games of skill for stakes from these two states is because the gaming acts applicable to these states, i.e. the Assam Game and Betting Act 1970 and Orissa Prevention of Gaming Act 1955 do not create any exception for “games of skill” (such exception is made by all the other gaming acts). The Assam and Odisha Acts do not permit any games in which a person stakes money.

The Assam Act does not permit staking of money or money’s worth on the happening or determination of an unascertained event, thing or contingency for or in relation to any game or sport etc.

The Odisha Act does not permit “any play or game for money or other stake and includes betting and wagering and other act, game and contrivance by which a person intentionally exposes money or things of value to the risk or hazard of loss by chance.”

One may notice that both these definitions include staking money on all games and sports within its ambit without creating any exception for games involving intellect and skill. This means that it is illegal to play such games publicly. It is also illegal to conduct any business venture allowing participants to play such skill games for stakes.

However, these provisions disregard the constitutional guarantee to practise any trade or carry out any occupation, trade or business under Article 19(1)(g). Reasonable restrictions may be imposed by the state to curtail this right by enacting a law in the interests of general public.

The Supreme Court in the 1957 case The State of Bombay v. RMD Chamarbaugwala had said that gambling activities are inherently pernicious, immoral and contrary to public policy. Hence the constitutional protection guaranteed under Article 19(1)(g) would not extend to gambling businesses. The state was free to ban gambling activities and this could not be termed as unjustified.

The court did not clearly answer whether the guarantee is available to business ventures allowing “games of skill”.

Again in M.J. Sivani v. State of Karnataka (1995) the court held that the right under Article 19(1)(g) can only be denied to maintain public order or prevent anti-social and immoral activities. It was thus not open to challenge regulation, licensing or even banning of video games which did not include a substantial degree of skill. Such an action could be valid as reasonable restrictions in the interests of general public.    

Both these decisions have not answered whether games involving a substantial degree of skill are guaranteed the protection of Article 19(1)(g) while allowing games of chance to be regulated or banned. However a logical corollary to these decisions would be that games of skill enjoy the constitutional protection under the freedom of trade and occupation clause and only regulations in public interest may be permitted. This has been observed by the Supreme Court in RMD Chamarbaugwala v. Union of India (1957). The Court in relation to prize competitions had observed that different considerations arise as regards to competitions involving substantial skill. “They are business activities, the protection of which is guaranteed by Art. 19(1)(g).”

Thus, if rummy and other skill games enjoy constitutional protection, it is not possible to ban such games even in Assam and Odisha.  Offering such games may be the trade of business ventures. It is also the profession of players who earn their livelihood out of such games by staking money against other players. This cannot be denied by any Act of the legislature and the portion of the Acts not allowing staking of money for any sport (without ascertaining the element of skill) may be struck down as unconstitutional by courts.

Categories
Legal & Regulatory

Recent Madras HC decision outlaws rummy for profit, decision based on fallacious interpretation

A recent decision of the division bench of Madras High Court has suprisingly ruled that playing rummy for stakes would be a criminal offence as per the Madras Police Act 1888 which is pari materia with most of the other state gaming Acts.

The Court while giving this decision acknowledged the landmark 1967 State of Andhra Pradesh v. K. Satyanarayana decision which recognised rummy as a game of skill. The Court in this case,  Director General of Police and Others v. Mahalakshmi Cultural Association (2012) held that even games of skill played for stakes would amount to gambling and would be a punishable offence.

The court in this instance tried to play the moral police and cited religious scriptures and other treatises in justifying the ban on rummy for stakes.  The court also justified its stance to protect players from getting ‘bankrupt’ and losing large sums of money.

However the court completely ignored the wordings of Section 49 of the Madras Police Act which says that penal provisions of gambling shall not apply to games of mere skill. Again the Court also overturned the decision of earlier decision of the single judge of the High Court which correctly interpreted the Madras Police Act to permit rummy for stakes.

This decision of the Madras HC is a clear U-turn from an earlier decision of the Andhra Pradesh High Court D. Krishna Kumar and Anr. v. State of A.P. (2002) which clearly says that the statutes specifically are worded to save games of skill from any criminal liability.

In this judgment the court observed:  “In view of Section 15 of the (Andhra Gaming) Act, the provisions of the Act do not apply to game of rummy, which is to be treated as a game of skill only. Therefore, the question whether the management of the club or the club is making profits, and what is the rate of profit that is being made from out of the game of rummy with 13 cards/syndicate may not be of any relevance. Therefore, even if the petitioners, who are running the club that was raided by the police, were making profits by allowing persons to use the premises for playing the game of rummy with 13 cards/ syndicate, they cannot be said to be running a ‘common gaining house’ as defined in Section 3 of the Act, because Section 3 of the Act, in view of Section 15 of the Act, does not apply to a place where Rummy is being played.”

The recent Madras HC decision seems to have taken the view that playing rummy (or other games of skill for that matter) is tantamount to gambling. While the Court has appropriately referred to Black’s Law Dictionary of gambling, the essence of this definition was lost in interpretation. The definition only terms gambling as “the act of risking something of value for a chance to win a prize.” Thus chance is a universally accepted element in any definition of gaming. In the absence of luck or chance (negated by the predominant skill involved) an activity cannot by any stretch of imagination be termed as “gambling”.

This decision delivered by the Madras HC in its application would imply that a renowned and skilled armed wrestler cannot stake his own money against other players to win a prize. Similarly professional chess players confident of their ability and skill cannot be pitted against one another to win prizes.

In conclusion it can be said that this recent decision of the Madras HC seems to be based on illogical grounds and has completely ignored the wordings of the gaming statutes as well as judicial decisions. The law on playing “games of skill for stakes” remains divergent due to varying decisions given by different courts.  One can only hope that the Supreme Court resolves this dispute by interpreting that there is nothing to penalise playing games of skill for stakes due to the explicit wordings of the gaming statutes and judicial decisions.

Categories
Legal & Regulatory

RTI application filed to seek clarity on gambling laws

I had filed a complaint with the Chief Information Commission (CIC) after the Right to Information (RTI) application filed by me did not get any response. The details of the RTI application and the appeal can be accessed here.

However since the CIC has not acted upon the appeal so far, I decided to redraft the RTI application and file a fresh application with the Department of Legal Affairs, Ministry of Law and Justice. I have drafted the application in such a manner that the Public Information Officer (PIO) cannot come up with any reason to deny the information sought.

I am now listing the questions asked by me in the RTI application:

A. Kindly give full summary, status, certified copies and details as to the number of corruption cases filed by the Anti Corruption Bureau and/or any other agency against any employee of your department.

B. Kindly give full summary, status, certified copies and details as to the number of disproportionate assets cases filed against any employee of your department.

C. Kindly give full summary, certified copies of file and or electronic noting and details as to the advice given to other ministries, reference notes, reports, case filings, advisory or any other document either in hard copy or electronic form relating to any gambling, betting or lottery provision, including online gambling, betting and lotteries.
D. Kindly give details and certified copies as to any noting, advisory, report, case filing or any other document relating to Section 30 of the Indian Contract Act, 1872.

E. Please provide details and certified copies as to any advice, report, case filings or any other document in possession of the Ministry suggesting changes in existing provisions on skill based card games, including poker and rummy.

The period to which the information relates: Last twenty years.

It would be the government’s duty to provide answers to the above mentioned queries in public interest. It would be necessary to get answers to these questions to clear ambiguities in gambling law provisions and to be updated on gambling law reforms contemplated by the government.