Why Kerala HC removed the ban on online rummy and how high the stakes are in the Indian gambling industry

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The Kerala High Court overturned an order issued by the state government banning online rummy. The verdict follows a similar Madras High Court ruling last month. State governments have sought to crack down on online gambling, especially when it involves cash, fearing that participants end up suffering monetary losses, even though gambling can be addictive and difficult to stop. . But gaming platforms argue that games like Rummy involve the use of skill and, in any case, are commonly played in their physical form in Indian households.

Why has the Kerala government banned online rummy?

At the end of February this year, the government of Kerala said in a notification that online rummy played for wagers was not exempt from the general gambling and gambling bans which are extended under section 14A. of the Kerala Gaming Act, 1960.

After the online gaming companies appealed the order to the High Court, the Kerala government said the ruling was based on its reading that online rummy is not a game of skill. It has also been argued that such games cause problems in society as people waste money on these platforms and the resulting monetary losses have led some to take the extreme decision to kill themselves.

What were the arguments against the ban?

Holding the Kerala government’s ban unconstitutional, a single-judge panel of the High Court said it violated fundamental rights to commerce and commerce under Article 19 (1) (g) and the law equality under article 14 of the Constitution of India.

Citing a Supreme Court ruling in this regard, the High Court said that rummy has already been held to be “just a game of skill” and whether playing for stakes or not can not be an issue. test of “if a game is a game of skill”. To this extent, since rummy “does not fall within the meaning of” game “or” game “, providing a platform for playing the game, which is the nature of business, cannot be restricted, ”the High Court said.

The lawyer for the online gaming companies also pointed out that even if a game was found to be addicting, it had nothing to do with whether it was a game of chance or not. It has been argued that in the same way even lotteries can be addictive, but are nonetheless allowed in the country. They also said that banning online rummy while physical rummy was allowed was an arbitrary decision.

Drawing attention to the Supreme Court rulings in this regard, the petitioners stated that since rummy has been considered a game of skill, any profit made by gaming platforms by offering a game of skill played with stakes, is a “business” that is protected by the Constitution of India.

What is the difference between a game of skill and a game of chance?

Gambling is a state subject in India, which means that it is up to each state to enact laws regulating or prohibiting activities involving “betting and gambling”. game involves an element of skill, it will not be treated as a game in relation to those whose outcome depends entirely on chance. Although it penalizes “gambling or playing with cards, dice, tokens, money or other playing instruments,” he says. that the Law “does not apply to any simple skill game wherever it is played”.

Although it is claimed that the “luck factor” is an integral part of any game, there is a line between a “game of skill” and a “game of luck” which rests on whether players can apply. their skills to succeed. Thus, success in games like poker, teen patti, horse racing, even if they involve gambling, is considered to depend on the skill of the player rather than blackjack and roulette.

Legal experts say an important marker in this regard is who the game is being played against. Normally games where one fights against other individuals are considered skill based as opposed to games where the individual has to play at the “house” which is the casino or gaming establishment. These latter games would belong to the category of games of chance.

Why is online gambling under pressure in India?

The online gambling industry has seen a huge increase in its user base amid the pandemic, attracting young people and adults alike as people have been forced to remain confined to their homes due to lockdowns and restrictions. But this increase in the number of users has been accompanied by warnings and complaints about the socio-economic and mental health impacts of online gaming.

In September 2018, the World Health Organization (WHO) included “gambling disorder” in its International Classification of Diseases list, claiming it was a pattern of behavior – which would “normally have been evident for at least 12 months ”- marked by“ control of gambling, increasing priority given to gambling over other activities… and continuation or escalation of gambling despite the occurrence of negative consequences ”.

Noting that studies suggest that gambling disorders only affect a small proportion of people who participate in digital or video game activities, he nevertheless warns that “people who participate in games should be mindful of the time they spend on games. play activities, especially when it is to the exclusion of other daily activities “and involves” a significant impairment in the functioning of personal, family, social, educational, professional or in other important areas “.

Days before the Kerala High Court order, the Karnataka legislature passed the Karnataka Police (Amendment) Act 2021, which aims to completely ban gambling in the state, including online gambling. . Although the legislation does not include lottery or horse racing betting and betting, it prohibits all forms of gambling in the state, including online gambling.

A similar law passed by neighboring Tamil Nadu – the Tamil Nadu Gambling and Police Laws (Amendment) Act, 2021 – was overturned last month by the Madras High Court, which ruled that rummy and poker were gambling games. address and that no distinction could be made. between their physical and online formats.

The Karnataka bill met with strong objections from the online gambling industry, with the trade body Confederation of All India Traders (CAIT) claiming that the online gambling ban would be a setback for Indian startups. In a letter to Karnataka CM Basavaraj Bommai, CAIT General Secretary Praveen Khandelwal said that the bill would “harm India’s startup sector, the Indian gaming and animation industry, and millions of Indian gamers and esports players across the country” and result in “loss of business” massive jobs in Bengaluru ”. He also said that the bill “does not distinguish between a game of skill and a game of chance”.

How big is the online gambling industry in India?

A June 2021 report by consulting firm KPMG states that Covid-19 has been the “tipping point for game consumption in India” and that everything from game downloads and average time spent playing games to Daily active user into paid user “is operating at a new normal higher compared to pre-Covid-19 lockout time”.

He said the number of users of online gaming platforms is expected to increase from 433 million in 2021 to 657 million by 2025 with revenues expected to rise from Rs 136 billion to Rs 290 billion during the same period.

Another report states that with regard to online rummy in particular, revenue is expected to increase from $ 335 million in 2019 to $ 1.4 billion by 2024, thanks to “the increasing penetration of smartphone use in rural areas of the country “.

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