In an eloquent judgment pronounced on August 3, 2021, the Madras High Court invalidated a part of the Tamil Nadu Gaming and Police Laws (Amendment) Act, 2021. The Act had been passed to prohibit and criminalise playing and organising online games with stakes. This is a significant decision as across India, gaming platforms and gamers have been caught in the crosshairs of the states' crackdown on betting and gambling.
The Constitution grants states the power to legislate on betting and gambling. A paternalistic approach to governance fuelled hostility towards games with stakes as it is feared that these games could ruin lives.
Eventually, the Supreme Court distinguished between games of chance and games of skill. The Court held the fundamental right to carry on trade and occupation would protect activities pertaining to games of skill and such games must not be equated with games of chance or gambling. Importantly, the Court held that even if a game involved chance, it would qualify as a game of skill if the skill component was substantial or predominant. Therefore, only reasonable restrictions could be imposed on games of skill. This distinction led to various courts ruling playing Rummy with stakes, betting on horse racing, etc were legal as they required application of skills.
The amended Tamil Nadu Gaming Act, 1930 blurred the distinction between games of skill and games of chance. Before being amended, the law criminalised certain activities pertaining to games of chance. The law expressly declared that games of skill were exempted from those provisions. However, the Amendment Act stipulated that betting in cyberspace by playing Rummy, Poker or 'any other game' would be punishable even if they were games of skill.
The petitioners claimed that the amendment violated their fundamental right to carry on trade and occupation as the restrictions were unreasonable, disproportionate and manifestly arbitrary. The state of Tamil Nadu justified its law by pointing out that online games with stakes were addictive and people had died by suicide after incurring losses in these games. The state claimed that gaming platforms could easily escalate the element of chance in all the games and hence it was legitimate to ban.
The Court was not swayed by the state's justifications. It held that when games of skill were protected by the fundamental right to carry on trade and occupation, the state could impose only reasonable restrictions. The Court observed that if the state wanted to address the deleterious effects of gambling, it ought to have imposed restrictions that were least restrictive and not a blanket ban.
The Court was critical of the excessive paternalism displayed by the state and the contention that as the 'rightful representative of the people' it considered these games as pernicious. It equated excessive paternalism with authoritarianism and held that the state could not deprive talented citizens of an opportunity to earn money.
In the past, various High Courts have declined to ban online fantasy games such as Dream 11. The Courts opined that Dream 11 was a game of skill as participants were required to exercise superior judgment and knowledge to win. The Supreme Court has declined to interfere with these decisions. These events have lessons for states like Karnataka which are keen on regulating online gaming.
Instead of imposing a blanket ban, states ought to regulate gaming platforms. While operating fraudulent gaming platforms and luring participants through misleading advertisements should be dealt with sternly, states should also focus on spreading awareness on the risks associated with these games. Additionally, improving access to de-addiction therapies is vital to help people addicted to gambling and gaming.
Treading down the path of intrusive paternalism backed by popular morality will whittle down constitutional rights and stifle individual autonomy.
(The writer is an advocate)