Legal landscape of the gaming industry in India

Q1: How does the Indian legal system differentiate between games of chance and games of skill?

The Indian courts have used the ‘dominant factor test‘ or ‘predominant test‘ to determine whether skill or chance plays a predominant part in determining the result of the game. Games based on skill are kept out of the purview of regulatory and penal provisions.

Q2: What is the legality of gambling in India? 

Gambling is illegal in India, except in a few states. The Public Gaming Act (1867) governs gambling activities, and each state is authorized to enact its own laws regarding gambling.

Q3: Are there any examples of games considered as games of skill by Indian courts? 

Yes, games like rummy, bridge, and horse racing are considered games of skill by Indian courts.

Q4: What are the legal precedents for a ‘game of skill’ or ‘game of chance’?

• State of Andhra Pradesh v. K. Satyanarayana (1968): The Supreme Court ruled that rummy is a game of skill because it requires memorization, strategy, and skillful card arrangement.
• K.R. Lakshmanan v. State of Tamil Nadu (1996): The Supreme Court held that horse racing is a game of skill, as it involves judgment, experience, and knowledge of horses and jockeys.
• Varun Gumber v. Union Territory of Chandigarh (2017): The Punjab and Haryana High Court ruled that fantasy sports (such as Dream11) are skill-based and thus legal.
• Karnataka High Court (2021): Struck down a ban on online gaming, stating that games involving skill should not be classified as gambling.

Q5: What is the legal status of fantasy sports games, such as Dream11, in India? 

The Hon’ble High Court of Punjab and Haryana ruled that fantasy sports games, such as Dream11, involve skill as a dominant element, making them legitimate. This ruling has led to the rapid development and expansion of fantasy sports apps and websites.

Q6: Which states in India have restrictions on online games? 

States like Assam, Nagaland, Odisha, Telangana, Sikkim, Andhra Pradesh, Tamil Nadu, Karnataka, and Gujarat have placed restrictions on online games.

Q7: What are the specific restrictions in Assam regarding online money games? 

The Assam Game and Betting Act (1970) prohibits all forms of betting or wagering on any game or sport except horse racing and lotteries. There is no exemption for games of skill, and online fantasy sports platforms do not operate for residents in Assam.

Q8: What are the licensing requirements for online games of skill in Nagaland? 

The Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2015, requires entities to obtain a license to offer online games of skill. The license fee varies, and licensees must pay 0.5% of the gross revenue generated as royalty.

Q9: What is the conclusion regarding the legality of gambling and online games in India?

While gambling is illegal in India, most states recognize the distinction between games of skill and games of chance, providing some legitimacy to online gaming platforms. However, excessive control over gaming activities and Goods and Services Tax (GST) of 28% on online games is, as per the industry bodies, hindering the growth of the industry and revenue generation for the states.

Q10: What role does the Advertising Standards Council of India (ASCI) play in regulating online gaming?

The proliferation of new gaming apps and rising consumer preference towards online gaming led to ASCI stepping in to issue guidelines to regulate advertising surrounding gaming apps. ASCI’s guidelines aim to monitor any misrepresentation or misleading advertisements, as these games entail an element of financial risk.

Q11: What are the key guidelines issued by ASCI for online gaming advertisements?

 The key guidelines issued by ASCI include:

• No gaming advertisement may depict any person under the age of 18 years or who appears to be under the age of 18, engaged in playing a game for real money winnings.
• Every gaming advertisement must carry a disclaimer stating that the game involves an element of financial risk and may be addictive. The disclaimer must occupy no less than 20% of the space in print/static ads and must be in both audio and visual formats for audiovisual ads.
• Advertisements should not present online gaming for real money winnings as an income opportunity or an alternative employment option.
• Advertisements should not suggest that a person engaged in gaming activity is more successful compared to others.

Q12: What is the expected impact of these guidelines on the online gaming industry? 

The guidelines are expected to make online gaming safer and more transparent. Platforms will be expected to issue more responsible and truthful advertisements. Overall, it is a positive step for an industry that is estimated to reach more than $4.5 billion in value by 2024.

Q13: What is the impact of the Digital Media Ethics Code under the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021?

 It regulates online gaming platforms by ensuring user safety, responsible gaming, and compliance with Indian laws.

Q14: What was the key amendment in April 2023 regarding online gaming platforms?

The amendment brought online gaming platforms under the purview of the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules.

Q15: How is an ‘online real money game‘ defined under the rules?

 It is defined as a game where users deposit money or valuable consideration with the expectation of winnings.

Q16: What are Self-Regulatory Bodies (SRBs) under the rules, and what is their role?

SRBs are government-approved bodies that verify platforms offering real-money games, ensuring they do not involve betting or gambling and comply with legal requirements. They also monitor user safety and responsible gaming measures.

Q17: What are the due diligence requirements for gaming intermediaries?

Online gaming platforms must appoint compliance officers, publish terms of service, verify users, prevent underage gaming, and implement measures to prevent financial fraud and addiction-related harm.

Q18: What powers does the government have regarding harmful games?

The government can block games that threaten national security, integrity, or public order and restrict games promoting violence, self-harm, or addiction.

Q19: What are the transparency and grievance redressal requirements for gaming platforms?

Gaming platforms under the rules must have a grievance redressal mechanism, with the Grievance Officer responding within 24 hours and resolving complaints within 15 days. Users must be informed about gaming risks, including financial losses and addiction hazards.

Q20: How does the advisory issued by the Central Consumer Protection Authority (CCPA) on the Prohibition of Advertising, Promotion, and Endorsement of unlawful activities impact media platforms and celebrities?

Celebrities and influencers, by this advisory, are advised to refrain from endorsing and promoting illegal betting and gambling activities as their endorsement gives the impression that indulging in such activity is acceptable. Similarly, the advisory warns media platforms against promoting betting and gambling platforms.

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