TN cabinet approves new law to ban internet gambling

The Tamil Nadu cabinet on Monday approved a new law that seeks to ban “internet gambling” in the state, making it the first step to adopt legislation banning online gambling — a contentious sector owing to its close proximity with online gaming. While multiple state governments including Telangana, Andhra Pradesh and Karnataka have sought to impose restrictions on online gambling, Tamil Nadu becomes the first state that has approved a law on the matter.

However, the move comes as the Supreme Court issued a notice on September 9, on a plea from the Tamil Nadu state government to overturn the Madras High Court’s decision to strike down the state’s banning of any online game involving stakes. In the notice, the apex court directed the case to be listed for deliberation in 10 weeks’ time, while stakeholders from the gaming and online gambling space were given four weeks to respond to the court’s queries.

The approval for the law, from the Tamil Nadu state government cabinet, yet again raises questions on the divide between online games of skill, versus games of chance. So far, court rulings have upheld the distinction between the two, with games of skill being referred to those that require “superior knowledge, training, attention, experience and adroitness of the player”.

A game of chance, on the other hand, has been referred to as those where the outcome is purely dependent on luck. The matter has been a point of contention on the taxation front, with the Goods and Service Tax (GST) Council notably sending notices to online gaming operators such as Gameskraft enforcing a higher tax slab that corresponds to gambling — and not online gaming.

However, industry experts said that it is too early to understand if the Tamil Nadu law will offer a clear distinction between games of skill and chance. Jay Sayta, a technology and gaming lawyer, said that the state’s legislation includes rummy — which is incidentally counted under a game of skill based on court and company rulings so far.

For instance, in a pilot policy by Google, the makers of Android, announced on September 7, rummy and fantasy games have been sanctioned to be listed officially on the Google Play Store. The company, however, has omitted real-money gaming platforms, such as WinZo Games, from its pilot project — based on which the latter has filed an appeal against the pilot project with the Delhi High Court.

Sayta said that it is “not clear” if games of skill are also included in the new law. However, he added that it is unlikely that the law will be sanctioned prior to the Supreme Court hearing on the matter.

“Since the matter is sub judice before the Supreme Court, and no stay has been granted against the High Court order — and also as the next legislative assembly session is less than three weeks away — ideally the Governor should withhold assent to the ordinance,” said Sayta.

Sayta, along with other industry experts, told Mint earlier this month that while discussions have been held at the centre to regulate online gaming and gambling, talks are still at a preliminary stage — leaving state governments to adopt their own legislations on the matter.