Tamil Nadu Governor RN Ravi on Monday approved a Bill to ban online gambling, including online rummy and poker with stakes. This will be a big blow to the nascent but fast-growing skill gaming sector. The E-Gaming Federation said it is examining the legislation and would take appropriate action in due course.

Last month, the Governor returned the Bill after 131 days since it was passed in the Assembly. However, for the second time, the Assembly passed it again and for Governor’s approval.

The Governor’s consent on Monday comes after the Assembly passed a resolution on Monday urging the President and the Centre to instruct him to clear the Bills within a timeframe.

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On September 26, 2022, the Tamil Nadu Cabinet headed by Chief Minister MK Stalin approved an Ordinance to ban online gaming in the State. An ordinance is promulgated after getting the Governor’s consent.

Earlier, on June 10, Stalin announced in the Assembly the formation of a committee headed by former Judge of the Madras High Court, Justice K Chandru, to look into the adverse effects of online rummy. This was decided after incidents of online gaming addicts losing money and falling into a debt trap. The Committee submitted its report to Stalin in two weeks, and it was placed for the consideration of the Cabinet on the same day.

Reacting to Governor’s approval, Malay Kumar Shukla, Secretary, E-Gaming Federation, reacting to the Governor’s consent, said, “It is extremely unfortunate and a disappointing development for the online gaming industry. We are examining the legislation and shall be taking appropriate action based on legal advice in due course of time.”

The legislation passed by the Tamil Nadu legislature incorrectly categorises Rummy and Poker as a game of chance. The legal jurisprudence in this regard set by the Supreme Court of India and several High Courts, stipulates that games like Poker and Rummy are games of skill. In its judgment in August 2021, the Madras High Court also reaffirmed that the preponderance test for distinguishing between games of skill and games of chance needs to be applied.

Rummy & poker games

Shukla said games of skill are protected under Article 19(1)(g) and different from gambling activities. The fact that rummy and poker games are listed for prohibition as games of chance or gambling under this new legislation runs contrary to the decision of the Madras High Court and the Supreme Court. The online gaming industry has always been unequivocal in its readiness for a progressive regulatory framework by the government, he said.

Ranjana Adhikari, Partner, IndusLaw, says that the rationale of why a separate law is required at the State government level is not very clear and is likely to lead to confusion, unnecessary litigation and instability in policy making. It will also cause duplication of efforts for start-ups, which form a large part of the online gaming ecosystem.

The Indian gaming market is projected to grow from $2.2 billion currently to $7 billion by 2026. With three gaming unicorns, 400-plus gaming companies, 15,000-plus gaming developers, and around 420 million gamers in the fray, the Indian gaming industry holds huge potential, say industry sources