Regulation Of Online Gaming: Unconstitutional Paternalism

The past fortnight has been eventful for gaming aficionados and gaming platforms. On July 30, 2021, the Supreme Court upheld the Rajasthan High Court's dismissal of a petition that sought a ban on a popular fantasy sport called Dream 11. On Aug. 3, 2021, the Madras High Court struck down Part II of the Tamil Nadu Gaming and Police Laws (Amendment) Act, 2021, which criminalised playing games with stakes in cyberspace.

The regulation of betting and gambling has been a contentious issue in India. In fact, the Constituent Assembly had a few members who were irked by the explicit recognition of 'betting and gambling' as a legislative entry in the Seventh Schedule of the Constitution. They believed that these activities were so immoral that they did not even deserve to be mentioned in the Constitution. Thereafter, when states sought to impose stringent restrictions on playing games with stakes, courts intervened by prescribing the limits of state interference. The most noteworthy intervention was distinguishing between games of skill and games of chance and ruling that games of skill were protected by the fundamental right to carry on trade and occupation.

Skill Vs Chance, Paternalism About Addiction

The vital distinction between games of skill and games of chance has been blurred in many state laws enacted to regulate online games with stakes. Andhra Pradesh, Telangana, and Tamil Nadu are some of the states that enacted laws banning online games with stakes even if they were games of skill. The Government of Andhra Pradesh even wrote to the Union Ministry of Information and Technology seeking a ban on gaming websites. States have justified such laws by asserting their paternalistic obligation to prevent citizens from getting addicted and to protect vulnerable classes of citizens from losing money.

The recent decision of the Madras High Court is significant as the Court examined whether these reasons would justify the ban on online games with stakes. The Tamil Nadu Gaming and Police Laws (Amendment) Act, 2021 amended the Tamil Nadu Gaming Act, 1930. Before the amendment, the Act did not prohibit games of skill. The Amendment Act stipulated that online games with stakes were unlawful even if they were games of skill. Contravention of the law by organising such games or playing them would attract imprisonment or fine.

The petitioners contended that the law was unconstitutional as it was manifestly arbitrary and imposed unreasonable restrictions on the fundamental right to carry on trade and occupation. The petitioners pointed out that the restrictions were excessive and not proportional to the harm sought to be prevented by the state. The state of Tamil Nadu contended that online games with stakes had driven citizens to die by suicide and that the addictive nature of these games had caused people to lose money. Interestingly, the state claimed that gaming platforms could manipulate the games to enhance the role of chance even in games of skill, and hence no concession ought to be granted to online games of skill.

The Court ruled that the state’s contention that these games were driving people to die by suicide was not backed by scientific and empirical evidence. It reiterated the Supreme Court's dicta that playing games that required substantial application of skills was protected by the fundamental right to carry on trade and occupation. The court referred to games such as online rummy and poker and pointed out that playing these games required players to utilise memory, work out percentages and adapt to changing possibilities.

The Court opined that the restrictions imposed on online games were disproportionate, unreasonable and manifestly arbitrary. What stands out in the judgment is the emphasis on the perils of paternalism.

Through eloquent words, the Court firmly held that people skilled in playing games should be free to exploit their skills and even make a living out of them.

Skill Even When There’s Chance

Apart from state-led initiatives to regulate online games with stakes, there are citizens who approached various High Courts seeking a ban on fantasy games such as Dream 11. One of the petitioners wanted the Court to initiate criminal proceedings against Dream 11. The Rajasthan High Court, the Bombay High Court, and the Punjab & Haryana High Court refused to intervene as Dream 11 required winners to exercise superior knowledge and judgment while evaluating sportspersons and their performance. As Dream 11 predominantly involved the application of skills, the mere presence of chance would not vitiate its character of being a game of skill.

The Supreme Court has generally been refusing to entertain appeals against these judgments. On July 30, 2021, when the Supreme Court dismissed a Special Leave Petition against the Rajasthan High Court's judgment, it declined to consider a New York court's decision that fantasy sports are games of chance. Despite these decisions, the demand to ban online games has not died down. The Advocates Association of Karnataka has demanded a ban on online games with stakes and the government has informed the Karnataka High Court that a bill on these games would be introduced soon.

Mature Outreach Instead Of Paternalism

Governments in India ought to understand that paternalism and noble intentions are not substitutes for the constitutionality of laws. Ideally, governments should first ascertain whether there is sufficient scientific evidence to attribute suicides to online games. Isolated anecdotal evidence and popular morality should not shape policy decisions. Instead, governments ought to explore alternative methods to prevent people from losing money on gaming platforms. These techniques would include cracking down on misleading advertisements and fraudulent platforms, spreading awareness on the perils of betting, establishing de-addiction facilities, imposing reasonable restrictions on stakes, etc. It is important not to forget the Madras High Court’s caution – excessive paternalism is a dimension of authoritarianism.

Rahul Machaiah holds an LLM in Law and Development from Azim Premji University.

The views expressed here are those of the author, and do not necessarily represent the views of BloombergQuint or its editorial team.