Tamil Nadu enacts legislation for banning online gambling and regulation of online gaming

The state of Tamil Nadu has notified the Prohibition of Online Gambling and Regulation of Online Games Act, 2022 (“Act”) on April 11, 2023. The Act provides for a ban on online gambling and online games of chance (as specified in the schedule to the Act). The Act defines an online game as “any game, whether or not there are other participants in the game, that is played on an electronic or a digital device and is managed and operated as a software through the internet or any other kind of electronic or other technology for facilitating communication.” Further, the Act also provides for the following non-exhaustive criterion for qualification of an online game as an ‘online game of chance’:

(i) involves both an element of chance and an element of skill and the element of chance dominates over the element of skill; or

(ii) involves an element of chance that can be eliminated only by superlative skill; or

(iii) is a game that is presented as involving an element of chance; or

(iv) involves cards, dice, wheel or such other device, which works on random outcome or event generator.

The criterion for an online game to qualify as an ‘online game of chance’ seems to be in conflict with each other. On one hand, the statute provides that any game in which element of chance dominates over the element of skill will be considered as an online game of chance, whereas, on the other hand, the statute provides that a game which is presented as even ‘involving’ an element of chance will be considered as an online game of chance. With the already existing subjectivity as regards whether or not a game involves a dominant element of skill or not, the insertion of conflicting provisions in the statute further adds to the confusion.

Interestingly (and controversially), the Schedule to the Act provides that ‘Rummy’ and ‘Poker’ are online games of chance (and have accordingly been prohibited by the statute).

Meanwhile, the Act has also prescribed prohibition of the provision as well as the advertisements or promotion of any online gambling or online games of chance (as listed in the schedule). The  Act prescribes a penalty of INR 5000 or imprisonment which could extend to three months, or both for any person that is found indulging in online gambling or online games of chance involving money (which are disallowed by the statute).

Further, any person who is engaged in the advertisement of such prohibited games could face imprisonment which may extend to one year or a fine which may extend to INR 5,00,000, or both. Moreover, persons who provide such prohibited games could be punished with imprisonment which may extend to three years, or a fine which may extend to INR 10,00,000, or both.

The enactment of the legislation by Tamil Nadu comes within days of the notification of amendments by the Ministry of Electronics and Information Technology (MeitY) to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, wherein the central government has regulated the sphere of online games and online gaming intermediaries. It is yet to be seen how the balance will be struck between the conflicting State and Central legislations.