I am pleased to bring to you our next guest post by Angad Singh Makkar. Angad is currently a final year student at Jindal Global Law School and had earlier written a post for us here and here. In this post Angad analyses the jurisprudence on gambling laws in India in light of the recent PIL filed by Abhinav Mehrotra before the Delhi High Court.
Update from the Delhi HC
Recently, a division bench of the Delhi High Court dealt with a Public Interest Litigation (‘PIL’), filed by social activist Avinash Mehrotra, which sought to “bring illegal and illicit online gambling/betting/wagering/gaming to an end”. Deeming such gambling and wagering activities to be a socio-economic menace ruining the lives of innumerable persons, Mehrotra questioned the distinction made in Indian gambling laws and jurisprudence between games of chance and games of skill, whereby wagering on the latter set of games is exempted from the ambit of illegal gambling. The petition argued inter alia that games such as poker or teenpatti revolve solely on the turn of cards and involve no skill, and similarly, sports betting (with averments made to fantasy sports as well) involves no skill on the part of the person placing the bet, as it is dependent on the performance of individual players. Accordingly, it was asserted that online wagering in these games/sports, which Indian legislation and judicial precedents currently permit, cannot be legally justified and must be brought to a halt. The petition further challenged the provisions of the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2015; a piece of legislation explicitly upholding the validity of acts of wagering/betting in games of skill available on online mediums (such as Adda52 or PokerStars.in).[i]
The High Court however declined to pass the interim order sought by the petition, and the matter is now set to be heard again on 31 July 2019.[ii] Nonetheless, this petition has brought under scrutiny the intricacies of India’s gambling laws and various judicial pronouncements on the matter. This article shall encapsulate the dominant legal position on the aforementioned contentions raised in the PIL, and in doing so, predict its eventual fate.
Games of Chance v. Games of Skill
While there are numerous legislations dealing with gambling in India, most notably the Public Gambling Act, 1867 and the Prize Competitions Act, 1955, the main purpose of these Acts is not to prevent gambling entirely but to suppress and regulate certain types of gambling in public houses.[iii] Accordingly, a distinction has been gradually recognized between gambling per se and betting in sports by Indian courts; in a nutshell, “gambling is an act of practice of putting monetary stakes on game of pure chance, whereas betting, in sports, is an act of wagering upon an ultimate outcome of an event which involves, predominantly, an element of skill”.[iv] As mentioned earlier, Indian gambling laws prohibit only the former, with the latter exempted on the basis of this intelligible differentia.
In the seminal case of Dr KR Lakshmanan v. State of Tamil Nadu,[v] the Supreme Court asserted that it is the dominant element – ‘skill’ or ‘chance’ – which determines the character of the game. Hence, horse foot racing, boat racing, football and baseball are games of skill, insofar as the element of skill predominates over the element of chance. It must be noted that, in betting in sports, the element of skill exists not only with the sportsmen concerned, but even with the bettor.[vi] For instance, while wagering in football is indubitably dependent on the skills of the 22 players on the field, it also involves the ability of the bettor to gauge external factors and assess the ‘match situation’ (whose ‘home’ stadium is the match taking place at; or what is the form of both teams coming into the game, etc.).
Similar assertions have been made in the foundational judgments of Chamarbaugwala[vii]and Satyanarayana[viii], i.e. even if there exists an element of chance, if a game is predominantly one involving skill, it would be categorized as a game of mere skill. In Satyanarayana, this test was used to assess the game of rummy. The Apex Court held that rummy is in fact a game of skill, as it requires a participant to memorize the fall of cards and exercise considerable skill in holding and discarding cards. The Karnataka High Court built upon this holding in the case of R. Shankar Creation Association v. State of Karnataka[ix], and held that poker is a game of skill, similar to chess, rummy, etc. One particularly interesting application of this test was undertaken by the Bombay High Court in News Television India v. Ashok D. Waghmare,[x] where it found the television programme ‘Kaun Banega Crorepati’ to be based around a game of skill (and thereby, exempted from the purview of the Prize Competitions Act). The Court reached this conclusion as the programme required a participant to rely upon his/her general knowledge and memory to answer increasingly difficult questions on topics as varied as sports, geography, cinema, science, mythology, etc.
Nonetheless, given the subjectivity involved in the application of the ‘predominant nature’ test, different courts continue to reach disparate conclusions in their assessment of certain games. For instance, a single-judge bench of the Gujarat High Court, in Dominance Games v. State of Gujarat,[xi] deemed poker to be a game of chance, and hence, subject to the provisions of the State’s gambling legislation. Thus, the application of the ‘predominant nature’ test can evidently lead to contradictory results, though it remains the rule of thumb vis-à-vis determination of a game as one of chance or skill. In this light, it is highly unlikely that the Delhi High Court will act upon the PIL to the radical extent of diluting this well-established distinction between games of chances and games of skill.
Coming to the core contention of the PIL, there is a conspicuous void in India’s online gambling regulatory framework. Sikkim and Nagaland are the only states which have adopted legislation geared towards regulation of online gambling; specifically, the Sikkim Online Gaming (Regulation) Act, 2008 and Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2015 (the validity of which has been challenged in the PIL). The Nagaland legislation permits, through licenses, wagering on games of skill expressly laid down in it, which include chess, rummy, poker, virtual sports, etc. This list is subject to timely review and allow for addition of games that involve a preponderance of skill over chance at any time (thereby, implicitly applying the ‘predominant nature’ test).
It has also been argued that the principle of ‘functional equivalence’ can be applied to extend the recognition and application of legal principles pertaining to offline services to equivalent services in the online world.[xii] In doing so, online versions of games can also be subjected to, or exempted from, the provisions of the Public Gambling Act and other such pre-internet legislations, through an application of the ‘predominant nature’ test. Of course, this principle must not be construed to permit for an equivalence of legal results between services provided through offline and online mediums, i.e. merely because teenpatti is categorized as a game of skill (hypothetically), an online version of teenpatti should not automatically be deemed to be a game of skill. Rather, the principle requires one to conduct a separate assessment of the relevant elements of the online version of the game, by using legal tests applied vis-à-vis offline games, and thereby reach a conclusion on its own merits. To elucidate, success in offline teenpatti heavily relies upon a participant’s ability to read other participants’ body language and facial expressions, while this physical factor is notably missing in online teenpatti. This is a crucial element of skill which is amiss in online teenpatti, and could viably be used to argue that online teenpatti, unlike its offline equivalent, is a game of chance. Given the paucity of Indian legislation pertaining to online gambling, it is reasonable to assume that, through the principle of ‘functional equivalence’, online games will be assessed using the ‘predominant nature’ test too.
There is virtually no judicial precedent on this subject-matter, as issues pertaining to engaging in online games of skill have only come once to the attention of the Supreme Court via an appeal from the Madras High Court’s judgment in The Director General of Police, State of Tamil Nadu v. Mahalakshmi Cultural Association.[xiii] Even then, the Court dismissed the appeal, brought by certain online gaming companies, as it found that there was no cause of action. Notably, the Delhi District Court, in Gaussian Networks v. State of NCT,[xiv] ruled that all online variants of offline games constitute games of chance. This decision was primarily based on an incorrect interpretation of ‘skill’ as physical skills alone (which play no significant role in online games). Such an argument cannot be sustained as good law, given that mental skills have been given substantial weightage in the assessment of a game as one of skill or chance by the Supreme Court (in the Satyanarayana case, for instance). It is highly improbable then that the view of the District Court will shape the legal framework on online gaming and betting; instead, as discussed above, the principle of ‘functional equivalence’ ensures that the regulatory framework on offline gambling will apply mutatis mutandis to online gambling as well (in the absence of any legislative intervention).
The legal framework on premium fantasy sports was also brought into question in the PIL, given their increasing popularity in India. In a nutshell, fantasy sports require participants to build virtual teams by selecting real players of a certain sport and then accumulate points over a period of time based on the performances of the players they selected. One of the most prominent examples of fantasy sports is the ‘Fantasy Premier League’, which is based around English football’s Premier League. In India, the massive popularity of the Indian Premier League has paved the way for the rise of fantasy sports leagues and competitions (such as ‘Dream 11’). Nonetheless, the fantasy sports industry is still at a nascent stage in India, and it is no surprise that there are no laws expressly dealing with premium fantasy sports. Accordingly, to ascertain the legality of fantasy sports, one must necessarily fall back upon the tried-and-tested ‘game of chance v. game of skill’ evaluation.
The Punjab and Haryana High Court, in its seminal judgment in Shri Varun Gumber v. UT of Chandigarh & Ors,[xv] became the first Indian court to rule upon the issue, as it held that the fantasy sport involved herein is predominantly skill-based. The plaintiff in this case wagered and lost a sum of INR 50,000 while playing fantasy sports tournaments offered by the respondent ‘Dream 11’. Subsequently, he contended that the activities carried on by ‘Dream 11’ are illegal under Punjab’s gambling legislation, as fantasy sports are not based on skill. The Court however was more impressed by the respondent’s arguments, as they showed that a participant in ‘Dream 11’ competitions to assess players, evaluate their worth on an objective basis, try to factor in the players’ anticipated statistics (for example, for a batsman in cricket, his batter averages, total runs, and so on), etc. The Court was also swayed by the Supreme Court’s decision in the Laskhmanan case discussed above, wherein it applied the ‘predominant nature’ test to rule that betting on horse-races was a game of skill. Hence, finding that fantasy sports also require the participant to exercise considerable skill, judgment and discretion, the Court ruled that the ‘Dream 11’ game would be a game of mere skill (ergo, not amounting to ‘gambling’).
It is key to note that this judgment does not serve as a blanket-exemption for all fantasy sports from Indian gambling laws, and once again, courts seem inclined to assess the legality of a fantasy sport through the ‘predominant nature’ test. This does not bode well for the PIL either, as its arguments against fantasy sports are of a generalized nature, and fail to specifically show the preponderance of chance over skill in any particular fantasy sport.
The PIL filed in the Delhi High Court attempts to drastically alter the existing jurisprudence on gambling in India, and stifle the rapid growth of the online betting industry and fantasy sports industry, by primarily relying on emotional pleas and social and moral concerns. But, as has been detailed above, the long-standing ‘game of chance v. game of skill’ distinction applied to determine the ambit of illegal acts of gambling – that too, by the Supreme Court repeatedly – is unlikely to be whittled down any time soon. The minimal legislation that does exist on online gambling has also implicitly upheld this distinction, as well as the ‘predominant nature’ test. Furthermore, online gambling beyond the purview of the Sikkim and Nagaland legislations will nonetheless be covered by the same legal tests, in accordance with the principle of ‘functional equivalence’. In light of the above, one should surely not expect the Delhi High Court to enforce the radical changes sought through the PIL, and perhaps a reflective comment from the judges or a negligible tweak to the regulatory framework remains the most likely outcome of this petition.
[i] ‘PIL filed in Delhi HC to stop online poker & betting websites’ (Glaws, 22 May 2019) <https://glaws.in/2019/05/22/pil-filed-in-delhi-hc-to-stop-online-poker-betting-websites/>.
[ii] ‘Delhi HC declines interim blocking of poker & betting websites, next hearing on 31stJuly’ (Glaws, 30 May 2019) <https://glaws.in/2019/05/30/delhi-hc-declines-interim-blocking-of-poker-betting-websites-next-hearing-on-31st-july/>.
[iii] Mukul Mudgal and Vidushpat Singhania, Law & Sports in India (2nd edn, LexisNexis 2016) 230.
[iv] Ibid, 233.
[v] (1996) 2 SCC 226.
[vi] Mudgal (n 3), 235-236.
[vii] State of Bombay v RMD Chamarbaugwala AIR 1957 SC 699.
[viii] State of AP v K Satyanarayana (1968) 2 SCR 387.
[ix] WP No 16622/2012, decision dated 4.6.2012.
[x] 2006 (3) MhLJ 431.
[xi] Special Civil Application No 6903/2017, decision dated 4.12.2017.
[xii] Sports Law & Policy Centre, Games of Skill in India: A Proposal for Reform (March 2017).
[xiii] WA No 2287/2011, decision dated 22.03.2012.
[xiv] Suit No 32/12 (Additional District Judge-I Patiala House Court).
[xv] CWP No 7559/2017, decision dated 18.04.2017.
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