The Allahabad High Court recently on 29th August, 2024 in DM Gaming Private Limited v. State of UP[i], heard a writ petition filed under Article 226 of the Constitution, challenging the denial of permission to run a gaming unit in Agra. It was held that permission could not be denied merely on clairvoyance, and hard facts were required to deny any permission for carrying out recreational activities such as Rummy and Poker.
The Allahabad High Court also reiterated that “Poker and Rummy are absolutely a game of skill and not gambling.” (Author’s Note: this is not written in the order, but it was reported[ii] that the Court has observed this, maybe during the proceedings)
Background
The petitioner had sought permission to operate a gaming unit in Agra where Poker and Rummy would be played, arguing that these were skill-based games, not gambling.
An order on January 24, 2024, was given by the office of the Deputy Commissioner of Police (D.C.P.), City Commissionerate, Agra which denied the petitioner’s application to operate a gaming unit, citing concerns about public peace and also a possibility of gambling taking place at the premises.
As gambling was illegal and prohibited, the DCP denied permission to the Petitioner, without even going into the aspect whether Poker and Rummy were games of skill and not gambling.[iii]
The Petitioner was aggrieved by this order. The Petitioner contended that the order was based on speculation rather than facts and argued that games like Poker and Rummy had been recognized by the Courts as games of skill, not chance, and therefore should not be categorized as gambling. To support their argument, the petitioner’s counsel relied on two judgments:
- State of Andhra Pradesh vs. K.S. Sathyanarayana
- Junglee Games India Pvt. Ltd. vs. State of Tamil Nadu
(note: see the summary of these cases below)
Judgement
The Court directed the authorities to revisit the issue and reconsider the petitioner’s application. The authorities were instructed to take into account the judgments of the Supreme Court and other High Courts, which have recognized that games of skill are distinct from gambling.
It was held that denial of permission merely due to clairvoyance of the officer cannot be a sustainable ground. Hard Facts are required to be placed on record by the concerned officer, for denying the permission for carrying out such gaming activities.
The Court clarified that granting permission to run a gaming unit does not prevent authorities from monitoring the gaming activities to ensure that illegal gambling does not take place. If gambling does occur, the authorities can anyways take appropriate legal action.
The concerned authorities were therefore directed to pass a reasoned order after giving an opportunity to the petitioner for a hearing within six weeks.
Conclusion
This is a reiteration of a well established legal principle that Rummy and Poker were games of skill and they should be permitted and not unreasonably prohibited as otherwise it would be a violation of the freedom granted to us under Article 19 of the Constitution. The denial of the permission here was, therefore, completely unjustified. However, it is necessary to note that the officer here has only been asked to reconsider his decision of denial of permission after going through the previous judgements of the Supreme Court and the High Court.
Previous Judgements
It may be pertinent to have a look at a few previous rulings on this topic for ease of reference:
| Case Name and
Citation |
Summary | Game Involved
|
| State of Andhra Pradesh v. K. Satyanarayana
AIR 1968 SC 825.
|
Certain players were found indulging in the game of rummy and were punished by the Sessions Court, but the decision was set aside by the High Court. On appeal, the Supreme Court while considering whether the protection under Section 14 of the Public Gambling Act, 1867 was available, observed that the game of rummy is not entirely based on chance and therefore the protection of Section 14 was available.
The Court observed that Rummy is predominantly a game of skill rather than pure chance, unlike games such as “three-card” games. While there is an element of chance due to card distribution, skill plays a significant role in Rummy. It requires certain amount of skill because the fall of the cards has to be memorized and the building up of Rummy requires considerable skill in holding and discarding cards. The Court therefore upheld the High Court’s decision as there was no evidence of gambling for profit in this case.
|
Rummy |
| Junglee Games India Private Limited v. State of Tamil Nadu
W.P. No. 18022 of 2020.
|
The Madras High Court struck down the overarching ban on games of skill by Tamil Nadu Gaming and Police Laws (Amendment) Act, 2021 (Act 1 of 2021), by which the Tamil Nadu Gaming Act, 1930 was amended, inter alia, to prohibit wager or betting on games of rummy, poker or any other game in the cyberspace (online).
The Court held that it was unreasonable and disproportionate to specifically prohibit skill-based games such as Poker or Rummy when played online or for stakes. These games involved considerable skill, including memory, mathematics, and strategic adaptation based on unseen cards, which distinguished them from pure games of chance. The Court observed that the skills required for playing these games are the same whether in physical form or online.
It was found that the rationale for the Amendment Act did not align with its prohibitions, rendering them unreasonable and grossly disproportionate. As a result, the Court declared the amendments to the Tamil Nadu Gaming Act introduced by the Amendment Act as ultra vires the Constitution.
|
Rummy and Poker |
| Head Digital Works Pvt. Ltd. v State of Kerala
WP (C) No. 7785/2021. |
The State of Kerala had issued a notification seeking to ban Rummy when played for stakes.
The Court struck down the notification and observed that Rummy, including its online variant, is a game of skill as established in K. Satyanarayana.
The Court emphasized that the element of skill in the game is independent of whether stakes are involved. The Court found the notification to be arbitrary, illegal, and a violation of Articles 14 and 19(1)(g) of the Constitution. It ruled that the notification imposed an unreasonable restriction, amounting to a complete prohibition of online Rummy for stakes, which was not permissible under Article 19(6) of the Constitution of India.
|
Rummy |
| All India Gaming Federation v. The State of Karnataka
WP 18703/2021
|
The Karnataka Government amended the Karnataka Police Act, 1963, through the Karnataka Police (Amendment) Act, 2021, which banned all forms of online gaming in the state, including both skill-based and chance-based games. The amendment, effective from October 5, 2021, prohibited wagering, betting, and electronic transactions related to games of chance and extended the ban to include cyberspace and digital communication devices. This led to multiple writ petitions challenging the Amendment Act’s legality.
The High Court of Karnataka ruled that the Amendment Act, 2021 violated Article 14 of the Indian Constitution. The Court found that the Act unreasonably conflated games of skill and chance without justification, disregarding the established legal distinction between them. The Court highlighted that the Act’s broad definition of gaming was inconsistent with prior jurisprudence and failed to provide a rational basis for the classification, thus rendering the amendment manifestly arbitrary and infringing on constitutional rights.
|
All Games of Skill including Rummy and Poker |
| Shri Varun Gumber v. Union Territory of Chandigarh
2017 Cri LJ 3827
|
The petitioner, Varun Gumber, filed a writ petition in the P&H High Court and in its order, the P&H High Court examined the terms and conditions, game rules and the format of the fantasy sports games contests offered on Dream11.com and rejected the Petitioner’s contentions in toto.
The P&H High Court found that ‘the element of skill’ had a predominant influence on the outcome of the fantasy sports games being offered on Dream11.com and adjudged the fantasy sports game being offered by Dream11.com, which involved users having to select a team consisting of at least as many players as constitute a real-world team to score points for the duration of at least one entire real world match.
The P&H High Court adjudged the fantasy sports game being offered by Dream11.com in this format to be a “game of mere skill” and thus not falling within the activity of gambling for the purposes of the PGA. P&H High Court relied on the following arguments put forth by Dream11 adjudicating the fantasy sports game offered by Dream11 to be a ‘game of skill’.
|
Fantasy Sports |
| Gurdeep Singh Sachar v. Union of India
Criminal Public Interest Litigation Stamp No. 22 of 2019 |
The Bombay High Court upheld the Varun Gumber decision, affirming that fantasy sports on platforms like Dream 11 are games of skill rather than gambling. The Court observed that fantasy sports results depend on the participant’s skill and not on the outcome of real-world games, thereby excluding them from gambling or betting classifications.
Additionally, the Bombay High Court addressed the taxability of fantasy sports under the Central Goods and Services Tax Act, 2017 (CGST Act). The Court noted that since fantasy sports do not constitute gambling or betting, they are not subject to GST. Amounts held in escrow accounts by operators are considered actionable claims, but as these do not fall under the categories of lottery, betting, or gambling, they are not taxable under the CGST Act or CGST Rules. The Bombay High Court further agreed with Dream 11’s view that GST is payable only on the consideration which is payable / collected for the supply of goods or services or both within the platform at the rate of 18%.
|
Fantasy Sports |
| Dr. K.R. Lakshmanan v. State of Tamil Nadu
1996 AIR 1153 |
In the case concerning the Tamil Nadu Horse Races (Abolition and Wagering or Betting) Act, 1974, the Madras Race Club, a registered company involved in horse racing, challenged the Act on the grounds that it violated Articles 14 and 19(1)(g) of the Indian Constitution.
The Supreme Court determined that for an activity to be excluded from betting or gambling and to be protected under Article 19(1)(g), it must involve a substantial degree of skill. The Court found that horse racing, which involves considerable skill from both the horse and rider, met this criterion. The Supreme Court held that betting on horse racing was a game of skill since factors like the fitness and skill of the horse, the weather conditions, the skill of the jockey must be accounted for by a person placing a bet.
It was held that “…A game of skill, ….. is one in which success depends principally upon the superior knowledge, training, attention, experience and adroitness of the player. Golf, chess and even Rummy are considered to be games of skill. The courts have reasoned that there are few games, if any, which consist purely of chance or skill, and as such a game of chance is one in which the element of chance predominates over the element of skill, and a game of skill is one in which the element of skill predominates over the element of chance. It is the dominant element – “skill” or “chance” – which determines the character of the game”.
Consequently, the Supreme Court declared the Tamil Nadu legislation unconstitutional.
|
Games of Skill / Horce Racing |
| Chandresh Sankhla v. State of Rajasthan
2020 SCC OnLine Raj 264 |
In this case, a petition that wanted to declare Dream11 as gambling was brought before the Rajasthan High Court. The Court noted that previous decisions of the Supreme Courts and High Courts have already held that fantasy sports were games of skill. Therefore, it was held that the fantasy sports offered by Dream11 were games of skill.
The Division Bench further determined that the game did not constitute gambling, as the outcome of the fantasy game was not contingent upon the performance of any specific real-world team on a given day. Consequently, the Court dismissed the Public Interest Litigation (PIL), finding no merit in the petitioner’s claims.
|
Fantasy Sports |
| Bimalendu De V. Union of India
AIR 2001 Cal 30 |
The Division Bench of the Calcutta High Court while deciding on the legality of broadcasting a cash prize based quiz show (Kaun Banega Crorepati) held, that any entertainment activity where the result involves a substantial and preponderant degree of skill, would not fall within the purview of gambling and therefore be permitted to be advertised.
|
Quiz Show |
| Indian Poker Association v. State of Karnataka
Writ Petition Nos. 39167 to 39169 of 2013 |
The Karnataka High Court held that “…game of poker if played as a game of skill, license is not contemplated…”. The Court also clarified that enforcement authorities have the right to take appropriate action, in accordance with the law, if there is concrete information regarding illegal activities being conducted under the guise of recreational activities.
|
Poker |
End Notes:
[i] DM Gaming Private Limited v. State of UP, WRIT-C No.-3880 of 2024.
[ii] https://www.livelaw.in/high-court/allahabad-high-court/allahabad-high-court-rules-poker-and-rummy-are-games-of-skill-not-gambling-268662.
[iii] Para 4, Ibid.
image generated on Dall-E
