The legality of games of skill

By Suhaan Mukerji, PLR Chambers
0
655

Whether played online or offline, games of skill are judicially protected and cannot be viewed as gambling, writes Suhaan Mukerji

Playing games of skill such as rummy or bridge has been judicially held to be not akin to gambling or gaming (both expressions being judicially held to be synonymous). This has been the consistent view of the Supreme Court for the past 50 years.

Suhaan Mukerji Founding Partner PLR Chambers
Suhaan Mukerji
Founding Partner
PLR Chambers

In two landmark Supreme Court cases, State of Bombay v RMD Chamarbaugwala (AIR 1957 SC 699), and RMD Chamarbaugwala v Union of India (AIR 1957 SC 628), it was held that competitions that involved substantial skill were not gambling activities. Such competitions were business activities, the protection of which was guaranteed under article 19(1)(g) of the constitution.

Ten years after the Chamarbaugwala decisions, the Supreme Court, in State of AP v K Satyanarayna (AIR 1968 SC 825), held rummy to be a game of skill since it entailed considerable skill in holding and discarding cards. The predominance test was evolved by the Supreme Court in this decision, being that rummy was “mainly and predominantly a game of skill”. In 1996, the Supreme Court had to deal with the subject of horse racing in Dr KR Lakshmanan v State of Tamil Nadu and Anr (1996 2 SCC 226). In paragraph 3 of the judgment, the court took note of the definition of the word “gambling” contained in the New Encyclopaedia Britannica, as: “The betting or staking of something of value, with the consciousness of risk and hope of gain on the outcome of a game, a contest, or an uncertain event, the result of which may be determined by chance or accident, or have an unexpected result by reason of the better’s miscalculations”, as well as the definition in Black’s Law Dictionary: “Gambling involves not only chance, but a hope of gaining something beyond the amount played. Gambling consists of consideration, an element of chance and a reward.”

The Supreme Court held that gambling was payment of a price for a chance to win a prize. Compared with a game of skill, the court held that a game of chance was one in which the element of chance predominated over the element of skill, and a game of skill was one in which the element of skill predominated over the element of chance, and that it was the dominant element – skill or chance – which determined the character of the game.

In paragraphs 8 and 9 of the judgment, on the question of whether the games which depend to a substantial degree on skill come within the stigma of gambling, the Supreme Court referred to the two Chamarbaugwala cases, and held that a competition where success did not depend to a substantial degree on the exercise of skill was now recognised as gambling. The Supreme Court held that gambling was not trade and as such was not protected by article 19(1)(g) of the constitution. It has further been authoritatively held that competitions which involved substantial skill were not gambling activities. Such competitions were business activities, the protection of which was guaranteed by article 19(1)(g) of the constitution. In the context of “online gaming”, the aforesaid time immemorial principles apply proprio vigore. This has been the view of the Madras High Court and the Kerala High Court in recent judgements. A division bench of the Madras High Court in the decision of Junglee Games India Private Limited and Ors v The State of Tamil Nadu and Ors (SCC OnLine Mad 2762) on 3 August 2021, struck down the Tamil Nadu Gaming and Police Law (Amendment) Act, 2021, in its entirety, which sought to ban online games of skill played for money with stakes.

Placing reliance on the decision of the Madras High Court in the Junglee Games case, and the above-mentioned landmark decisions of the Supreme Court on betting, wagering and gambling, the Kerala High Court, in its decision dated 27 September 2021 in Head Digital Works Private Limited and Ors v State of Kerala and Ors (WP (C) No. 7785), declared a notification issued under the Kerala Gaming Act, 1960, which imposed a ban on “online rummy when played for stakes” as being arbitrary, illegal and violative of fundamental rights under articles 14 and 19(1)(g) of the constitution.

Therefore, playing games of skill (online or offline) is judicially protected and cannot be viewed as gambling or gaming activities.

PLR Chambers

Suite 1-B, Plot No. 8-B, Main Mathura Road

New Delhi – 110 014, India

Contact details:

Tel: + 91 11 2437 0981

Email: suhaan.mukerji@plrchambers.com