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From privatisation efforts to disagreements over a centralised market for electricity, there have been many instances of ever-growing tussles between the Centre and various state governments in the last few years. On Monday, perhaps a new frontier was added to that – the Tamil Nadu government received its Governor’s approval for a Bill banning online gambling, just one business day after the Centre notified fresh rules for online gaming.
The state’s assembly had passed the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Ordinance, 2022 last October. However, in early March, the Governor RN Ravi returned the ordinance for reconsideration. A few weeks later, the assembly readopted the Bill and sent it to Raj Bhavan once again.
State laws on online gaming are a pain-point that many in the industry are foreseeing. They have also raised these concerns with the Ministry of Electronics and IT (MeitY), which is now the nodal agency for the sector. They are also likely to challenge Tamil Nadu’s measure in court once it is notified by the state government.
What is Tamil Nadu’s law on online gambling?
The Bill prohibits online gambling and online games of chance played for money or other stakes. While it specifically names Rummy and Poker as games of chance, it can go much wider in scope – it defines online games of chance as those where both an element of chance and skill are involved, and the element of chance dominates over the element of skill; games are presented as games of chance; the element of chance can only be eliminated by superlative skill; or games involve cards, dice, or wheel which work on random event generators.
It also establishes the Tamil Nadu Online Gaming Authority and empowers it to regulate online gaming companies. Companies that are based outside the state are required to follow specified due diligence or restrict access to prohibited games for people in Tamil Nadu. The state’s proposed gaming authority will identify games of chance and recommend them to be included in the Schedule of prohibited games.
It is worth noting that the state’s Governor gave his assent to the Bill hours after the legislative assembly passed a resolution against him for indefinitely withholding assent to several bills.
Online gaming: Centre vs Tamil Nadu
Aside from the state assembly’s resolution against the Governor, the timing of the development is also particularly significant given that his assent to the Bill comes just days after the Centre notified amendments to the Information Technology Rules, 2021, which brought in rules for regulating online real money games.
“State governments’ regulating online gambling is not required any more after the IT rules for online gaming have been notified,” Minister of State for Electronics and IT Rajeev Chandrasekhar told The Indian Express when asked for a reaction on Ravi’s assent to the Bill.
In a meeting with MeitY a day after the amended IT Rules were notified, online gaming companies had raised concerns around state governments passing competing legislations which could potentially go against norms prescribed under Centre’s rules. MeitY believes that while gambling is a state subject, activities that occur on the Internet – including online gambling and gaming – fall exclusively in its domain to regulate.
What are the Centre’s norms for online gaming?
Last week, MeitY notified amendments to the Information Technology Rules, 2021 clearing regulations for the online gaming sector. The fresh changes require the setting up of multiple self-regulatory bodies (SRBs) whose approval will be required for online games with a monetary element. Games that involve wagering on outcomes of events will not be allowed.
Online gaming companies will also have to complete a KYC procedure for users when they first make a deposit in their accounts to play a game. KYC norms laid down by the Reserve Bank of India (RBI) for its regulated entities will have to be followed by them.
How have gaming companies reacted to Tamil Nadu’s Bill?
Industry associations representing online gaming companies expressed regret over Tamil Nadu Governor’s assent to the Bill. They are expected to challenge it in court when the state government notifies provisions of the ordinance. Roland Landers, head of the All India Gaming federation (AIGF) said the Bill was “unconstitutional” and that the association will file a case against it.
“…we will challenge the constitutionality of the law, once the effective date is notified and have full faith that our judicial system will uphold the fundamental rights of the gaming platforms and their users,” Landers said.
Similarly, the E-Gaming Federation (EGF) said it was “examining the legislation and shall be taking appropriate action based on legal advice in due course of time”.
It is worth noting that last November, the AIGF had challenged the constitutional validity of Tamil Nadu’s Bill at the Madras High Court. However, at the time, the state government had said that it was yet to notify the Bill as a law, following which the court had allowed AIGF to withdraw its petition with liberty to file it once the law is in effect.
Last year, the Karnataka High Court had declared as unconstitutional certain provisions of the Karnataka Police (Amendment) Act, 2021, which prohibited and criminalised the activities of offering and playing online games, by risking money or otherwise.
