In recent months, India's online gaming industry has been humming with activity. Given India's young population and the widespread use of cell phones and the internet, the industry has already seen tremendous growth and still has a lot of room to expand.

Revenue is forecast to rise at a CAGR of 22.1 percent from about USD 600 million in FY18 to USD 1.6 billion in FY23. Indian and international investors have shown a strong interest in fantasy sports games in particular. Dream 11 is said to have recently been India's first gaming unicorn.

A natural concern amidst the commotion is whether or not online games are legal in India. Given India's outdated and complicated gaming legal system, the solution is sadly not obvious. Add to the mix a string of recent tragic events in which players committed suicide after losing money in online games and one in which a gaming site was prosecuted for money laundering, leading to the banning of online games in some Indian states.

Regulatory structure

There is no unified legislation in India that governs gaming or gambling (both terms are largely interchangeable for Indian laws). The Indian Constitution gives each state the authority to enact its gambling laws. There are several state-specific deviations as a result of this.

Online gaming is prohibited in Telangana, Tamil Nadu, and Andhra Pradesh, for example. The games of bridge, poker, and rummy are not called gambling in West Bengal. There is a government notification in Kerala that exempts rummy from gaming provided there is no side-betting. Online games need a license in Sikkim and Nagaland.

Many states' gaming laws are also based on the Public Gambling Act of 1867 (Old Act), which was passed before the country's independence and isn't intended to deal with new gambling ways. This rule, for example, allows for games to be played in a 'traditional gaming building,' which is a physical room or enclosure.

And jurisdictions that acknowledge video gaming have different approaches. Tamil Nadu continues to allow skill-based (but not other) online games, while Telangana and Andhra Pradesh have outright barred all online games with monetary or stakes.

Different courts in India have taken varying opinions on handling online gaming due to a lack of uniformity or consistency in the legislation. These perspectives also do not represent the realities of contemporary gaming.

The Supreme Court of India has established a guiding principle: games in which chance outnumbers skill are forbidden, whereas games in which skill outnumbers chance are permitted.

However, in the absence of a square measure to distinguish between talent and chance games, courts have applied this theory to various details in varying ways. As a result, there is a complicated regulatory framework determining whether a game is legal or not impossible.

Below are three examples of online games that are becoming extremely popular.

i. Rummy

According to the Supreme Court, Rummy is a game of skill in normal conditions and is legal under gaming laws. However, there is a caveat to this decision. In any other way, there should be no signs of gambling – game owners should not benefit or reap from rummy, and games should not be played for stakes.

The disclaimer indicates that many online rummy games would not benefit from the Supreme Court's decision because they can require earnings for both players and game owners, who also charge participation fees.

RummyCircle (online rummy) was recently declared not to be gambling by the Kerala High Court. Bear in mind that if no side-betting is involved, Kerala law does not deem rummy to be gambling, which means that courts in other states do not agree.

ii. Poker is a game of chance.

Different High Courts have drawn varying opinions regarding whether poker is a talent or chance game.

While the Gujarat and Bombay High Courts have ruled that poker is a game of chance and therefore unconstitutional, the Calcutta High Court has ruled that poker is not protected by the state's gaming rules (meaning that it is not restricted). Again, the context is that poker is not included in the concept of gambling in West Bengal gambling rules.

The Supreme Court has also stated that games such as poker double up, blackjack, and Pacman do not allow for the use of talent (meaning they are prohibited). However, based on the lower court's empirical conclusions, which categorized these games as games of chance, this seems to have been a passing observation. This implies that there is no definitive decision on poker.

iii. Sports Visions

Unlike other online games, Indian courts have traditionally extended fantasy sports games the same care and have allowed them because they require abilities. Both the Punjab and Haryana High Courts and the Bombay High Court have ruled that the games provided by Dream 11 (fantasy cricket, kabaddi, football, and other sports) involve talent, experience, judgment, and attention and are not gambling. The Rajasthan High Court has also made the same decision.

The preceding decisions provide a reason to believe that fantasy sports games are legal. However, the position cannot be assumed to be resolved quite yet because other courts can respond differently.

For example, based on the Supreme Court's rummy ruling, would it mean that a fantasy sports game owner makes money off the game or plays for real money that the game has a gambling character? Regrettably, we will have to wait for a judge to decide on this.

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To sum it up

Recent incidents have illustrated the need to shield players, but there could be alternatives to outright bans on video gaming. Checks and balances, on the other hand, maybe considered.

For example, the Niti Aayog recently published draught guiding principles for fantasy sports games, which include creating a self-regulatory body, retaining the predominance of talent in games, obtaining permission from an independent committee for pay-to-play games, a minimum age of 18 years for competition, fairness and accountability in game terms and conditions, policy on misuse, and advertisement.

The Advertising and Standards Council of India recently issued self-regulatory guidance for ads of real money games.

But first and foremost, archaic state legislation must be updated to accept video games in their current form. Prohibiting a game merely because it creates income for the game's owners or is played for stakes can no longer be important.

The task of maintaining legal uniformity across states is likely to be challenging. Perhaps the federal government will take action to promote state-level negotiations to achieve some legal uniformity.

Since certain state laws depend on the Old Act's rules, they will want to consider a model modification to the Old Act that recognizes (or prohibits) online gaming. The Niti Aayog's guiding principles are a great start and demonstrate the government's good intentions. Hopefully, this would pave the way for a more straightforward regulatory system that is more conducive to modern games.