Monthly Archives: September 2014

Central Government Denies To Give Opinion Upon The Legality Of Online Games Like Rummy, Poker, Card Games, Etc

Central Government Denies To Give Opinion Upon The Legality Of Online Games Like Rummy, Poker, Card Games, EtcIndian Supreme Court is presently hearing a matter that can decide whether playing online rummy, poker and card games is legal or illegal in India. Further, Supreme Court has already clarified that the stay upon the Madras High Court’s judgment would benefit only the parties to the litigation. This means that till the time Supreme Court actually says that online rummy, online poker and online card games are legal in India, majority of these gaming stakeholders may be exposing themselves to legal risks and civil and criminal liabilities.

Realising the complex legal issues involved in the litigation, the Supreme Court of India referred the matter to Central Government for its opinion. However, Central Government has not provided any formal reply so far and a formal reply is expected from Central Government on12th November 2014, the next data of hearing of this case. The Centre has asked the Supreme Court to adjudicate the matter at its own level citing different judicial decisions and constitutional issues.

Online gambling laws of India are complicated in nature  as gambling is a State subject and different State have enacted different laws regarding gambling activities in India. We have a central law on gambling called the Public Gambling Act of 1867. Similarly, we have many state laws on gambling that are mostly based upon the central law. Further, almost all the state laws are regulating real world or offline gambling in India. The exception in this regard can be found in the laws applicable in places like Goa and Sikkim. In Sikkim, a provisional And Regular Licence can be obtained under the Sikkim Online Gaming (Regulation) Act, 2008.

To bring uniformity among various laws regarding gambling in India, the present Law Commission of India is analysing whether the Public Gambling Act of 1867 should be repealed or not. Meanwhile, those engaging in online betting and gambling are at risks of being arrested and prosecuted. Recently the owner of an online betting website for IPL 7 was arrested in Mumbai for allowing betting on his website. Similar arrests have been made by police of Delhi, Ahmedabad, Mumbai, etc. The income tax official also raided four offshore casino vessels and one onshore casino in Panaji. The Central Bureau of Investigation (CBI) has also established a Sports Integrity Unit to investigate illegal sports betting in India. The legality of use of Bitcoins for gaming and gambling in India is also doubtful and full of legal risks.

There are certain rules to decide whether online gambling and betting is legal in India or not. There are totally different set of rules for running an online poker website in India. In many cases police in India has arrested people indulging in illegal online betting. In short, legality of online gambling and online gaming is still a grey area that requires extensive legal research and compliances before launching the website in this regard. The Supreme Court of India has to decide these complicated issues in the present litigation.  If the SC holds online rummy, online poker and card games for stakes as gambling, the states could prosecute those engaged in such activities within their jurisdictions. However, if the Supreme Court decides in favour of such online games with stakes, then the Central Government would be required to bring uniform legislation for India. That would be a tough task for the Central Government as the proposed legislation must be techno legal in nature to be effective and contemporary. This is the reason why the central government is not willing to take any action in this regard.

World over countries are finding it difficult to regulate online gaming, betting and gambling activities due to conflict of laws in cyberspace. Online gambling and gaming laws and regulations in India and conflict principles would be very difficult to resolve in these circumstances. Other issues that require techno legal legislation skills on the part of Central Government are blocking of illegal gambling websites in India, taxation issues, online gaming regulations, mobile gaming regulations, payment gateways issues, mobile payment issues, mobile applications legal issues, etc.

Those planning to engage in online games including online rummy, online poker, etc must comply with techno legal requirements prescribed by various existing laws of India. Otherwise, they would find themselves on the wrong side of Indian laws.

Supreme Court Of India Asks Central Government To Clarify Its Stand Regarding Legality Of Online Rummy And Card Games With Stakes

Supreme Court Of India Asks Central Government To Clarify Its Stand Regarding Legality Of Online Rummy And Card Games With StakesOnline gaming and gambling laws in India are in a state of flux. As the stakes are high and online gamings being a lucrative market in India, many stakeholders have taken up the matter before the Supreme Court of India to get a clear legal position. The decision of Indian Supreme Court may establish legality or illegality of online games like rummy, poker, etc.

However, we at Perry4Law believe that online rummy and online poker may still be illegal and punishable despite this judgement of Supreme Court. This is because Indian Supreme Court is not dealing with the legality of online rummy and online poker in strict and absolute sense. As a result the legal position in this field would remain a grey area. In fact, a decision by Supreme Court without any legislative support may be counterproductive.

The real trouble seems to be use of cash or stakes while conducting online rummy and poker competitions without following all the applicable laws of India. This issue is partially covered before the Supreme Court that also between the parties to this litigation alone. Both third parties and the parties to the litigation are in a legally risky position.

Supreme Court is very well aware of this situation and it has taken a stand that was very much required. The Court has asked the Central Government for its legal stand regarding games like online rummy, online poker, etc. The Court issues a notice to the Centre asking it to spell out its position on the legality or otherwise of the online game of rummy and card games involving stakes. The court also extended its stay on Madras High Court judgment that had held these games illegal as these involved gambling. However, the stay is applicable only to the petitioners before the Court. This means other are vulnerable to legal risks and they cannot take the protection of this stay.

The next hearing of the matter has been fixed for September 25, 2014. However, there are no hints that the matter would be settled very soon. It may take few more months or years before the matter is finally settled. We at Perry4Law strongly recommend that online gaming entrepreneurs must ensure techno legal compliance in order to stay on the right side of the law till legal position is made clear in this regard.

The Gambling (Licensing And Advertising) Act 2014 Of UK Faces Legal Challenge From GBGA

The Gambling (Licensing And Advertising) Act 2014 Of UK Faces Legal Challenge From GBGAOnline gaming and gambling industry of United Kingdom (UK) is fast changing. Regulations governing online gaming and gambling are also redrafted by UK to bring additional control over foreign online gaming and gambling service providers who are targeting UK territory and its citizens.  Internet service providers (ISPs) in UK were also asked to insert warning pages for gambling sites that are unlicensed in the UK. However, they refused to comply with this request of UK government.

Meanwhile, the UK Gaming (Licensing and Advertising) Bill has become an applicable law. Following agreement by both Houses on the text of the Bill it received Royal Assent on 14 May 2014. The Gambling (Licensing and Advertising) Act 2014 of UK (PDF) has made some significant changes in the way oversees online gaming and gambling service providers have to operate in UK or target UK players.

The Bill is now an Act of Parliament and an applicable law in UK. The Act requires any operator wishing to transact with or advertise to British consumers to obtain an operating licence from the Gambling Commission and is expected to come into force on 01 October 2014. The Act has also introduced 15 percent point of consumption tax applied to gaming operators.

However, the Gibraltar Betting and Gaming Association (GBGA) has filed a legal challenge against the UK Gambling Commission’s decision of its new licensing system and a 15 percent point of consumption tax for gaming operators. The GBGA believes this regime was designed purely for economic reasons. GBGA Chief Executive Peter Howitt explained in a statement released on Monday, “The only beneficiaries of this change are the UK domestic industry and the Gambling Commission itself, which has persuaded the UK government that it should be the global regulator of this high tech and complex industry.” The GBGA also claims that this regime impedes the right to free movement of services as outlined by Article 56 of the Treaty of the Functioning of the European Union.

Back in India, Indian Supreme Court is hearing about the legality of playing Rummy. While this would be a crucial decision yet it must be kept in mind that despite Supreme Court’s decision, online rummy and online poker may still be punishable in India. The position as on date is that online rummy and online poker are still legally risky in India.

At Perry4Law we believe that Indian players involved in online gaming and gambling activities and targeting UK and Indian markets must comply with both Indian and UK laws. This is really tricky if they intend to explore other foreign markets as well as conflict of laws in cyberspace are really difficult to manage.

Online Rummy And Online Poker May Still Be Punishable In India Despite Supreme Court’s Decision

PRAVEEN DALAL MANAGING PARTNER OF PERRY4LAW AND CEO OF PTLBOnline Gaming is a multi crore industry in India. Despite this fact, we have no dedicated Online Gaming and Online Gambling Laws in India. This has made the Legal Position regarding Online Games like Rummy, Poker, etc really confusing and murky. Due to diverse legal actions and situations, the matter has reached before the Supreme Court of India. However, there are great misunderstandings and misconceptions regarding the nature of present legal proceedings before the Indian Supreme Court.

For instance, the core issue before the Supreme Court pertains to Legality of playing Rummy with Cash Stakes. Supreme Court in this case is not concerned with Online Rummy and it is definitely not concerned with Online Poker. However, Online Gaming Entrepreneurs are very hopeful with the decision of the Supreme Court that may be pronounced in late 2014 or in the year 2015.

Rummy has already been pronounced to be a “Game of Skill” by Indian Supreme Court on numerous counts and there is nothing new about this “Settled Legal Position” in the present litigation. What is new is the declaration to be made by Supreme Court whether Rummy can be played with Cash Stakes and whether Online Rummy is Legal or Illegal in India?” Presently the Indian Supreme Court is considering the Cash Stakes aspect and there are no hints that Legality of Online Rummy would also be adjudicated upon by the Court. Further, parallel analogy and interpretation vis-à-vis Online Poker is not only misplaced but is also not in question before the Supreme Court of India.

The major “Legal Fallacy” in the Online Gaming business activities in India is that entrepreneurs are applying the offline world’s standards and rules to the online environment. This is the reason that Supreme Court of India may not adjudicate upon the online part of gaming activities in India. And applying the offline version of the gaming activities to online games, including upon Online Poker and Online Rummy, by Gaming Entrepreneurs of India is “Not a Legally Sound Strategy”.

Even if the Supreme Court reiterates that Rummy is a “Game of Skill” and declare that Cash Stakes are allowed, this decision would not make Playing, Displaying and Hosting of Online Rummy in India “Automatically Legal”. Online Rummy and Online Poker would still remain Illegal unless certain Techno Legal Compliances are followed by the Gaming Entrepreneurs of India. In short, Online Rummy and Online Poker may still be an Offence and Punishable in India unless proper Cyber Law Due Diligence (PDF) and Techno Legal Compliances are followed by Gaming Entrepreneurs.

Indian Supreme Court Decision Could Establish Legality Or Illegality Of Online Rummy And Online Poker In India

Indian Supreme Court Decision Could Establish Legality Or Illegality Of Online Rummy And Online Poker In IndiaOnline gaming is a very lucrative industry in India and it is booming at a rapid rate. Lots of entrepreneurs are exploring Indian market in this regard and they have come up with many innovative ideas and games. While this is a good sign for Indian economy and business community yet it is also important for Indian government to suitably regulate the business affairs of these gaming portals.

As more and mobile devices are being used for day to day transactions, mobile gaming market segment has also been targeted by these gaming entrepreneurs. This has given rise to many unique legal challenges before these gaming portals. As on date we have no dedicated online gaming and gambling law in India and application of old laws to this new segment is creating many problems.

States like Sikkim grants provisional and regular licence under the Sikkim Online Gaming (Regulation) Act, 2008. On the other hand, some Indian States expressly prohibit any form of online gaming and gambling in their jurisdictions. Now it has been mandated that foreign companies and e-commerce portals would be required to register in India and comply with Indian laws. This would require many techno legal compliances on the part of these companies especially following of the cyber law due diligence (PDF) and e-commerce due diligence in India.

Taxation issues like service tax, sales tax, etc have also started surfacing in India. Indian government is devising many new methods to make e-commerce and online gaming and gambling websites taxable for their business transactions. In fact, most of the e-commerce websites of India are already on the regulatory scanner of Enforcement Directorate (ED) for possible foreign exchange and foreign direct investment (FDI) violations.

Online rummy and online poker have attracted the attention of many gaming entrepreneurs in India. However, regulatory uncertainty has forced them not to explore these areas fully. It is still not clear whether it is legal to play online poker in India or not. Similar is the case with online rummy and none can clearly say that online rummy is legal in India to play till the matter is settled by either the Parliament or the Supreme Court of India. In fact, ancillary laws applicable to online poker and online rummy are flouted by almost all the poker and rummy websites operating in India whether they are Indian or foreign.

The Supreme Court of India is presently hearing a matter that would have a bearing on the interpretation of legality or illegality of online poker and online rummy in India. However, till the matter is conclusively decided by the Indian Supreme Court, it would be a sound business practice to comply with all the applicable laws of India while running various online poker and online rummy websites in India. Otherwise, civil and criminal prosecutions may occur and that would be a major setback for the gaming entrepreneurs of India.