Online 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.