Tamil Nadu governor gives assent to bill banning online gambling

The legislation, called the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Bill, also seeks to regulate online gaming including fantasy sports which may now need vetting by a multi-member committee, Justice K Chandru, retired Madras High Court judge who led the four-member committee tasked with giving recommendations on online gambling in the state, told ET.

Across party lines, there was consensus to ban these games in the state, Chandru said. He added that for all other online games, including fantasy sports, a Committee will be set up to look individually into the companies and determine if they need to be regulated or banned.

Also read | Tamil Nadu to stick by online gaming ban: Justice Chandru

“The rules are yet to be framed. A committee will be constituted when the Gazette notification is published,” he said.

Based on his panel’s report, an ordinance that later became the Bill was passed by the state assembly that sought to ban online rummy and poker.

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Online gaming firms reacted sharply to the legislation citing previous Court judgements that had classified rummy and poker as games of skill and not chance. Firms will pursue legal recourse in a bid to overturn the ban, they said.

Malay Kumar Shukla, Secretary, E-Gaming Federation, said, “We are examining the legislation and shall be taking appropriate action based on legal advice in due course of time.”

“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,” said Roland Landers, CEO, All India Gaming Federation, which represents a large number of Indian MSME gaming startups.

The Central government on Thursday released new rules for online gaming that entail a framework of multiple self-regulatory organisations (SROs) for the sector, while prohibiting any game that involves betting and wagering.

Shukla said, “It is extremely unfortunate and a disappointing development for the online gaming industry.” Concurring with him, Landers said, “The Tamil Nadu government has passed a law that will result in banning most online games of skill including rummy and poker.”

The Tamil Nadu government had set up a four-member committee led by Justice Chandru on June 9, 2022, to study the adverse impact of online gambling. The committee submitted its report to the chief minister on June 27, 2022, recommending a ban on online gaming including rummy and pokes with stake by promulgating an ordinance. The recommendations were accepted by the Tamil Nadu cabinet, and an ordinance was promulgated in October with the approval of Governor RN Ravi to ban online gambling.

In October 2022, the state assembly passed the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Bill, 2022, and sent it to the governor’s office for his assent. However, after four months on March 8, Governor Ravi refused to give his assent to the bill, citing the Tamil Nadu government’s lack of “competence” to legislate on the matter.

In August 2021, the Madras High Court quashed the amendments to the Tamil Nadu Gaming Act, 1930 as ultra vires the Constitution. The state government of Tamil Nadu has appealed its High Court judgment before the Supreme Court of India. The appeal is pending at the preliminary stage before the Supreme Court.

“What the Tamil Nadu law sought to achieve is achieved in essence by the amendments made to the IT Rules 2021 a few days ago by the central government,” said Ranjana Adhikari, Partner, Technology Media Telecom of law firm IndusLaw.

“The rationale of why a separate law is required at the state government level is not very clear and is likely to lead to confusion, unnecessary litigation and instability in policy making. It will also cause duplication of efforts for startups, which form a large part of the online gaming ecosystem,” she added.