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The Governor of Tamil Nadu has given his assent to a Bill banning online gambling in the state, despite the recent amendments to the Information Technology Rules, 2021 by the Ministry of Electronics and IT (MeitY) which brought in rules for regulating online real money games. The Bill prohibits online gambling and online games of chance played for money or other stakes, and while it specifically names Rummy and Poker as games of chance, it can go much wider in scope. The Governor’s 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.
Industry associations representing online gaming companies expressed regret over Tamil Nadu Governor’s assent to the Bill and 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.
Anyone caught indulging in online gambling or games of chance with money or other stakes in Tamil Nadu will face a punishment of imprisonment for a term of up to three months or a fine of up to ₹5,000, or both. Those who induce people to play these games will face punishment with imprisonment of up to one year or a fine of up to ₹5 lakh, or both. Any person providing online gambling services or games of poker and rummy with money or other stakes will face imprisonment for a term of up to three years or a fine of up to ₹10 lakh, or both.
It is worth noting that 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.
While gambling is a state subject, activities that occur on the Internet – including online gambling and gaming – fall exclusively in MeitY’s domain to regulate. The amendments notified by MeitY 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, and 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.
It remains to be seen how the legal challenge against the Bill banning online gambling in Tamil Nadu will play out. With the Centre’s recent amendments to the Information Technology Rules, 2021, and the involvement of multiple stakeholders, this issue is likely to become a complicated legal battle.