IS MONETISATION OF A GAME OF SKILL GAMBLING? – A RUMMY PERSPECTIVE
This post has been authored by Mr. Dhruvo Das and Mr. Samyak Dalal.
Mr. Dhruvo Das is a 4th-year student pursuing B.B.A LL.B (Hons.) from School of Law, Christ University, Bengaluru. Mr. Samyak Dalal is a 4th-year student pursuing B.B.A LL.B (Hons.) from School of Law, Christ University, Bengaluru.
Owing to easy and affordable access to smartphones and the internet, India’s online gaming industry is growing at a rate of knots. According to a report by Deloitte, the industry is projected to touch $2.8 billion by 2022. However, this rapid growth has brought to the forefront a plethora of legal and regulatory issues. In recent times, several courts have held that playing or conducting rummy for stakes amounts to gambling, despite it being a game of skill. This interpretation would also imply that if other games of skill are monetised, it will constitute the offence of gambling. This article seeks to examine the legality of playing and conducting games of skill, more particularly rummy, for money.
DECIPHERING THE MEANING OF ‘GAME OF SKILL’ AND ‘GAME OF CHANCE’
A ‘game of skill’ refers to a game in which success depends on the superior knowledge, training, attention, experience and adroitness of the player. Essentially, it refers to a game where the element of skill dominates the element of luck/chance. In the case of K.R. Lakshmanan v. State of Tamil Nadu and Ors., the Supreme Court held that betting on horse racing is a game of skill, as the individual placing the bet would have to determine the pedigree of the horse, its current form, its previous performances, the type of race, etc. to obtain a favourable result. The court also held that boat racing, football and baseball are games of skill. Whereas, a ‘game of chance’ refers to a game in which the result is determined entirely or majorly by luck. The ‘three card’ game, also known as flush and brag, is a game of pure chance.
The Public Gambling Act, 1867 is the central legislation with respect to gambling in India. Section 12 of the Act specifies that the legislation shall not be applicable to any game of skill wherever played. Since gambling is a state subject in India, most states have passed their own legislation while retaining the principles of the Public Gambling Act, including the exception provided under Section 12 of the Act. Therefore, in most states in India, ‘games of skill’ are permitted, whereas ‘games of chance’ are termed as gambling and are prohibited.
RUMMY – A GAME OF SKILL
In the landmark case of State of Andhra Pradesh v. K. Satyanarayana, the Supreme Court held that ‘Rummy’ is a preponderantly a game of skill, as the fall of the cards needs to be memorised and the building up of rummy requires substantial skill in holding and discarding cards. However, the court also observed that if the gambling house is earning profits out of the game, it could constitute the offence of gambling. In the case of Mahalakshmi Cultural Association, the Madras High Court also observed that rummy is primarily a game of skill though an element of chance is involved. In the event, rummy is played for stakes, it would amount to gambling and certain provisions of the Chennai City Police Act, 1888 would be invoked. Section 45 of the Act states that any individual who opens or operates a gaming house shall be liable to pay a fine not exceeding 500 rupees, or imprisoned for a period not exceeding three months or to both. Section 46 stipulates the penalty for being found gaming in a common gaming house.
In two recent cases, the observations of the courts in the aforementioned cases were reiterated. In the case of The Director General of Police and Ors. v. S. Dillibabu, the Madras High Court held that playing rummy for a recreational purpose is permissible, but playing rummy for stake would constitute the offence of gambling. Similarly, in 2019, the Kerala High Court held that playing rummy for innocent pastime is a game of skill; however, playing rummy for stakes constitutes an offence under the Kerala Gaming Act, 1960.
DEMYSTIFYING THE FLAW IN THE INTERPRETATION OF COURTS
By relying on the case of Executive Club formed by Lalitha Real Estates Pvt. Ltd., Vijayawada and Ors. v. State of Andhra Pradesh., the authors argue that a ‘game of skill’ does not fall under the category of gambling regardless of whether such game is played for money or not. In the aforementioned case, it was held that rummy is a game of skill and does not constitute gambling. It is immaterial whether the game is played for stakes or not. The same reasoning was rendered in the case of D. Krishna Kumar & Ors. v. State of A.P, wherein the Andhra Pradesh High Court held that operating a rummy club does not amount to gambling, as rummy is a game of skill. The court observed that it is irrelevant whether the club is earning profits or not.
However, it is rather disappointing to observe that courts have taken a contrary view in recent times and held that playing rummy for stakes amounts to gambling, despite it being a game of skill. As discussed earlier, most state gambling legislation contains a provision which states that the legislation shall not be applicable to a game of skill. Therefore, once a game qualifies as a ‘game of skill’, the state legislation that punishes gambling ceases to apply in relation such a game, irrespective of whether such game is played for stakes or not. This has been clarified in the landmark case of K.R. Lakshmanan, wherein the Supreme Court observed that betting on horse racing qualifies as a game of skill and does not amount to gambling. Thus, the court held that the provisions of the Chennai City Police Act, 1888 and Tamil Nadu Gaming Act, 1930 which seek to punish gambling in the state of Tamil Nadu would not be applicable.
The courts should take a cue from these decisions while adjudicating upon cases related to the legality of rummy in the future and state with appropriate reasons that playing or conducting a game of skill for money, including rummy does not amount to gambling.
The interpretation drawn by the Kerala High Court and Madras High Court in recent cases can threaten the existence of the thriving online gaming industry in India. According to the interpretation, monetisation of a game of skill will constitute the offence of gambling. This would imply that entities that are monetising games of skill, and fantasy sports operators such as Dream 11, MPL, MyTeam11 can be held liable for operating a ‘gaming house’ and participants can be penalised for being found in a gaming house, despite fantasy sports being a ‘game of skill’ as held in the case of Varun Gumber v. Union Territory of Chandigarh and Ors. and subsequently in Gurdeep Singh Sachar v. Union of India & Ors. In the case of M/S Gaussian Network Pvt. Ltd v. Ms. Monica Lakhanpal, it was held that online gaming portals can fall within the definition of a ‘gaming house’ under the gambling legislation of states, as such portals merely seek to replace the traditional brick and mortar gaming rooms. This makes the situation even more alarming for online operators that are offering games of skill in return of money to the Indian public.
Despite the ambiguity that exists in relation to the legality of playing rummy in India, the recent decision of the Rajasthan High Court in the case of Ravindra Singh Chaudhary v. Union of India & Ors. has been a silver lining for the online gaming industry, more particularly, for fantasy sports operators. The court reiterated that fantasy sport is a game of skill and participants are permitted to play such a game for money. Further, the court held that Dream 11 is allowed to conduct and monetise such a game. While courts have upheld the legality of monetising other games of skill such as fantasy sports, it is difficult to comprehend as to why a contradictory approach has been taken with respect to rummy despite it being a game of skill.
The decisions rendered by various courts in relation to the legality of playing rummy for stakes can cause immense confusion within the gaming fraternity. Therefore, it would be advisable to carry out an amendment in the gambling legislation of each state to include a provision outlining the games that would qualify as ‘games of skill’, and would be exempt from the scope of the legislation, regardless of whether such games are conducted or played for money or not. Games such as chess, sudoku, fantasy sports, solitaire, rummy, poker, etc., are games of skill, and monetisation of such games does not amount to the offence of gambling. Currently, The Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2015 is the only legislation that specifies the games that fall within the purview of ‘games of skill’. At present, playing rummy for stakes remains illegal due to the faulty interpretation rendered by courts in recent times. Such interpretation would hinder investment in the gaming sector and discourage users from playing ‘rummy’, which is certainly a ‘game of skill’. Thus, in the humble opinion of the authors, conducting and playing rummy for money should be legalised for India’s sprawling gaming industry to reach its true potential.
The authors can be reached for comments on his email at email@example.com
Cite as: Dhruvo Das & Samyak Dalal, Is monetisation of a game of skill gambling? – a rummy perspective, Extra-Cover: The Sports Law Blog of India (28th August 2021), Accessed at https://www.extra-cover.org/post/is-monetisation-of-a-game-of-skill-gambling-a-rummy-perspective [Date of Access].