Online Gaming Laws in India

Online gaming refers to playing video games by using the internet, either individually or with other players across the globe. It basically provides a common virtual platform where individuals from different regions of the world can connect and play virtually. For instance, some prominent online/e-games are PUBG, Free Fire, Temple Run, etc. These games work on different systems, i.e. Some games can be played through mobile phones; these games are free to download but include in-app purchases and advertisements; they have lower graphics, performance, and complexity in, but they are easily accessible and played by large chunks of people, whereas on the other hand, there are some games that are played on PCs (personal computers) or gaming computers; these games typically involve a one-time purchase cost and have high graphics, excellent performance, high complexity, and depth. Games played on PCs have longer gameplay sessions than mobile games. This online gaming industry is growing at a faster rate in India and across the globe, especially after the pandemic (Covid-19).

Historical Context The online gaming industry has evolved significantly throughout history. The Internet was developed around the year 1990's, which led to a pivotal shift in the world. During the late 1990s and early 2000s, multiplayer online games, i.e., rummy, darts, yacht, and chess, began to hold a firm grip across the market, which led to the trend such as massively multiplayer online role-playing games (MMORPGs) and online arenas like the 4th coming, Blade & Soul, etc. Today, the global online gaming industry is projected to reach US$ 348.85 billion by 2032, with an annual growth rate of 10.89%. This growth is fuelled by the large popularity and growth of mobile gaming, which allows the players to connect and interact from different regions around the globe as it is easily accessible as discussed above. Particularly in India, the online gaming industry is expected to reach USD 2.4 billion by 2029, reflecting a 20% increase from 2017 to 2029. There is a very interesting shift from the 20th to the 21st century in the gaming industry, games like Doom(1993), a very popular multiplayer game during the 1990s that had a USP of deathmatch mode; around 2000, World of

Warcraft was released; this game attracted a large number of subscribers during mid-2000. Around 2010, Xbox Live services and PlayStation networks got famous among the crowd; later on, PUBG (Player Unknown’s Battlegrounds) Clash of Clans and Call of Duty Morden warfare got developed in 2017, 2012, and 2019, respectively. Now in the future, the gaming industry will evolve more, and technologies will be integrated like VR, virtual reality (VR), and augmented reality (AR). Games like Half-Life Alyx (2020) and Pokémon GO have pushed the boundaries of how players will interact in the virtual world.

Gaming and Gambling In this section, you will be reading about gaming and gambling and the major and minor differences between them. Gaming basically refers to an act of playing games; it can be a physical game or an online game, but in the current trend, generally, gaming is used for online games. Whereas gambling refers to betting money or something valuable on an event or occasion where the outcome is not certain, gambling is primarily driven by the act of chance. Gambling includes activities like betting on sports, playing casino, etc. The major difference between gaming and gambling is that gaming is primarily skill-based, where the existing players can influence the result or outcome through planning, skill, and decision-making that they showcase in the game while playing, whereas in gambling the success is totally determined by chances; it involves money or assets that are placed at risk, and the primary goal is to win money or any valuable item or asset. In short, gambling is a highly risky activity; the players have a little control over the outcome. One of the major distinguishers lies in the purpose of both gaming and gambling. Gaming has a sole purpose of entertainment, social interaction, skill and personality development. Players engage for competition, fun, and enjoyment of the gaming experience, whereas in gambling the major purpose is to win money or a valuable asset, which often leads to addiction.

Game of Skill vs. Game of Chance

As we know the major difference between gaming and gambling, there are some cases where these two terms are blurred and seen in the same frame, which means people still categorize gaming under gambling. For example, games like Rummy are mostly considered gambling by most of the people in India as they involve betting, but in reality, they come under gaming because they involve games of skill. Often lines between gaming and gambling are blurred in many games, which causes a sort of confusion in categorizing them. Considering this issue in the nation, “Hon’ble Supreme Court” has defined and cleared the confusion between gaming and gambling under the case of Dr. K.R. Lakshmanan vs. State of Tamil Nadu.

This case arose from the Tamil Nadu Horse Races Act, 1947. This act aimed at abolishing betting on horse racing in the state. The Madras Race Club, represented by Dr. K.R. Lakshmanan, challenged the constitutional authenticity of this act, and the major issue was whether horse racing is primarily a game of skill or a game of chance, which is gambling. Major key arguments were from the side of the petitioner, states that horse racing is a sport that requires skill and involves factors like the horse's pedigree, rider ability, and nature of race. The petitioner questioned the Horse Races Act's validity and showed a strong resentment that it should not be considered gambling.

“Hon’ble Supreme Court” ruled in Favor of the Madras Race Club, stating that the Tamil Nadu Horse Act, 1947, is unconstitutional, and the court also emphasized that house racing is a game of skill rather than a game of chance as it involves a substantial degree of skill, which differentiated it from gambling. This judgment has significant importance in the gaming industry, as this judgment clearly differentiates between games of skill and games of chance.

Key Judgments on Dream11: Game of Skill or Chance?

Dream 11 is a fantasy sports platform. Dream 11 has over 200 million registered users, and it is the first Indian fantasy sports company that has achieved unicorn status in April 2019 and a total valuation of more than $8 billion. This game also became popular due to the case with the union territory of Chandigarh, known as Varun Gumber vs. Union Territory of Chandigarh. This case arose when an advocate, Varn Gumber, filed a petition against the online fantasy sport platform “Dream 11.” He challenged the legitimacy of the game and argued that the Dream 11 game includes illegal gambling under the Public Gambling Act, 1867, as it involves betting. Key issues of this case include debate on the legality of the game and its categorization on the basis of skill and chance. The court findings were that the Punjab and Haryana High Court ruled that Dream 11 is a game of skill rather than a game of chance. The High Court noted that the probability of success in dream 11 requires substantial knowledge, skill, performance, and match conditions. The court stated that the outcome is significantly based on the player's skill, thus the game is exempt from the provisions of the Public Gambling Act, 1867.

Key Laws Governing Online Gaming in India

There are many acts and regulations that govern online gaming in India. These acts and policies are shaped by various state regulations and constitutional provisions. Some of the key laws that govern the online gaming and industries in India are as follows:

Public Gambling Act, 1867: The Public Gambling Act, 1867, is the first legislation that governs the gambling activities in India. This act was enacted during British rule. This act aims at stopping public gambling and keeping an eye on common gaming houses. This act defines “common gaming houses” as a place that is used for profit gains through gambling activities. There were many penalties under this act. Owning and operating a gaming house is punishable, and it will be fined up to 200 rupees or imprisonment up to 3 months. It also includes a 100-rs fine and imprisonment up to 1 month if an individual is caught visiting a gaming house. This act gives the authority to police to enter and search suspected gaming houses. This act does not apply to the games that are categorized under “game of skill." This exemption by the government is significant as it allows games like rummy and fantasy sports to operate legally. After independence, gambling and gaming come under the state list (List II) of the seventh schedule of the constitution; now the state has the legitimate power to legislate gambling. In some states, public gambling acts still persist, and some states have enacted their own gambling and gaming laws.

The Information Technology Act, 2000

The Information Technology Act, 2000 is one of the primary laws in India that governs electronic commerce, electronic data interchange, electronic funds transfer, and addresses the issue related to cybersecurity and data protection, which is one of the most important pillars for online gaming and industries. There are a few key provisions of this act that have relevance to online gaming. First is data protection; online gaming platforms collect and store personal and sensitive data of users, like financial information, location of the user and mobile number, email ID, and access to a microphone and camera. In short, online games take the whole charge of the mobile or PC information; thus, this IT act makes sure that this data is protected and it is made constraint to the user only; this act maintains the privacy of the critical information shared by the user. Second is cybersecurity; this act criminalizes various cybercrimes like hacking, phishing, and spreading malware and inappropriate information. This is crucial for maintaining security in the games and gaming platforms, and it also protects users from cyber threats. These two key features of this act play a significant role in maintaining protection and cybersecurity in games and gaming platforms across India.

Digital Personal Data Protection Act, 2023 (DPDP Act)

The Digital Personal Data Protection Act, 2023 (DPDP Act) is one of the landmark legislations in India that focuses on protecting the personal data of users. This act has a significant relevance in online gaming platforms that collect and process the information of users. There are a few key aspects of this act that have a significant role in making this act successful. First is user data protection. Online gaming platforms include a large chunk of information and users’ personal data, such as name, contact details, financial details, etc. The DPDP Act ensures that a user's data is processed in a transparent and secure manner with the consent of the user. Second are penalties for breaches. If an individual or an organization is not meeting the rules and standards of the act, it will result in significant penalties, which will be further ranging from 10,000 rupees for individuals to 250 crores for organizations. This penalty standard will automatically trigger gaming platforms to set robust data protection and security measures for users.

State Legislation

Before independence, gaming and gambling were under the Public Gambling Act, 1867, but after 1947, most of the states issued their own gambling laws based on the Central Public Gambling Act. Some examples include:

Kerala Gambling Act, 1960
Goa, Daman, and Diu Public Gambling Act, 1976
Sikkim Regulation of Gambling (Amendment) Act, 2005

Most of the states have prohibited gambling and betting with an exception for games of skill like rummy and horse racing, but still, there are some states that have legalized some form of gambling, like Goa and Sikkim. Goa has legalized casinos in five-star hotels and offshore vessels, whereas Sikkim has legalized casinos, online gambling, and sports betting also. Sikkim passed the Sikkim Online Gaming (Regulation) Act in 2008. This act primarily legalized poker and casino games, but later on in 2009 it legalized online sports betting as well. Every state has their own point of view on gambling and gaming. Some states have acted in a traditional manner by strictly prohibiting gambling, but on the other hand, some states like Sikkim and Goa have adopted a liberal approach by legalizing certain gambling activities.

Conclusion The online gaming industry is growing at a faster pace in India and globally than before. Internet connectivity has acted as a catalyst in its growth. Gaming as a whole has a widest history, and its evolution over the years is interesting. We discussed all in and out, major and minor differences between gaming and gambling, and their legality over different regions in India. We looked upon many landmark cases that revolve around online gaming and gambling. The most important thing that we discussed in the blog was the difference between games of skill and games of chance. We looked upon many policies and acts that play an important role in the online gaming industry. We also noted that after independence, the legal situation of online gaming laws also changed, as now every state has its own online gaming and gambling acts and policies. In my opinion, the central government of India should take the charge in regulating online gaming instead of the state, as the laws and acts enacted by the central government will be more credible. As we step into the future, the technology and the law will still keep changing the industry. Balancing entertainment with proper self-regulation is the biggest hurdle, which will see the gaming industry reach its most effective state where people can safely play video games and not worry about data protection and be happy in a gaming-friendly environment if they work on it all together.