Online Gaming for Stakes: A Constitutional and Public Policy Perspective

By Sandeep Suresh 

Sandeep Suresh is a fifth-year law student at the National Law University in Jodhpur, India.

Globalization cannot only be seen through the lens of commercial trade between the nations and corporations. The Internet has created a scenario of online globalization of which online gaming occupies a significant part. India has also been lately witnessing the waves of online gaming among the youth who play games like Rummy, Poker, and Bridge. The significant legal question accompanying such this occurrence was whether games like Rummy or Poker played online amount to gambling. This issue has been to the the doorsteps of Indian constitutional courts several times. There are mainly two aspects of this issue that will be discussed in the coming paragraphs.

Firstly, the pertinent question is whether such games are mere games of chance or whether they involve substantial skill. On that point, the Indian law is considerably clear. Primarily, the Public Gambling Act, 1867 and corresponding gambling laws enacted by the individual states which regulate gambling exempt games that involve skill from the ambit of gambling. Based on the concept of ‘involvement of skill’ as dictated by the legislation, the Supreme Court of India (SCI) held in State of Bombay v. R. M. D. Chamarbaugwala (1957 SCR 874) that competitions where success depends predominantly on skill than luck, cannot be categorized as gambling. Further, this position was affirmed with respect to the game of Rummy in State of Andhra Pradesh v. K. Satyanarayana (1967 AIR 825) (Satyanarayana). The SCI had categorically held that Rummy is not a game of sheer chance, but involved predominant quotient of skill as well. The court held that Rummy requires a certain amount of skill because the fall of the cards has to be memorized and considerable skill is required in holding and discarding cards. The latest SCI decision confirming this position of law came in 1996. In Dr. K.R. Lakshmanan v. State of Tamil Nadu (1996 AIR 1153), the apex court ruled that even though the probability of luck cannot be wholly removed, games like Rummy “is one in which success depends principally upon the superior knowledge, training, attention, experience and adroitness of the player”.

Apart from the above three SCI decisions, there have been a few significant decisions at the state court level as well in this line of cases. Firstly, in Indian Poker Association v. The State of Karnataka (Writ Petition No. 39167/2013), the Karnataka High Court held that a game of poker is a game of skill and does not require license for it to be played privately in a recreational club. Lately in January 2014, the same High Court in Kirana S v. State of Karnataka (Criminal Petition No. 7648/2013) (Kirana) categorically reaffirmed that Rummy satisfies the ‘predominant skill’ test evolved by the previous judgments.

In other jurisdictions also, the position of law is identical to a great extent. For example, in the United States itself, in a significant Eastern District Court of New York judgment in US v. Lawrence Dicristina , the court stressed on expert opinions and scientific reports to hold that poker is a game of skill and is not illegal gambling. Even though the United States 2nd Circuit Court of Appeals overturned the decision of the District Court on various grounds, the District Court’s finding that Poker is a game of skill was upheld and not disturbed. In Europe as well, games like poker and rummy have been held to be legally valid and formally perceived as games of skill.

Therefore, in light of the above-mentioned case laws, there is no disagreement on the point that rummy and poker are games based on a substantial degree of skill. However, there are some grave concerns regarding the second aspect of this issue, such asthe implications of these games of skill being played for high stakes and money considerations.

At this point, it is necessary to take a look back on the Satyanarayana case. In the operating part of the judgment, after holding that rummy is a game of skill, the court concluded that if there is enough evidence that such games are played for stakes or profits, the criminal liability attached to gambling may be attracted. However, in 2002, the Andhra Pradesh High Court rendered the judgment in Krishna Kumar v. State of Andhra Pradesh (2002 (5) ALT 806) without giving heed to this ratio of Satyanarayana case and held that it is legal even if high stakes are involved in rummy. The fact that the owners of the rummy clubs were making profits and the rate of profit made from those games were considered by the court to be irrelevant. Similar was the conclusion in the Kirana case where the court held that collection of commission from the members of a club for playing Rummy does not make it gambling and hence, not an offense.

However, in 2012, the Madras High Court took note of the operating portion in the Satyanarayana judgment. In Director General of Police, State of Tamil Nadu v. Mahalakshmi Cultural Association (Writ Appeal No. 2287/2011), the High Court held that even games of skill like rummy played for stakes would amount to gambling and be a punishable offense. The court justified its decision by stating various ill effects of games played with stakes such as excessive spending of hard earned money by common men and consequential bankruptcy of low income persons, which will eventually disrupt peace in the personal lives of many. The court correctly recognized that the gambling laws in India exempt games of skill from the category of gambling. However, the court interpreted that such exemptions can only be given in cases where the games are played without money or high stakes. The rummy companies aggrieved by this decision have appealed against this High Court decision before the SCI. The Division Bench of the SCI consisting of Justices Ibrahim Kalifulla and Shiva Kirti Singh is currently hearing the matter. [1]

Therefore, in essence, it can be concluded that even though the Indian courts have recognized rummy and other similar games as games predominated by skill, there is still a considerable concern regarding the legalization of online games played for high stakes. In fact, such a reservation shown by the courts may be necessary because such extra-commercial activities can erode certain constitutional and public policy principles that contain the essence of public interest.

When we talk about the facet of public interest in this context, the statement by Dr. Howard J. Shaffer of the Harvard Medical School is critical. According to Dr. Shaffer, there are currently “more children experiencing adverse symptoms from gambling than from drugs.” [2]

This statement points towards the ill effects of gambling and games played with stakes on the most one of the important sections of the population. Legalizing something creates a corollary inference that it is morally right as well. This assumption is especially present in the minds of young children. Therefore, while deciding the appeal, even if the SCI allows rummy companies to operate freely without any limitations on playing for money and other such stakes, the lawmakers must keep in mind the accessibility of such platforms to minors and accordingly regulate the gaming industry in India. Dr. Howard’s statement is extremely vital for India because the majority of the population in India is between the age group of 10 - 25.

In countries like the USA and India, which have strong democratic Constitutions that principally prefer public good to individual good, the governments may deal with such apprehensive threats by regulating such activities extensively, but reasonably, to protect public health, safety and welfare from a public policy perspective. [3] Even though playing any game for stakes are generally legal in most parts of the world, they are considered a threat to moral and economic order of society.[1] Therefore, even without regarding the decision of the SCI in the ongoing appeal, it would only be ideal in light of public interest that the lawmakers attempt to regulate the gaming industry in India to prevent the substantial harmful side of online and offline gaming for stakes.

Taking cue from the above paragraph, the actual authority of the Constitution over such gaming activities must be analysed. Can the Constitution of India that predominantly is meant to uphold the country’s social welfare have any effect on the gaming industry?

It is noteworthy that during the preliminary hearing of the ongoing Appeal, Dr. Abhishek Manu Singhvi, who is appearing for the online rummy companies, argued before the SCI that in the context of games of skill, the amount of stakes or commission collected is immaterial. This argument may not stand the force of basic constitutional law principles which govern all the other laws and policies. As previously mentioned, the Indian Constitution is balanced sufficiently to harmoniously construe individual rights and public interest.

Under the Indian Constitution, there is no specific bar on conducting games of skill for stakes or for that matter, gambling.  However, Article 19 (6) of the Constitution gives power to the State to make laws that put reasonable restrictions on the fundamental right of Indian citizens to practice any profession or business. The same provision explicitly mentions ‘interests of the general public’ as a ground to make such restrictions. It is not denied that citizens have the constitutional right to establish gaming houses to conduct games of skill like Rummy or Poker. However, the license to play such games for extra money and higher stakes may not find a place in the Constitution.

On that point, the judgment in M.J. Sivani v. State of Karnataka (1995 6 SCC 289) may prove significant. According to the SCI, any law that strikes proper balance between social control and the right of the individual can be formulated under Article 19 (6). It was specifically stated that no one has the inherent right to carry on a business that is injurious to the general public interest. As stated in section 18 of the decision, “Trade or business attended with danger to the community may be totally prohibited or be permitted subject to such conditions or restrictions as would prevent the evils to the utmost”.

Hence, it would not be constitutionally impermissible to place reasonable restrictions on the conduct of games like rummy or poker so as to reduce the ill effects that arise when extra money or stakes are attached to such activities. In that light, it may not be constitutionally correct to accept the argument of Dr. Singhvi which would thereby allow the gaming industry to conduct activities that can clearly have adverse impacts on major sections of our population as indicated in the above paragraphs. In the ongoing Appeal, the SCI must conduct a comprehensive constitutional and moral scrutiny of legalization of such games of skill, which when played for stakes, take the colours and shades of illegal gambling. Moreover, the SCI has to bear in mind the caveat laid down by the apex court itself in Kishan Chander v. State Of Madhya Pradesh (AIR 1965 SC 307) that, “Considering the fact that gambling is an evil and it is rampant... the law to root out gambling cannot but be in the public interest.”

To conclude, it is only hoped that the SCI considers aspects of social welfare, and public morality that the Indian society holds in its breath before deciding whether to allow such games without any restrictions whatsoever. It would be ideal if the SCI decides the appeal in a comprehensive manner by giving clarity on all the conflicting judgments on this point of law that have been rendered till date.


[1] Mahalakshmi Cultural Association v. State of Tamil Nadu, Special Leave Petition No. 15371/2012
[2] Horn, Bernard P. "Is There A Cure For America's Gambling Addiction?" PBS.org. May 1, 1997. Accessed November 6, 2014.
[3] Kathryn Keneally, State Regulation of Casino Gambling: Constitutional Limitations and Federal Labor Law Pre-emption, Fordham Law Review, Vol.49, No.6, 1981

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