All India Gaming Federation vs The State Of Tamil Nadu

IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED: 09.11.2023

CORAM :

THE HON'BLE MR.SANJAY V.GANGAPURWALA, CHIEF JUSTICE AND THE HON'BLE MR.JUSTICE P.D.AUDIKESAVALU

W.P.Nos.13203, 13593, 13720, 13722 and 14704 of 2023

W.P.No.13203 of 2023:

All India Gaming Federation A Society Registered under the Societies Registration Act, 1860, Rep by its General Secretary and Authorised Signatory, Sunil Krishnamurthy having its registered office at Tiffany, 1st Floor, Hirandandani Road, Hiranandani Estate, Ghodbunder Road, Patlipada, Thane(West), Maharashtra -400607. .. Petitioner

Vs

1. The State of Tamil Nadu Through Chief Secretary, Secretariat, Fort St. George, Chennai - 600 009.

2. The State of Tamil Nadu, Department of Home, Through Principal Secretary, Secretariat, Fort St. George, Chennai - 600009.

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3. The State of Tamil Nadu, Department of Law, Through Principal Secretary, Secretariat, Fort St. George, Chennai - 600009.

4. The Director General of Police, State of Tamil Nadu, Office of the Director General, Kamarajar Salai, Chennai – 600004. .. Respondents

W.P.No.13593 of 2023:

1. Gameskraft Technologies Private Limited 1st and 2nd floor, Ibis Hotel, 26/1, Hosur Road, Bommanahalli, Bangalore - 560 068, Rep. by its Director, Vikas Taneja.

2. Vikas Taneja .. Petitioners Vs

State of Tamil Nadu Through Secretary to Government Law Department, Secretariat, Chennai-09. .. Respondent

W.P.No.13720 of 2023:

1. Play Games 24x7 Private Limited A company incorporated under the Companies Act, 1956 Rep by its Authorised Representative, Sameer Chugh, Having its Registered Office at 5th Floor, Central Wing (B), Tower - 4, Nesco IT Park, Nesco Centre, Western Express Highway, Goregaon (E), Mumbai - 400 063.

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2. Bhavin Pandya S/o. ShriKaushikPandya Through his Power of Attorney Holder, Sameer Chugh, Having its Registered Office at 5th Floor, Central Wing (B), Tower 4, Nesco IT Park, Nesco Centre, Western Express Highway, Goregaon (E), Mumbai 400 063 .. Petitioners Vs

1. The State of Tamil Nadu Through Chief Secretary Secretariat Fort St. George, Chennai - 600 001.

2. The State of Tamil Nadu Department of Home Through Principal Secretary Secretariat Fort St. George, Chennai -600 001

3. The State of Tamil Nadu Department of Law Through Principal Secretary Secretariat Fort St. George, Chennai -600 001.

4. The Director General of Police State of Tamil Nadu Office of the Director General, Kamarajar Salai, Chennai - 600 004

5. The Union of India Through Ministry of Electronics and Information Technology Electronics Niketan, 6, CGO Complex, Lodhi Road, New Delhi- 110003. .. Respondents

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W.P.No.13722 of 2023:

1. Head Digital Works Private Limited Regd. Office at 1st Floor, Express Building, 9-10, Bahadur Shah Zafar Marg, New Delhi – 110002.

Corp Off. At 8th Floor, Atria Block, The-V, Plot No.17, Software Units Layout, Madhapur, Hyderabad, Telangana 500 081. Through its Authorized Representative, Aayush Raj

2. Deepak Gullapalli, S/o. Shri Ram Prasad Through his Power of Attorney Holder, Aayush Raj Head Digital Works Private Limited 8th Floor, Atria Block, The-V, Plot No. 17 Software Units Layout, Madhapur, Hyderabad, Telangana - 500 081. .. Petitioners

Vs

1. The State of TamilNadu Through Chief Secretary Secretariat, Fort St. George, Chennai - 600 001

2. The State of Tamil Nadu Department of Home Through Principal Secretary Secretariat Fort St. George, Chennai - 600 001.

3. The State of Tamil Nadu Department of Law Through Principal Secretary Secretariat Fort St. George, Chennai - 600 001.

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4. The Director General of Police State of Tamil Nadu Office of the Director General, Kamarajar Salai, Chennai - 600 004.

5. The Union of India Through Ministry of Electronics and Information Technology Electronics Niketan, 6, CGO Complex, Lodhi Road, New Delhi- 110003. .. Respondents

W.P.No.14704 of 2023:

1. Junglee Games India private Limited, A Company incorporated under the Companies Act, 1956, having its registered office at, 2nd Floor, 55, Lane-2, Westend Marg, New Delhi - 110030. Corporate office at, 5th Floor, Tower A, Building 10, DLF City, DLF phase 2, Sector 24, Gurugram, Haryana - 122002.

2. Ankush Gera, S/o. Shri Subhash Chander Gera, Through his Power of Attorney Holder, Kapil Chaudhary, 2nd Floor, 55, Lane -2, Westend Marg, New Delhi – 110030. .. Petitioners

Vs

1. The State of Tamil Nadu Through Chief Secretary Secretariat Fort St. George, Chennai - 600 001.

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2. The State of Tamil Nadu Department of Home, Through Principal Secretary Secretariat Fort St. George, Chennai - 600 001.

3. The State of Tamil Nadu Department of Law, Through Principal Secretary Secretariat Fort St. George, Chennai - 600 001.

4. The Director General of Police, State of Tamil Nadu Office of the Director General, Kamarajar Salai, Chennai - 600 004.

5. The Union of India, Through Ministry of Electronics and Information Technology, Electronics Niketan, 66, CGO Complex, Lodhi Road, New Delhi - 110003. .. Respondents

PRAYER IN W.P.No.13203 of 2023: Petition under Article 226 of the Constitution of India seeking a writ of declaration to declare the Impugned Act being Tamil Nadu prohibition of Online Gambling and Regulation of Online Games Act, 2022 enacted by the first respondent as unconstitutional as the same is lacking legislative competence and/or being in violation of Constitution of India including the fundamental rights enshrined under Articles 14, 19 and 21.

PRAYER IN W.P.No.13593 of 2023: Petition under Article 226 of the Constitution of India seeking a writ of declaration declaring that the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022 (Act No 9 of 2023) is ultra vires the Constitution of India.

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PRAYER IN W.P.No.13720 of 2023: Petition under Article 226 of the Constitution of India seeking a writ of declaration declaring Sections 2(i) read with Sections 7, 8, 9, 10, 23 and the Schedule contained in Act No. 9 of 2023 dated April 7, 2023 as arbitrary, void, illegal, and unconstitutional, in so far as the same applies to Rummy and Poker when played online with money or other stakes.

PRAYER IN W.P.No.13722 of 2023: Petition under Article 226 of the Constitution of India seeking a writ of declaration declaring Sections 2(i) read with Section 7, 8, 9, 10, 23 and the Schedule contain in Act No. 9 of 2023 dated April 07, 2023 as arbitrary, void, illegal, and unconstitutional, in so far as the same applies to Rummy and Poker when played online with money or other stakes.

PRAYER IN W.P.No.14704 of 2023: Petition under Article 226 of the Constitution of India seeking a writ of declaration declaring Sections 2(i) read with sections 7, 8, 9, 10, 23 and the schedule contained in Act No. 9 of 2023 dated April 7, 2023, Tamil Nadu prohibition of online Gambling and Regulation of online Games Act, 2022 as arbitrary, void, illegal, and unconstitutional, in so far as the same applies to rummy and poker when played online with money or other stakes.

For the Petitioner in : Mr.Sajan Poovaiya, Senior Counsel; W.P.No.13203 of 2023 Mr.V.Ragavachari, Senior Counsel; Ms.Deepika Mulari, Mr.Pradeep Nayak, Mr.Samkeeth Vittal, Mr.Pratiks Bhadri Narayan S, Ms.Shreya Narayanan For the Petitioners in : Dr.Abhishek Manu Singhvi, Senior Counsel W.P.No.13593 of 2023 assisted by Mr.Suhaan Mukherji Mr.Harsh Hiroo Gursahani Mr.Nikhil Parikshith Mr.Abhishek Manchanda Mr.Sayandeep Pahari Mr.Arun Karthik Mohan Ms.Ashwini Vaidialingam Mr.L.Nidhiram Sharma

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For the Petitioners in : Mr.C.Manishankar, Senior Counsel W.P.No.13720 of 2023 for Mr.R.S.Diwaagar For the Petitioners in : Mr.Satish Parasaran, Senior Counsel W.P.No.13722 of 2023 for Mr.R.S.Diwaagar For the Petitioners in : Mr.Mukul Rohatgi, Senior Counsel W.P.No.14704 of 2023 for Mr.R.S.Diwagar Mr.Akhil Anand Mr.Himanshu Vij Mr.Bharadwaj Ramasubramanian Mr.Durga Bose Gandham

For the 1st Respondent : Mr.Kapil Sibal, Senior Counsel in W.P.Nos.13203, assisted by Ms.Aparajita Jamwal 13720, 13722 & 14704 of 2023 For the 2nd : Mr.R.Shunmugasundaram Respondent in Advocate General W.P.Nos.13203, assisted by Mr.P.Muthukumar 13720, 13722 & State Government Pleader, 14704 of 2023 and for Ms.A.G.Shakeena and the sole Respondent in Mr.B.Thiyagarajan W.P.No.13593 of 2023 For the 3rd Respondent : Mr.Amit Anand Tiwari in W.P.Nos.13203, Additional Advocate General, 13720, 13722 & Supreme Court 14704 of 2023 assisted by Ms.Devyani Gupta and Mr.Amartya A.Sharan

For the 4th Respondent : Mr.P.Muthukumar in W.P.Nos.13203, State Government Pleader 13720, 13722 & assisted by Mrs.R.Anitha 14704 of 2023 Special Government Pleader; Mr.K.M.D.Muhilan Additional Government Pleader and Mr.K.Karthik Jagannath Government Advocate

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COMMON ORDER

(Order of the Court is made by the Hon'ble Chief Justice)

All these writ petitions involve common question of law and

are based on similar set of facts. To avoid rigmarole, they are

decided by this common judgment.

2. The petitioners assail the constitutional validity of the Tamil

Nadu Prohibition of Online Gambling and Regulation of Online

Games Act, 2022 [for brevity, hereinafter referred to as the “Act of

2022” or “the impugned Act”].

3. The petitioner in W.P.No.13203 of 2023 is a Society

registered under the Societies Registration Act, 1860. It claims to

have been established with the objective of protecting consumers of

online skill gaming and representing the interests of various online

skill gaming Companies, including online skill gaming Companies

offering skill-based games/platforms at various forums. The

Members of the petitioner Society offer games such as poker,

chess, rummy, fantasy sports, casual games and e-sports.

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4. The petitioner in W.P.No.14704 of 2023 claims to be a

Company engaged in the business of developing and offering online

games of skill and other free games in India and abroad. The

petitioner is currently engaged only in the business of designing,

developing software relating to games of skill, deploying and

maintaining an online gaming website and mobile applications based

on games of skill for the Indian market.

5. The petitioner in W.P.No.13593 of 2023 is a Company

incorporated under the Companies Act, 2013. It is in the business of

operating online gaming platforms offering the game of rummy to

its users across India, through its website/mobile based applications

called “Rummyculture”, “Gamezy” and “Playship”, which comprises

of money based and free variants of the game rummy.

6. The first petitioner in W.P.No.13722 of 2023 claims to be a

Company registered under the Companies Act, 2013 and engaged

in the business of developing and offering online games of skill in

India. The petitioner contends that it is involved in the business of

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designing, developing software related to games of skill, deploying

and maintaining an online gaming website and mobile applications

based on games of skill for the Indian market via the internet.

7. The first petitioner Company in W.P.No.13720 of 2023 is a

private limited Company providing online web and mobile based

platforms and offering competitive games of rummy in three

popular formats of tournaments, points rummy and pool rummy.

8.1. Dr.Abhishek Manu Singhvi, learned Senior Counsel for the

petitioners in W.P.No.13593 of 2023; Mr.Mukul Rohatgi, learned

Senior Counsel for the petitioners in W.P.No.14704 of 2023;

Mr.Sajan Poovaiya and Mr.V.Ragavachari, learned Senior Counsel

for the petitioner in W.P.No.13203 of 2023; Mr.C.Manishankar,

learned Senior Counsel for the petitioners in W.P.No.13720 of 2023;

Mr.Satish Parasaran, learned Senior Counsel for the petitioners in

W.P.No.13722 of 2023, put forth the case of the petitioners. The

contour of their submissions can be summed up as under:

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8.2. The impugned Act is solely based on the report submitted by

the Committee under the Chairmanship of Justice K.Chandru (Retd.).

The said report has arbitrarily categorised games of skill, i.e., online

rummy and online poker, to be games of chance. The said report is

directly in the teeth of the law settled by the Division Bench of this

Court in the case of Junglee Games India Private Limited v. State of

Tamil Nadu1, and that of the Apex Court in a catena of judgments. The

report fails to substantiate its own findings or the alleged impact of

online games. The said report was not made available on the public

domain, however, the same was filed by the State of Andhra Pradesh

before the Andhra Pradesh High Court in W.P.No.19659 of 2020. The

said Committee did not have a single expert on online games or a

representative from the industry as a Member of the Committee.

8.3. The terms of reference of the said Committee show that the

whole intent was predetermined, that is to ban online games of rummy

and poker, despite being a legally permissible business activity and

protected under Article 19(1)(g) of the Constitution of India. A perusal

of the title of the report, i.e., “Report of the Committee to recommend

1 2021 SCC Online Mad 2762

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the desirability of a legislation to ban online card games including

Rummy” shows that the Committee was formed to submit a report,

which is pre-decided, on prohibiting online rummy by classifying the

same as gambling/game of chance.

8.4. The Committee met only on two occasions, i.e., on

13.06.2022 and on 16.06.2022, to discuss the notes of the Committee

Members, which itself seems to have been put together within a short

period of time. The said report arbitrarily, incorrectly and unjustifiably

equated skill games, when played online for money, to gambling and

betting. The said report refers to the findings of the law laid down by

the Apex Court and followed by the Division Bench of this Court, as

well as the Karnataka High Court and Kerala High Court. The report

summarises the findings of the High Court judgments correctly, that is,

“Skill gaming cannot be banned but may be regulated. Any such ban

can be challenged on the grounds of violation of Constitutional Rights”.

The report bifurcates playing online rummy into two activities,

“playing” and “betting”. The same is without any logical reasoning and

is completely contrary to the rulings of the Apex Court, this Court and

the other High Courts.

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8.5. The Committee has not appreciated the functioning of online

rummy, especially the limited role of the Random Number Generator

(RNG) Software. The report further incorrectly alleges that the game

can be manipulated by the use of bots (short for Robots), however,

failed to consider that no bots are employed. The report erroneously

distinguishes and concludes that there is a vast difference between

rummy and poker when played physically and online. The said report

further erroneously suggests that online gaming portals utilize digital

currency. However, it has been clarified that the petitioners do not

accept any digital currency on its platform. Money is accepted only

through legally recognized banking channels like net banking, debit

cards, wallets, UPIs etc.

8.6. The said report refers to the 246 th Law Commission Report,

but conveniently ignores Section 3 of the Law Commission Report,

wherein it has been held that the games of skill are not gambling

activity. The report cannot be placed on a higher pedestal. It does not

have appropriate value. The said report suggests that suicides are

committed by students, but no empirical data exists in that regard.

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Suicides are unfortunate, however, it is in no way substantiated that

the same are because of the online games.

8.7. Section 2(i) of the Act of 2022 defines “online gambling” to

include wagering or betting. Section 7(1) of the Act of 2022 prohibits

online gambling. Section 10(5)(a) and Section 14(1)(a) of the Act of

2022 restrain local and non-local online games providers from

providing online gambling services. These provisions, which form the

bedrock of the Act of 2022, are contrary to the dictum of the Supreme

Court and ultra vires the competence of the respondent State.

8.8. The Government of India, vide notification dated

23.12.2022, has amended the allocation of Business Rules and

designated the Ministry of Electronics and Information Technology as

the nodal Ministry for regulation of online games. Entry 31 read with

Entry 14, List I (Union List) of the VII Schedule of the Constitution of

India deals with posts, telegraphs, telephones, wireless, broadcasting

and other like forms of communication. The same is a Union Subject

and the State of Tamil Nadu has no power to legislate with regard to

the same.

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8.9. The Ministry of Electronics and Information Technology has

issued the Information Technology (Intermediary Guidelines and

Digital Media Ethics Code) Amendment Rules, 2023 [for brevity, herein

after referred to as “the I.T Amendment Rules”]. The I.T Amendment

Rules recognises the term “online gaming intermediary” and defines it

as an intermediary, which enables the users of its computer resource

to give access to online games. The I.T. Amendment Rules have placed

the online gaming intermediary at par with the “significant social media

intermediary”. The online gaming intermediary, under the I.T

Amendment Rules, has stringent compliance requirements.

8.10. The Ministry of Electronics and Information Technology has

filed a memo stating that three applications have been received for

formation of a Self Regulatory Body. The petitioners, along with the

other online gaming Companies, have already incorporated a Company

under Section 8 of the Companies Act, 2013 for the purpose of

formation of a Self Regulatory Body.

8.11. The State does not possess the legislative competence to

enact the impugned Act. Legislature under Entry 34, List II (State List)

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of Schedule VII of the Constitution of India can legislate on “betting

and gambling”. This Entry includes only games of chance and not

games of skill. Any game, wherein there is predominance of skill over

chance, would fall outside the ambit of “betting and gambling” and

cannot be legislated upon by the respondent State.

8.12. The competitions which involve substantial skill are not

gambling activities. Reliance is placed on a judgment of the Apex Court

in the case of K.R. Lakshmanan v. State of Tamil Nadu2, wherein after

analysing the earlier Constitutional Bench judgments in The State of

Bombay v. R.M.D. Chamarbaugwala3, and R.M.D. Chamarbaugwala v.

Union of India4, it was observed that gaming means the act or practice

of gambling on a game of chance, where chance is the controlling

factor. Reliance is also placed on the judgment of the Karnataka High

Court in the case of All India Gaming Federation v. State of

Karnataka5.

2 (1996) 2 SCC 226

3 AIR 1957 SC 699

4 AIR 1957 SC 628

5 2022 SCC OnLine Kar 435

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8.13. Reliance by the State on the judgment of the Apex Court in

the case of M.J.Sivani & Ors. vs. State of Karnataka & Ors.6, is

misplaced. The said judgment is with regard to rigging of video game

machine at video game parlour, which is very distinct from the online

games offered by the petitioners. Further, it is stated by the State that

this Court has not dealt with the judgment in M.J.Sivani case while

delivering the judgment in the case of Junglee Games (supra). However, this Court has specifically referred to the case of M.J.Sivani

(supra) in Junglee Games (supra).

8.14. Reliance by the State on the last four lines of the judgment

of the Apex Court in the case of State of Andhra Pradesh vs.

K.Satyanarayana and Ors7, is misplaced. The judgment in

Satyanarayana's case is clarified by a Three Judge Bench of the Apex

Court in the case of K.R.Lakshmanan (supra) that the clubs have the

right to make profits in conducting a game of skill. A Larger Bench of

the Apex Court has clarified the position taken in the last four lines of

Satyanarayana's case.

6 (1995) 6 SCC 289

7 AIR 1968 SC 825

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8.15. The game of Poker is also a game of skill. The same is

observed by this Court in the case of Junglee Games (supra) and so

also in the judgments of the Karnataka High Court and of the Kerala

High Court. The 276th Law Commission of India report, titled “Legal

Framework: Gambling and Sports Betting including Cricket in India” at

paragraphs 3.34 and 3.35 has recognised Poker as a game of skill,

since skilful players always win over less skilled or novice players.

Even in the case of U.S.A. vs. Lawrence DiCristina8, the United States

District Court for the Eastern District of New York, on facts, accepted

that Poker is a game of skill. Though the finding was reversed in an

appeal, the finding that Poker is a game of skill was left undisturbed,

as the Appellate Court noticed that the question of whether “skill” or

“chance” predominates in Poker is inapposite to the appeal. The

Supreme Court of Israel in the case of Amit Amishvilli Rafi vs

Assessing Officer9, has also held that Poker is a game of skill.

8 2012 USA LEXIS 118037

9 Civil Appeal No.476 of 2017

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8.16. The judgment of the learned Single Judge of the Gujarat

High Court in the case of Dominance Games Pvt. Ltd. Vs State of

Gujarat10 is erroneous, as the conclusion is based on the fact that the

initial distribution of cards in the game is not within the control of the

player. The Gujarat High Court has failed to consider that other card

games, including rummy and bridge, also include initial distribution of

cards and are held to be games of skill by the Apex Court in the case

of K.Satyanarayana (supra). The Gujarat High Court relied upon the

judgment in the case of R vs. Kelly from the Courts of Appeal in the

United Kingdom and the same is of no avail, as it was based on the law

fully applicable to the United Kingdom and they do not follow the

predominance test. More over, whether online poker is permissible or

not falls within the jurisdiction of the Self Regulatory Body, notified by

the Ministry of Electronics and Information Technology.

8.17. It is the further submission that games of skill do not cease

to be one even when played with stakes. The Kerala High Court in the

case of Head Digital Networks Pvt. Ltd. vs. State of Kerala11 has held

10 2017 SCC OnLine Guj 1838

11 2021 SCC OnLine Ker 3592

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that playing games of skill for stakes does not amount to gambling.

There is no concept of an independent category of “betting” on games

of skill. All “betting”, sought to be got in the ambit of “betting and

gambling”, is betting on games of chance. Reliance is placed on the

judgment of the Apex Court in the case of Dr.K.R.Lakshmanan (supra)

and the judgment of this Court in the case of Junglee games (supra).

8.18. The word “betting” cannot be segregated from “gambling”

in order to create an alternate field of regulation by the respondent

State. The State can only legislate on betting pertaining to gambling,

inter alia, betting only on games of chance. Reliance is placed on a

judgment of the Division Bench of this Court in Junglee Games

(supra).

8.19. The words “betting and gambling” cannot be read as

“betting or gambling”. When the provision is clear and unambiguous,

the word “or” cannot be read as “and”, the word “and” cannot be read

as “or”.

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8.20. The games of online rummy and poker are no different

from playing physical rummy or poker, other than the fact that the

game is conducted and played virtually on a platform. The game per

se is the same rummy game or the same poker game as in physical

format. The State purports unreasonable classification and creates an

artificial distinction between online and offline rummy. The State has

failed to place any material or evidence on record to justify the

difference in playing rummy physically or in online mode and the said

classification is in utter violation of Article 14 of the Constitution of

India.

8.21. The State cannot raise its power to Entry 1 in the State

List, which relates to public order. Public order is synonymous with

public peace, safety and tranquillity. For public order to be disturbed,

there must in turn be public disorder. Contravention of law can be said

to affect public order, for that, it must affect the community or the

public at large. The State has not placed any material on record to

show any public order concerns arising out of online games of skill.

The game of skill is played indoors and is not a

demonstration/procession in public street, where public order could be

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disturbed. Reliance is placed on the judgment of the Apex Court in the

case of Ram Manohar Lohia vs. State of Bihar & Anr12. The Karnataka

High Court in the case of All India Gaming Federation (supra) has

observed that the State cannot exercise its powers to restrict games of

skill to Entry 1 in the State List.

8.22. Entry 6 in the State List provides for public health and

sanitation, hospitals and dispensaries. The same cannot be relied on by

the State. The impugned Act is no way relatable to this Entry. The

alleged deleterious effect of online gaming cannot be the basis of

holding that the State can legislate on it based on public health.

8.23. The impugned Act is against the Constitution of India. The

State has enacted the impugned Act to override the findings of this

Court in the case of Junglee Games (supra). The impugned Act creates

a charade, that is to suggest prohibition of gambling and to regulate

games of skill, but it actually bans games which are held to be games

of skill by various Courts, including this Court. The State cannot even

regulate online gaming of skill under the State List, as this sector is

12 (1966) 1 SCR 709

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already regulated by the Ministry of Electronics and Information

Technology, being the nodal Ministry for regulation of games on the

Indian internet. The impugned Act is not a validating Act. The

judgment of this Court in the case of Junglee Rummy (supra) is

binding on the State and no law under Entry 34 in the State List can be

enacted to prohibit games of skill.

8.24. The State's reliance on the screenshots of the petitioners

to suggest that the petitioners' incentives to the players is to gain

profits is incorrect. Every business runs legitimate promotions and

schemes to expand their business to ultimately make the business

profitable. Any activity protected under Article 19(1)(g) of the

Constitution of India is for the purpose of gaining profits and permitted

activity and earning profit out of it and paying applicable taxes in

compliance with law. If the State's argument is to be accepted, then all

business activities, making profits, ought to be prohibited. This

necessarily implies that if the petitioners were running at a loss, then

the State would have no objection to the business activities of the

petitioners. The petitioners do not profit from the winnings of the

players, but charge a predetermined service charge from the players

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playing the game.

8.25. The petitioners, being Companies, the writ petitions are

maintainable. In fact, the shareholders have been arrayed as parties to

the writ petitions. Reliance is placed on the judgments of the Apex

Court in the cases of R.C.Cooper vs. Union of India13, Bennett Coleman

& Co. vs Union of India14, and Western Coalfields Ltd. vs. Special Area

Development Authority, Korba15.

8.26. The petitioners herein offer platforms to play games of skill

(online rummy and poker) with real money to only those who are

above the age of eighteen years. The players, who register on the

platform and play real money games, are subjected to Know Your

Customer/Client (KYC) process.

8.27. A player's wallet is linked to a Bank account and at the end

of the game, the winner gets the entire winning amount in their Bank

accounts, minus the predetermined service charge/platform fee, which

13 (1970 1 SCC 248)

14 (1972) 2 SCC 788

15 [(1982) 1 SCC 125]

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is deducted by the petitioners from the total player's pot depending on

the game and the stake. In the event the player wants to close the

account, the amounts are sent back to the same source from where

the money was deposited by the player. Further, Goods and Services

Tax (GST) forms a part of the service fee and is paid by the

petitioners to the Government in compliance with the applicable law.

8.28. The petitioners do not employ bots or use Artificial

Intelligence (AI). The State has failed to substantiate their allegation

against the petitioners of employing bots or the alleged use of AI. The

same are bald allegations. The petitioners' platforms do not deploy AI

or bots for the game play. The petitioners have already placed on

record a certificate issued by an independent globally renowned I.T

Audit Agency (iTech Labs, Australia), certifying that there is no usage

of bots in the game play. The said agency has been accepted by

Governments of several Countries. The State of Tamil Nadu is at

liberty to assess the same by using or deputing an independent Agency

of repute of its choice. Online rummy or poker is played between two

or more human beings only.

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9. Mr.Kapil Sibal, learned Senior Counsel,

Mr.R.Shunmugasundaram, learned Advocate General of the State of

Tamil Nadu, Mr.Amit Anand Tiwari, learned Additional Advocate

General of Tamil Nadu (Supreme Court) and Mr.P.Muthukumar,

learned State Government Pleader canvassed their submissions on

behalf of the State of Tamil Nadu (respondents).

9.1. The Preamble of the Act of 2022 establishes the societal

concerns, which need to be addressed with reference to betting and

gambling and its impact on the family and its societal impact. The

Government of Tamil Nadu constituted a Committee, chaired by Justice

K.Chandru (retd.). The Committee comprised five Members. The

Committee incorporated experts from the fields of law, psychiatry and

technology to understand the legal and social implications of online

games. The allegations of bias as against the Committee are misguided

and bereft of merits. The terms of reference of the Committee were

wide and open, including the determination of whether online games

involve skill and to study the algorithm and its susceptibility of being

tweaked.

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9.2. The provisions of the impugned Act are traceable to the

matters enumerated in the Entries 1, 6 and 34 in the State List. The

impugned Act is also referrable to the subject of “Criminal Law” under

Entry 1, List III (Concurrent List) of the VII Schedule of the

Constitution of India.

9.3. Entry 34 in the State List relates to “betting and gambling”

and enables the State Legislature to make laws on “betting” and

“gambling”, or both. There is no legal impediment preventing the State

from making a Law on the subject of “betting” per se, including

“betting” on games of skill, pursuant to Entry 34 in the State List and

the enactment of a Law, regulating “betting” on games of skill, is not

contrary to any binding judicial decisions. The judgment of this Court

in Junglee Games (supra) is per incuriam to the extent that it holds

that betting in Entry 34 in the State List cannot be divorced from

gambling and treated as an additional field for the State to legislate

on, apart from the “betting” involved in gambling.

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9.4. The Apex Court has held that the Entries in the Lists in the

VII Schedule of the Constitution of India must be given wide

interpretation in furtherance of the presumption of constitutional

validity. Reliance is placed on the judgment of the Apex Court in the

case of Elel Hotels & Investments Ltd. vs. Union of India16. The

restrictive interpretation adopted by this Court in the case of Junglee

Games (supra) ignores this interpretive canon and is per incuriam.

9.5. No repugnancy has resulted due to the amendment of the

Intermediary Guidelines by the Ministry of Electronics and Information

Technology notification dated 06.04.2023. Rule 2(1)(qd) of the I.T

Amendment Rules defines “online real money game” as where a user

makes a deposit in cash or kind with the expectation of earning

winnings on that deposit. The said provision includes explanation,

which explains “winning” as any prize, in cash or kind, which is

distributed or intended to be distributed to a user of the online game

based on the performance of the user and in accordance with the Rules

of such online game. Therefore, “online real money games” are online

16 (1989) 3 SCC 698

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games where the earnings of the player are contingent on his

performance, that is skill, with no reference to any game of chance or

gambling. The I.T. Amendment Rules themselves provide that when

an online gaming intermediary hosts any online games which violate

the impugned Act, such conduct would be a breach of due diligence

under the I.T. Amendment Rules.

9.6. Further, Section 15 of the impugned Act takes into account

the issue of legislative competence with regard to internet

communication. The enforcement of the prohibition and regulation on

online gambling service providers is not abrogated by the State,

instead, the enforcement mechanism consists of a provision enabling

the Online Gaming Authority to make a recommendation to the State

Government, which in turn would merely request the Central

Government to exercise its powers under Section 69-A of the

Information Technology Act, 2000 in respect of offending gambling

service. In any event, under Article 246(3) of the Constitution of India,

the Tamil Nadu Legislature has exclusive competence to make laws on

the subjects mentioned in the State List. The matter of “betting and

gambling” is enumerated in Entry 34 in the State List, and as such, the

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State of Tamil Nadu has an exclusive jurisdiction in respect of the

same.

9.7. It is the Ministry of Electronics and Information Technology

notification, amending the Intermediary Guidelines, which is invalid for

lack of legislative competence. The definition of “online real money

game” in the Ministry of Electronics and Information Technology

notification takes into its fold all games, whether of skill or chance that

involve “betting”, which is in the area of the State's exclusive

legislative competence under Entry 34 in the State List. By adding Rule

4A after Rule 4 in the I.T Amendment Rules, the Central Government

has sought not only to usurp for itself, but also to outsource to a Non-

Governmental Body for the State's exclusive competence to legislate

on “betting and gambling” under Entry 34 in the State List.

9.8. The judgements relied on by the petitioners to contend that

the game of rummy is a game of skill date to an era where there was

no internet or it was in its infancy. The Apex Court, at that relevant

time, had not been in the position to apprehend the growth and scope

of online gaming and its ease of access to the public. The findings of

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the said judgments are de hors the ambit of online rummy and the

reliance thereof, as online rummy is a game of skill, is misplaced.

9.9. The discussion in K.R.Lakshmanan (supra) pertained to the

statutory interpretation of the expressions “gaming” and “mere skills”

in terms of the Madras City Police Act, 1888 and the Madras Gaming

Act, 1930. The challenge in the said case was to the amendment

effected to the Madras City Police Act, 1888 and the Madras Gaming

Act, 1930, wherein, the definition of “gaming” was amended by

removing the exception granted to Horse Racing, subject to certain

conditions stipulated therein. The Apex Court held Horse Racing to be

a game of skill and neither “gambling” nor “gaming”. However, Section

3, as it was read prior to the amendment, construed Horse Racing a

game of skill if (1) played on any date other than the date of running;

or (2) in any place outside the enclosures of authority controlling the

race. As such, the State, within its legislative competence, was

empowered to regulate game of skill in Horse Racing to determine

when it would amount to gambling and consequently, prohibiting it and

the same has been recognised by the Apex Court in the case of

Lakshmanan (supra).

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9.10. The observation of this Court in the case of Junglee Games

(supra) that “betting” on a game of skill is itself an activity, in which

success depends on the skill of the player, is not universally true. Even

if the game may be one of skill, the success of the person betting

would depend on how accurately the result of the game can be

guessed by someone who is not playing it. Even in the former case,

where the player and bettor are the same person, the player may lack

data about his opponents. Thus, he would be staking money on what

is, from his perspective, an uncertain event, hence, he would be

“betting”. The correctness of the judgment in the case of Junglee

Games (supra) is also under challenge before the Apex Court.

9.11. Online rummy cannot be described as a game of skill due

to various reasons, as its dealer (software) knows all the unopened

cards.

9.12. More over, the State's interest in reasonably restricting the

same is weightier in view of the following aspects:

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(a) online games are available at all times of the day to be played by an unlimited number of players from anywhere in the world;

(b) there is no social check of any sort on addictive behaviour of an individual and the game user is totally at the mercy of the game providers who would naturally be inclined to make him play more and more;

(c) the design elements are used to ensure that the online game user becomes psychologically dependent on the positive feeling generated upon winning even a few rounds of the game, even though they make a loss overall;

(d) most of the money staked by the online game users gets converted as profit of the online gaming firm; and

(e) money lending for supporting online gambling is a full-blown economic sector which fuels addiction to online gambling.

9.13. Reliance is placed on the judgment of the Apex Court in

the case of M.J.Sivani (supra). The Apex Court held that “gaming is to

play any game whether of skill or chance for money or money's

worth... No game can be a game of skill alone...It is not practicable to

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decide whether particular video game is a game of skill or a mixed skill

and chance.”

9.14. The judgment of the Karnataka High Court in Gameskraft

Technologies Pvt. Ltd. v. Directorate General of Goods, Services Tax

Intelligence (Headquarters) and Ors.17 has been stayed by the Apex

Court. In the said case, the Single Judge of the Karnataka High Court

has held that the game of skill, whether played with stakes or without

stakes is not gambling and that there is no difference between

offline/physical rummy and online rummy. Many of the developed

countries worldwide have prohibited online games and gambling

services. There is no authoritative pronouncement to hold that rummy

is a game of skill, much less of an online gaming. Incentives are

offered by the petitioners involved in the online gaming business in

high proportions.

9.15. The placement of the conjunction “and” between the

expressions “betting” and “gambling” in Entry 34 in the State List is

contrary to the approach directed by the Apex Court. The conjunction

17 (2023) 98 GST 93 (Karnataka)

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“and” appears several times in the Entries in the Lists in the VII

Schedule. If the same consequence is attached to the placement of the

conjunction “and” in all cases, it could lead to irrational results. For

example, Entry 48 in the Union List enables Parliament to make laws

on the subject matter of “Stock exchanges and futures markets”.

Applying the same conjunction to Entry 48 in the Union List would lead

to a result where no law can be made relating to stock exchanges, on

which no futures are traded.

9.16. With respect to the game of poker, even when poker is

played physically, the game has been held to be a game of chance by

the Gujarat High Court in the case of Dominance Games (supra). Thus,

so far as online poker is concerned, even the support of the judgment

of the Apex Court is not available to the petitioners.

9.17. The Doctrine of Proportionality cannot be converted into a

form of Mandamus, wherein the Judiciary instructs the Legislature

about the specific type of regulation that should be adopted, no matter

the cost. The measures comparable to the impugned Act have

withstood the test of Proportionality, since Courts worldwide have

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acknowledged the risk of social and economic hardship posed by online

gambling. In Liga Portuguesa de Futebol Professional18, the Court of

Justice for the European Union upheld Portugal's Legislation prohibiting

operators which are established in other Member States, in which they

lawfully provide similar services, from offering games of chance via the

internet in Portugal. Similarly, the Supreme Court for the State of

Washington in the United States in the case of Rousso vs State19

upheld a similar prohibition on remote gambling services.

9.18. Online rummy and online poker are substantially different

from rummy and poker played in physical space. In physical card

games, there is truly random process (shuffling of cards), which can be

seen and verified by the players. In online rummy/poker, there is no

actual shuffling of cards and the same is simulated by the computer

usually using a Random Number Generator Software (RNG). Every

computer, from the simple Babbage Engine to the modern

supercomputer, is in the final analysis, a device which operates

mechanically through combination of switches which turn on (binary 1)

18 (Case C-42/07)

19 170 Wn.2d 70; 239 P.3d 1084

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and turn off (binary 0). Computers are incapable of generating a truly

random outcome, that is, the “chance” element in online rummy/poker

is not comparable to the “chance” element in the physical versions of

these games. In view of that, this Court would not merely decide

based on the judgments, which ostensibly state that physical rummy

or physical poker are games of skill and that online rummy and online

poker are also games of skill.

9.19. The petitioners' platforms, which host online rummy and

online poker are not comparable to physical clubs, where such card

games are played, because:

(a) the game of rummy is played in a club for limited hours when the club is open. The same is played by individuals above the age of eighteen. No virtual money is used as mode of payment. However, in the online world, there is no way to verify the claim that the person involved is eighteen years old and above. Though the player is duty-bound to make a self-declaration to that effect, the gaming Company has no means to verify that fact;

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(b) the club does not benefit from betting and gambling in the club while the game of rummy is being played. The club does not receive any monetary consideration in any way directly from the players who participate in the game. In virtual mode, certain percentage has to be paid from each of the players in the game of rummy and poker;

(c) the participants in the physical world are face-to-face. Online rummy could well be played using Artificial Intelligence which would be aware of the best possible option in each game play;

(d) the petitioners' platforms are capable of recording the manner in which each player exercises options in a certain situation and therefore, know the pattern in which the player exercises those options, which in the physical world is not to the knowledge of the club and players;

(e) The cards in a club are distributed by players themselves in turns and in the sight of those who are present and playing the game. Such is not the case in online rummy.

9.20. The definition of “online game” under Section 2(k) of the

impugned Act has unique qualities, which distinguish them from offline

games. A physical card game involves a true element of chance on

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account of the factors such as, each player knows only his/her own

cards and not other players' cards; no one, including the dealer, knows

the unopened cards; no one, including the dealer, can touch the

unopened cards or change the order; no one, including the dealer,

knows which card is at which place. In the absence of such factors, the

“chance” element in any card game cannot be described as a true

element of “chance”. The predominance or otherwise of the “skill”

element in an online game cannot be measured, because the “chance”

element in an online game is not a true element of “chance”. A

computer, at best, is able to generate only a pseudo-random outcome,

which is never a truly random outcome. Despite harping on the

equivalence between real-life “true chance” and the chance generated

via RNG, the petitioners or its Members do not appear to have faith in

the mechanism. For this reason, several online games providers

include a disclaimer as to the consequences of deploying RNG.

9.21. The impugned Act does not seek to overrule any binding

judicial precedent or pronouncement. There is no inter partes finding

of fact by any Court for the specific online games of rummy and poker

offered by the petitioners herein that they are games of skill or that

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there is any impediment to the State to adopt a suitable legislation

within its competence to regulate the said games. The Legislature is

competent to remove the basis of a judgment. Reliance is placed on

the judgment of the Apex Court in the case of Shri Prithvi Cotton Mills

Ltd. Vs Broach Borough Municipality20.

9.22. The impugned Act is a sui generis legislation on online

gaming and gambling and there is no authoritative legal

pronouncement on the character of any online game as a “game of

chance” or a “game of skill”. Hence, the old binary of “game of skill”

versus “game of chance”, which was formulated in the pre-Information

Technology period, needs recalibration by factoring in the critical

differences between offline and online games.

9.23. The term “public order” in Entry 1 in the State List has

wide connotation. Reliance is placed on the judgment of the Apex

Court in the case of Rev. Stainislaus vs State of Madhya Pradesh21. The

object and purpose of the impugned Act is to remedy the public

20 (1969) 2 SCC 382

21 (1997) 1 SCC 24

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disorder, which has resulted from the unchecked spread of online

gaming addiction and online gambling in the State and to prevent it

from spreading further. The spread of unchecked online gaming

addiction and online gambling in the State was leading to (1) persons

incurring unsustainable debts and committing suicides; (2) financial

distress for families; (3) exploitation of persons in the State on

account of the addictive design of online games and the incitement to

squander money; (4) psychological and physiological effects, such as

development of aggressive behaviour, poor eyesight, reduced

concentration, diminished analytical thinking and decreased

productivity among the youth within the State. Reading the Act as a

whole, it is evident that the Legislature had the threat of public

disorder due to online gaming and gambling in mind while passing the

impugned Act and that the provisions of the impugned Act have the

effect of curbing the said threat. The impugned Act qualifies as a law

on the subject of “public order” under Entry 1 in the State List and is

intra vires the power conferred on the Tamil Nadu Legislature by

Article 246(3) of the Constitution of India.

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9.24. The State does not have to wait for the threat to public

order to fully manifest into widespread public disorder before invoking

its legislative power under Entry 1 in the State List. The petitioners

have failed to distinguish between the scope of “public order” under

Entry 1 in the State List vis-a-vis the phrase “maintenance of public

order”, which appears in Entry 3 in the Concurrent List. The judgment

relied on by the petitioners in the case of Ram Manohar Lohia (supra)

relates to the interpretation of the phrase “maintenance of public

order”, while the judgment in the case of Alijan Mian vs. District

Magistrate22 also discusses the same phrase.

9.25. Reliance is placed on the judgment of the Apex Court in

the case of Kartar Singh vs. State of Punjab24. It is contended that the

only conclusion regarding Entry 1 in the State List, emerging from the

case of Kartar Singh (supra), is that public disorder, targeted by a law

under Entry 1 in the State List, must be of a lesser gravity having

impact within the boundaries of the State and cannot extend to

22 (1983) 4 SCC 301

24 (1994) 3 SCC 569

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matters such as terrorist activities which threaten the sovereignty and

integrity of the Nation.

9.26. The impugned Act is valid under Article 245 of the

Constitution of India as long as it meets the Doctrine of Territorial

Nexus test, i.e.;

(a) the nexus between what is sought to be regulated and the territory of the State is real and not illusionary; and

(b) the liability sought to be imposed is pertinent to that connection. The same has been held in the case of State of Bombay vs. R.M.D.Chamarbaugwala (supra).

The Doctrine of Territorial Nexus with non-local online game providers

is established based on the fact that such entity reaches out to the

persons present within the State. Given that the object and purpose of

the impugned Act is to protect persons within the State of Tamil Nadu

from harms associated with online gambling and online gaming

addiction, it stands to reason that the impugned Act only applies to

non-local online game providers, whose activities are likely to lead to

such harm on account of their failure to exercise due diligence or to

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provide geo-blocking within the territory of the State. The impugned

Act has no extraterritorial effect and is not invalid on that ground.

9.27. Gaming disorder has been recognised and included by the

World Health Organisation (WHO) in its International Classification of

Diseases (11th Revision), which is characterised by a pattern of

persistent or recurrent gaming behaviour and is manifested by

impaired control over other activities and continuation of gaming,

despite the occurrence of negative consequences in personal, family,

social, educational, occupational or other important areas of

functioning. It is therefore evident that leaving online gaming

unregulated poses a grave threat, particularly to young persons within

the State and that online gaming addiction, recognized as a mental

health concern by the World Health Organisation (WHO), is spreading

in the State.

9.28. For this reason, the State Legislature has made a suitable

law, under which the Online Gaming Authority can regulate the eligible

age at which persons can play online games and the number of hours

for which an online gaming service can be made available to them.

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Such provisions can safeguard the mental health of the people of the

State as an aspect of “public health” and are therefore intra vires the

power of the Tamil Nadu Legislature under Article 246(2) of the

Constitution of India read with Entry 6 in the State List. Any activity

affecting the mental health of the general public can be regulated by

the State in terms of Entry 6 in the State List.

9.29. The impugned Act does not violate any fundamental rights

of the petitioners. The petitioners cannot claim fundamental rights

guaranteed by Article 19(1)(g) of the Constitution of India solely on

the basis of there being an aggregation of citizens (shareholders), that

is to say, the right of the citizens composing the Body. Reliance is

placed on the judgments of the Apex Court in the cases of Divl. Forest

Officer vs Bishwanath Tea Co. Ltd.24 and A.P.Dairy Development

Corpn. Federation vs B.Narasimha Reddy25. As for the Shareholders

and Directors in online gaming Companies, assuming that they are

citizens of India, in such case, the petitioners lack locus to file such

petitions, because unlike the legislation under challenge in R.C.Cooper

24 (1981) 3 SCC 238

25 (2011) 9 SCC 286

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(Banks Nationalisation) vs. Union of India (supra), the impugned Act

does not deal with their rights qua the Shareholders and Directors and

only targets the activities of the Company. The indirect consequences,

if any, of the impugned Act on the values of the shares of the

Shareholders pursuant to the enactment of the impugned Act would

not confer locus on such petitions.

9.30. The petitioners are not in a position to agitate the putative

fundamental rights of players of the game of skill to play such a game

as their occupation or profession. The Court would examine the

“reasonability” under Article 19(1)(g) of the Constitution of India for

the restrictions placed on the “trade or business” carried on by the

petitioners/its Members and not the restriction on the right of the

players to play the online games on offer as their occupation or

profession. The unregulated trade or business may have a greater

social and economic impact than an individual carrying on a specific

profession or occupation. There is a strong public interest in regulating

and in suitable cases, prohibiting trades and business to prevent wide

ranging social harms which may result therefrom. The stronger

restrictions may qualify as “reasonable restrictions” in the context of

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“trade and business” rights under Article 19(1)(g) of the Constitution

of India, as compared to restrictions on professions and occupations of

individuals.

9.31. No person or a Company can claim a fundamental right to

organize a game which is a “game of chance” or organize a service for

betting on games of chance. Such trades or businesses are in the

nature of gambling services and qualify as res extra commercium.

Article 19(1)(g) of the Constitution of India offers no protection for

carrying on such trades or business. The petitioners/its members offer

their online gaming services for a fee and derive profit in several ways

from the activity of providing online gambling services. Other sources

of income of the Company is the commission received from users,

revenue from rummy, fantasy sports and casual games, platform fees

and entry fee paid by the users in a game. Therefore, as per the

decision of the Apex Court in the case of K.Satyanarayana (supra), the

petitioners/its Members qualify as businesses in the nature of “gaming

houses”, whose activities can be prohibited and may warrant

prosecution under criminal laws. The impugned Act seeks to do the

very same.

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9.32. It is further submitted that assuming without conceding

that the petitioners are entitled to any fundamental rights under Article

19 of the Constitution, the impugned Act qualifies as a reasonable and

proportionate restriction on the petitioners' activities under Article 19

of the Constitution of India. The impugned Act satisfies all four prongs

of the test of proportionality outlined by the Apex Court in the case of

Modern Dental College and Research Centre26.

9.33. Artificial Intelligence and bots are used in online games in

several scenarios. Detecting the use of AI and AI-assisted bots as part

of online gaming services is impossible by merely examining the

functioning of the online game program itself. Thus, the regulation of

online games for ensuring fair play and equal chance of betting poses

challenges of a different nature and scope as compared to regulating

offline games. It is on this basis that the Tamil Nadu Legislature, in its

wisdom, has taken the most social and economic step of prohibiting

online gambling services altogether.

26 (2016) 7 SCC 353

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9.34. The impugned Act pursues the legitimate goal of

countering ruinous addiction to online gambling and of protecting

vulnerable and under age persons who are at great risk of harm to

their finances and mental health on account of the uninterrupted and

unrestricted access to gambling platforms. Prohibition on online

gambling services is a suitable measure for achieving this goal. No

measure, other than prohibition of online gambling services would be

as effective for achieving the legitimate goal, as prescribed herein.

Regulating any entity that operates over the internet is a complex

matter and would involve disproportionate expenditure of finances and

manpower, which is not feasible for the State of Tamil Nadu.

10. We have considered the submissions canvassed by learned

counsel for the parties.

11.1 The petitioners are challenging the Act of 2022, namely the

Tamil Nadu Prohibition of Online Gambling and Regulation of Online

Games Act, 2022. The impugned Act is enacted in the backdrop of the

Tamil Nadu Gaming and Police Laws (Amendment) Act, 2021

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(hereinafter referred to as “the Amendment Act of 2021”), which had

sought to ban online games such as “rummy” and “poker” played with

stakes or money. The said Amendment Act of 2021 was struck down in

its entirety by this Court and was declared as ultra vires the

Constitution of India under the detailed judgment dated 03.08.2021 in

the case of Junglee Games (supra).

11.2 After the aforesaid judgment was delivered by this Court,

thereby striking down the Amendment Act of 2021, the State

Government appointed a five Member Committee, headed by a retired

Judge of this Court for advising the Government for enacting a fresh

legislation on online games. The State Government purportedly, on the

basis of the recommendations made by the Committee, promulgated

the Tamil Nadu Prohibition of Online Gambling and Regulation of

Online Games Ordinance, 2022 on 01.10.2022. The Ordinance was

challenged before this Court in W.P.No.29911 of 2022, but as there

was no date notified for operation of the Ordinance, the petitioners,

along with the other persons, were permitted to withdraw the petition

on 16.11.2022 to represent their cases as and when the date is

notified.

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11.3. The Ordinance was subsequently introduced as a Bill on

19.10.2022 and was passed by the Legislative Assembly on the same

day. The Bill was returned by the Governor of Tamil Nadu over certain

concerns regarding the similarity between the Bill and the Amendment

Act of 2021, which was struck down by this Court. The Bill was

re-enacted by the Legislative Assembly without any changes on

23.03.2023, which was assented by the Governor of Tamil Nadu on

07.04.2023. The Tamil Nadu Prohibition of Online Gambling and

Regulation of Online Games Act, 2022 was published in the Tamil Nadu

Government Gazette Extraordinary and the notification, bringing the

impugned Act into force, was issued on 21.04.2023.

12.1. Section 2(i) of the impugned Act defines “online gambling”

as online wagering or betting and includes playing of any online game

of chance for money or other stakes in any manner. The said definition

is further explained as wagering or betting shall be deemed to

comprise the collection or soliciting of bets, the receipt or distribution

of winnings or prizes, in money or otherwise, in respect of any wager

or bet, or any act which is intended to aid or facilitate wagering or

betting or such collection, soliciting, receipt or distribution.

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12.2. Section 2(l) of the impugned Act defines “online game of

chance” as hereunder:

“2(l) “online game of chance” includes any online game which,-

(i) involves both an element of chance and an element of skill and the element of chance dominates over the element of skill; or

(ii) involves an element of chance that can be eliminated only by superlative skill; or

(iii) is a game that is presented as involving an element of chance; or

(iv) involves cards, dice, wheel or such other device, which works on random outcome or event generator.”

12.3. The Online Gaming Authority is established under Section 3

and the functions of the said Authority are detailed under Section 4,

whereunder, in Section 4(1)(c), one of the functions of the Authority is

to identify online games of chance and recommend the same to the

Government, for inclusion in the Schedule.

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12.4. Section 5 of the Act of 2022 empowers the Authority, with

the previous approval of the Government, to make regulations

consistent with the provisions of the Act or the Rules. Sub-Section (2)

of Section 5 of the Act of 2022 states that regulation may provide for

(a) time limit, monetary limit, age restriction or such other restrictions

in regard to playing of online games; and (b) procedure to regulate its

own functions.

12.5. Section 7 of the Act of 2022 states that (1) Online

gambling is prohibited; (2) Playing of online games of chance specified

in the Schedule with money or other stakes is prohibited. Sub-Section

(3) of Section 7 of the Act of 2022 provides that no online games

provider shall provide online gambling service or allow playing of any

online game of chance, specified in the Schedule, with money or other

stakes or playing of any other online game in contravention of the

regulations in any form.

12.6. Section 10 of the Act of 2022 prohibits local online games

provider from providing any service for the conduct of any online

game, except in accordance with the certificate of registration duly

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obtained from the Authority.

12.7. Section 14 of the Act of 2022 prohibits non-local online

games providers from providing any online gambling service so as to

allow playing of any online game of chance specified in the Schedule

with money or other stakes or allow playing of any other online game

contrary to the regulations in this State.

12.8. Section 23 of the Act of 2022 provides that any online

game specified in the Schedule shall be presumed to be an online

game of chance. Sub-Section (2) of Section 23 of the Act of 2022

empowers the Government, by notification, to omit or add any online

game in the Schedule, on the recommendation of the Authority and

upon issuance of such notification, the Schedule shall be deemed to be

amended accordingly.

13. On the day the impugned Act was enacted, (i) rummy and

(ii) poker were included in the Schedule of the impugned Act as online

games of chance. The same is the bone of contention in the present

matter.

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14. It is true that whenever there is a challenge to the

constitutional validity of an Act enacted by the Legislature or

provisions thereto, one has to keep in mind that presumption is in

favour of constitutional validity of law enacted by the Legislature and

the petitioners will have to demonstrate transgression of the

constitutional provisions and the mandate. It is well settled that the

legislative enactment can be challenged on two grounds:

(i) That the Legislature does not possess the competence to make the said law;

(ii)The same is arbitrary, irrational and that it takes away or abridges any of the Fundamental Rights enumerated in Part III of the Constitution of India or any other constitutional provisions.

It is on the touchstone of the aforesaid principles, the matter will have

to be decided.

15. The essence of the impugned Act has been clearly

encapsulated in its Preamble. The impugned Act is based on the

pretext of achieving public welfare and to maintain public health. The

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impugned Act is enacted under the premise that the issues of online

gaming and gambling cannot be dealt with by the old binary of “game

of chance” versus “game of skill” and a new conceptual framework is

needed, which incorporates the understanding of how Information

Technology operates at the basic level, the critical difference between

physical and online in general and also the physical and online versions

of the games.

16. The intention and object of promulgating the impugned

legislation, no doubt, appears to be laudable and bonafide. However,

mere intention and bonafides would not be sufficient to uphold the

legislation. The legislation has to withstand the test of legislative

competence and should be free from manifest arbitrariness. The same

will also have to be viewed on the premise of the rights of the parties

being trampled or otherwise.

17.1. The State is empowered to legislate in respect of the

Entries in List II of the VII Schedule. Entry 34 of the State List includes

“betting and gambling”. The State certainly has the authority to

legislate in respect of betting and gambling. This Entry 34 of the State

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List viz, “betting and gambling” was the subject matter of

consideration before the Apex Court in catena of cases.

17.2. The Apex Court in the case of The State of Bombay v.

R.M.D. Chamarbaugwala (supra) observed and held that “if even a

scintilla of skill was required for success the competition could not be

regarded as of a gambling nature”.

17.3. In the case of R.M.D. Chamarbaugwala vs. Union of India

(supra), the Apex Court held that “the competitions in which success

depends to a substantial extent on skill and competitions in which it

does not so depend, form two distinct and separate categories. The

difference between the two classes of competitions is as clear-cut as

that between commercial and wagering contracts”. In that way it was

held that competitions in which success depends on substantial extent

of skill are commercial in nature and not wagering.

17.4. In the case of Andhra Pradesh vs. K.Satyanarayana and

Ors. (supra), the Apex Court has conclusively held that “the game of

rummy is not a game entirely of chance like the “three-card” game

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mentioned in the Madras case. The “three-card” game which goes

under different names such as “flush”, “brag” etc. is a game of pure

chance. Rummy on the other hand requires certain amount of skill

because the fall of the cards has to be memorised and the building up

of rummy requires considerable skill in holding and discarding cards.

We cannot, therefore, say that the game of rummy is a game of entire

chance. It is mainly and preponderantly a game of skill”.

17.5. The Apex Court in the case of K.R. Lakshmanan v. State of

Tamil Nadu (supra), has elaborately dealt with the concept of gaming.

The Apex Court in the said case had observed that gaming is an act or

practice of gambling on a game of chance. It is the game of chance,

where chance is the controlling factor. Gambling would mean wagering

or betting on games of chance. It would not include games of skill. It

further held that the games of skill, although the element of chance

necessarily cannot be entirely eliminated, is one in which success

depends principally upon the superior knowledge, training, attention,

experience and adroitness of the player. Golf, chess and even rummy

are considered to be games of skill. In the said case, the club was

charging 5% commission, however, was not earning an income from

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the betting money. The same was held to be legal by the Apex Court.

17.6. The Division Bench of this Court in the case of Junglee

Games India Private Limited v. State of Tamil Nadu (supra) also held

that the games of rummy and poker are games of skill. Even in the

276th report of the Law Commission, poker is referred to as a game of

skill. The learned Single Judge of the Gujarat High Court, in the case of

Dominance Games Pvt. Ltd. (supra), held that poker is a game of

chance. It relied upon the judgment of the Court of United States,

District Court, New York in case of United States of America vs.

Lawrence Dicristina (supra). In the said case, the finding that poker is

a game of skill was undisturbed by the Appellate Court. The said

aspect has been considered by the Division Bench of this Court in the

case of Junglee Games (supra). In view of the judgment of the Division

Bench of this Court in the case of Junglee Games (supra), the

judgment delivered by the learned Single Judge of the Gujarat High

Court need not be relied.

17.7. Similarly, the said judgments have been followed by the

High Courts of Karnataka, Andhra Pradesh, Kerala and this Court in the

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cases of B.Mahamood & Ors. Vs State27; Muthu vs. State28; All India

Gaming Federation vs State of Karnataka (supra); Head Digital Works

Private Limited vs State of Kerala (supra); Executive Club vs State of

Andhra Pradesh29; Patamata Cultural and Recreation Society vs

Commissioner of Police30; Friends Cultural & Sports Society Club,

Hyderabad & Ors. Vs Prl.Secretary Home Depts., Hyderabad & Ors. in

W.P.No.30597 of 2014 and W.P.Nos.22428 & 121 of 2015; G.V.R.

Family Club vs State of Andhra Pradesh in W.P.Nos.24533, 25043,

25053, 25395 and 25404 of 2011; D.Krishna Kumar vs State of AP31;

Twin Cities Cinema Cultural Centre vs Comm. Of Police32; and Fulsingh

Naik Krida Mandir vs The State of Maharastra and Ors. 33, where it is

held that rummy is a game of skill.

18.1. The first legislation, the Public Gaming Act was brought in

the year 1867, which is still being followed in the Act of 2022.

27 (2019) SCC OnLine Mad 10303

28 (2019) SCC OnLine Mad 25365

29 1998 (5) ALD 126

30 2005 (1) ALD 772

31 2002 (5) ALT 806

32 2002 (2) ALD (Cri) 22 (Division Bench)

33 2018 ALLMR(Cri) 1013

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According to the Act of 1867, all forms of gambling and betting

activities, except horse racing, are illegal. However, this Act only deals

with physical betting. The law is silent on online betting. The Act of

1867 is still in existence after independence, as it was enforced under

Article 372 of the Constitution of India. The Constitution of India gives

power to the State to regulate gambling as it falls under List II Entry

34 of the VII Schedule of the Constitution of India. However, if the

State fails to regulate, the Act of 1867 will continue to govern. Few

States have made certain amendments to the Act of 1867 according to

the requirement of the State. Gambling is generally prohibited in all

States except Sikkim, Goa and Daman.

18.2. According to Section 12 of the Act of 1867, any game in

which skill is the dominant factor, it will not be considered gambling,

while games of chance would be considered as gambling. The Apex

Court and High Courts in various decisions have given interpretation of

games of chance and games of skill.

19. Wagering, gambling and betting have often been confused to

be synonymous. This Court, in the case of Public Prosecutor v. Veraj

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Lal Sheth34, explained the distinction as follows: "The principal

distinction between gaming and betting or wagering is thus

immediately apparent; in gaming the stake is laid by the players upon

a game, the result of which may depend to some extent upon the skill

of the players, but in a bet or wager, the winning or losing of stake

depends solely upon the happening of an uncertain event". In a game

of skill, although the element of chance necessarily cannot be entirely

eliminated (specially the element of randomness in shuffling and

dealing of cards), success predominately depends on superior

knowledge, training, attention and experience of the player.

20. The Apex Court and the High Courts have consistently held

that rummy and poker are games of skill, however, at that relevant

period, the game of rummy was played only physically (offline) and

what is sought to be banned is only the online games of rummy and

poker. In view of the authoritative pronouncements of the Apex Court

that rummy is a game of skill and this Court also has held that rummy

and poker are games of skill, heavy burden is upon the State to

distinguish as to how online games of rummy and poker would partake

34 AIR 1945 Mad 164

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the character of games of chance and not skill.

21. The State, under the Act of 2022, does not ban physical

games of rummy and poker. The question would be whether the

games of rummy and poker, played physically and construed as games

of skill, would not remain games of skill if played online. To

substantiate the contention that the online games of rummy and poker

would not be brought within the purview of games of skill, the State

has relied upon the following factors:

i. Dealer (software) knows all the cards at all the times, including which card is going to be dealt next;

ii. Dealer (software) knows all the cards in hands of each player;

iii. Dealer (software) knows all the unopened cards;

iv. Dealer (software) can change the unopened cards;

v. The players are not in a position to prevent the dealer (software) from breaching the rules of the game;

iv. The players cannot see each other and no player can be certain about the identity of other

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player or whether another player is a human or a bot.

22. To counter the same, the petitioners have stated that they

have adopted the highest standard of security measures on their

platforms for providing its users/players a secured platform and a

healthy environment. It is stated that the players follow the “Code of

Conduct for Online Rummy Operators”, issued by the E-Gaming

Federation. According to them, the following are the measures adopted

by the petitioners on their platforms:

i. The players deposits are encrypted with 128- bit SSL;

ii. No information about the cards, which are dealt, are shared with any party and only a player has information about the cards dealt to him or her;

iii. Information related to users are stored in a secure environment and is not shared with any third-party, except for the purpose of provision of services by the Platform. The Company enters into Non-Disclosure Agreement with all such third parties;

iv. The Petitioner has a dedicated customer support team ensuring prompt response to customer issues, if found and reported. Games are monitored

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on a regular basis to detect any violation of the terms of the Portal by players;

v. Allocation of tables is random, and no table is prefixed for any game. Players, therefore, have no control over selection of players on any table;

vi. Players logged in from the same IP address are not allocated seats on the same table;

vii. Information about the playing cards is always encrypted, thereby preventing any third party from viewing the same;

viii. There is no intervention of the petitioners in the conduct of games between players. Anti-fraud algorithms are applied after conclusion of games to check if players tried to defraud anyone after the completion of games and appropriate action is taken as per the Terms of Service of the Portal, if any such case is found;

ix. As per the Code of Conduct, the Players can also choose 'Responsible Play Settings' to self-regulate the option to voluntarily set limits on their game of play including monetary limits and time limits;

x. Constant improvements are made in the Platform to ensure fair and secure gameplay by deployment of the latest software and technical solutions;

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xi. No bots or Artificial Intelligence is used while playing the online game of rummy. Moreover, there is no empirical data or proof to substantiate the contention of the State. The petitioners rely upon the certificate issued by an independent globally renowned IT Audit Agency (iTech Labs, Australia), certifying that there is no usage of bots in the game play;

xii. In the game of online rummy, the card decks are properly shuffled, the sequence of cards dealt by each player on a game table is completely random and does not follow any observable/deducible pattern nor is the same controlled or known to the petitioners or any of its employees and does not work to the advantage of any single player on the table;

xiii. The RNG Software ensures that there is no bias or tampering in the way cards are distributed to users and that all users start the game on an equal footing. The petitioners, nor their employees can neither find out nor predict the cards that are to be distributed.

23. The contention of the State that the petitioners may use bots

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would be without any basis. There is nothing on record to substantiate

the contention of the State that the dealer (software) knows all the

cards all the time, including which card is going to be dealt with, or

that the dealer (software) knows all the cards in the hands of each

player or that the dealer (software) can change the unopened cards.

The said propositions, on behalf of the State, are merely on surmise.

We can understand that the game is played online and the State could

not gather authentic evidences about bots being used or that the

software knows all the cards in the hands of each player, so also the

unopened cards or the software could change the unopened cards. In

the absence thereof, it will be too far fetched only on the basis of the

assumptions by the State to conclude that the game of rummy, played

online, partakes the character of game of chance and is distinctly

different than the one played offline.

24. We are now transcending into the era of digitization world

and entertainment. People, instead of playing in clubs, are now playing

online. With the rise of internet connectivity and technological

advancements, we see a spurt in online games. Many online games

are in vogue. The games of rummy and poker, which are considered as

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games of skill are also now sought to be played online. In online

games of rummy and poker also, the same brain activity would be

involved as required for offline games of rummy and poker. Online

fantasy games are now held to be games of skill and not games of

chance by the High Court of Punjab and Haryana in the case of Varun

Gumber vs. Union Territory of Chandigarh & Ors35. The High Court of

Rajasthan, in the case of Chandresh Sankhla vs. State of Rajasthan36

observed that in Dream 11, there is no element of betting or gambling

as it is a game of skill. The High Court of Bombay has also reiterated

the same in the case of Gurdeep Singh Sachar vs. Union of India37.

25. The State, in the impugned Act, has already included the

games of rummy and poker to be online games of chance merely on

presumption. The same cannot be protected. The same would be

contrary to the judgments of the Apex Court and of this Court,

discussed supra. In view of that, it will have to be held that the

inclusion of the games, rummy and poker, in the Schedule of the Act is

erroneous, does not stand to reason and the said Schedule deserves to

35 2017 Cri LJ 3827

36 2020 SCC OnLine Raj 264

37 2019 (30) G.S.T.L. 441

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be set aside. The corruption or mischief in a game may not define the

game. Of course, in an isolated case, if it is noticed by the State that

the petitioners or any other online games servers, online games

providers are using bots or have indulged in any illegal activity, it can

take action against it. However, to dub online games of rummy and

poker as games of chance would be against the dictum of the Apex

Court and the various High Courts.

26.1. The Central Government, in exercise of its powers

conferred by Sub-Section (1) and Clauses (z) and (zg) of Sub-Section

(2) of Section 87 of the Information Technology Act, 2000 enacted the

Information Technology (Intermediary Guidelines and Digital Media

Ethics Code) Amendment Rules, 2023. It came into effect from 6 th

April, 2023.

26.2. The IT Amendment Rules, 2023 defines “online real money

game” as “an online game where a user makes a deposit in cash or

kind with the expectation of earning winnings on that deposit”. “Online

gaming intermediary” means “any intermediary that enables the users

of its computer resource to access one or more online games”.

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26.3. Under Rule 4A of the IT Amendment Rules, 2023, the

Ministry may, by a notification in the Official Gazette, designate as

many Online Gaming Self-regulatory Bodies as it may consider

necessary for the purpose of verifying an online real money game as a

permissible online real money game under the Rules.

26.4. The said Rule provides for an Online Gaming Intermediary

Body comprising persons from varied fields, such as, an individual

having practical experience in the Online Gaming Industry, an

Educationist, an expert in the field of Psychology or Mental Health or

such other relevant field, an individual having special knowledge of/or

practical experience in the field of Information and Communications

Technology, an individual who is or has been a Member or Officer of an

Organisation dealing with the protection of Child Rights and so on.

26.5. Under Rule 4A(8) of the IT Amendment Rules, 2023, the

Online Gaming Self-regulatory Body shall prominently publish on its

website, mobile based application or both, as the case may be, a

framework for verifying an online real money game, which among

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other things, includes (a) the measures to ensure that such online real

money game is not against the interests of sovereignty and integrity of

India, security of the State, friendly relations with foreign States and

public order; (b) the safeguards against user harm, including self-harm

and psychological harm; (c) the measures to safeguard children,

including measures for parental or access control and classifying online

games through age-relating mechanism, based on the nature and type

of content; and (d) the measures to safeguard users against the risk of

gaming addiction, financial loss and financial fraud, including repeated

warning messages at higher frequency beyond a reasonable duration

for a gaming session and provision to enable a user to exclude himself

upon user-defined limits being reached for time or money spent.

27. One cannot divorce “betting” from “gambling”. The

contention of Mr.Kapil Sibal, learned Senior Counsel for the State is

that in the case of K.Satyanarayana (supra), the Apex Court held that

“if there is evidence of gambling in some other way or that the owner

of the house or the club is making a profit or gain from the game of

rummy or any other game played for stakes, the offence may be

brought home”. In the said case, the club was charging a sitting fee

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i.e., 50 Paise per person. The Apex Court further observed that “if it

had been proved that 5 points per game were charged, that might

have been considered as an illegal charge”.

28. In the present case, the platform provider or the game

provider is charging a fixed sum and is not claiming shares in the

profits. If the game providers have been claiming shares in the profits,

then that would be a different situation altogether, but here, a fixed

percentage of sum is charged.

29. In the case of K.R. Lakshmanan (supra), it has been held by

the Apex Court that unless both “betting” and “gambling” are involved,

the State Legislature has no legislative competence to make law.

30. The State has relied upon its power to legislate in view of

Entry 1 and Entry 6 of the State List. Entry 1 of the State List deals

with public order and Entry 6 of the State List deals with public health,

sanitation, hospitals and dispensaries.

31.1 No doubt, the State would certainly be concerned with

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public health, which is one of the duties of the State. However, what

has been done by the State and the Committee, submitting the report,

is only interviewing school teachers. Moreover, the school teachers

would be supervising students below 18 years of age. Students below

the age of 18 years are prohibited and not permitted to play online

games in the instant case.

31.2 It is contended that before enacting the impugned

legislation, a Committee was constituted under the Chairmanship of a

retired High Court Judge and the Committee has given a report. The

report emphasises about the survey conducted among more than two

lakh teachers in the School Education Department to study the effects

of online games on School students. More than 74% of the teachers

responded that the concentration of students is impacted, 67% of

them responded that they noticed eye defects, more than 74% of the

teachers stated that they noticed decrease in Intelligent Quotient,

writing skills and creativity of students, more than 77% said they

noticed increase of anger in students and more than 72% said they

have noticed indiscipline among students.

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32. It is to be considered that the online games, in the instant

case, are not available for persons/children below the age of 18 years.

Online games can be played only by the persons who are 18 years and

above i.e., major and not School children. The apprehension raised by

the learned Senior Counsel for the State was that there would be no

methodology to verify the age of the person playing. The petitioners

responded to it by suggesting that a person, before he enrols to play,

is required to submit his Aadhaar Card, photograph, KYC and other

precautionary measures are taken to confirm that the person playing is

18 years old or more.

33. Another apprehension of the respondent was that the games

are played 24 hours, thereby endangering the public and domestic

health. As observed above, the concern expressed by the State about

public health of its citizens is but natural. The State has to take care of

the public health of its citizens. Section 5 of the impugned Act

authorises the authority, by notification and with the previous approval

of the Government, to make regulations to carry out the provisions of

the Act namely, time limit, monetary limit, age restriction or such

other restrictions in regard to playing of online games. The State

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certainly has the power to regulate online games of skill. It can control

and regulate the games of skill. The State can provide for the time

limit, that the game may not be played after a particular time and it

would have the necessary infrastructure and expertise to take all the

measures that the games would not be played within the State after a

particular time. It can also regulate the age restriction and other

aspects. The same would be within the competence of the State.

34. The power to regulate games of skill lies with the State

Legislature under Entry 26, List II of the Indian Constitution, viz.,

“Trade and Commerce”. If that is the case, then the State certainly will

have the right to regulate games, as is contemplated in Chapters IV

and V of the impugned Act. Though the aspect of public welfare ought

to be considered while legislating a particular subject matter, it is

necessary to carve out the pragmatic regulatory measures, rather than

imposing blanket ban.

35. In the case of R.M.D. Chamarbaugwala vs. Union of India

(supra), the Apex Court had observed that “while controlling and

regulating would be requisite in the case of gambling, mere regulation

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would have been sufficient as regards competitions involving skill”. The

Preamble of the Act is also suggestive of the same. The Preamble of

the Act states that “the Act to prohibit online gambling and to regulate

online games in the State of Tamil Nadu”. Certainly, online gambling

can be prohibited by the State. The State has ample power to enact a

legislation to prohibit online gambling and it has also the power to

regulate online games of skill in the State of Tamil Nadu. In stead of

resorting to regulating online games of skill, in this case, rummy and

poker, the State has simply prohibited the said games. The same was

in excess of its legislative competence.

36. Heavy reliance is placed by the State on the judgment of the

Apex Court in the case of M.J.Sivani (supra). In the said case, the

Apex Court was considering the legislation enacted for running of video

game parlours and not playing of video games. In the said case, the

Apex Court held that certain video games are falling within the class of

games of chance and not in the games of skill. The said conclusion was

arrived at after considering the report of the Committee of Senior

Police Officials, demonstrating about tampering of the video game

machines and thereby, were brought within the purview of games of

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chance. However, in the said case, law existed regulating gaming

activity and the same was violated. In the present case, as observed

supra, the respondent State could not even remotely demonstrate

tampering of software or any such device that would take away the

games of rummy or poker from the contour of games of skill. Moreover, the three Judges Bench of the Apex Court in the case of

Dr.K.R.Lakshmanan (supra) held rummy to be a game of skill.

37. Another apprehension raised by the State is of public order.

Public order in the State List would imply activities that would

jeopardize and affect public at large. The Apex Court in the case of

Ram Manohar Lohia (supra) observed that “Every breach of the peace

does not lead to public disorder. When two drunkards quarrel and fight

there is disorder but not public disorder. They can be dealt with under

the powers to maintain law and order but cannot be detained on the

ground that they were disturbing public order. Suppose that the two

fighters were of rival communities and one of them tried to raise

communal passions. The problem is still one of law and order but it

raises the apprehension of public disorder. Other examples can be

imagined. The contravention of law always affects order but before it

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can be said to affect public order, it must affect the community or the

public at large. A mere disturbance of law and order leading to

disorder is thus not necessarily sufficient for action under the Defence

of India Act but disturbances which subvert the public order are....”.

There is no evidence in the instant case that public order is disturbed.

38.1. In the light of the aforesaid discussion, we hold that the

impugned Act, in its entirety, need not be held to be ultra vires. It is

held that the State is competent to legislate to the extent of

prohibiting online gambling, i.e., games of chance, at the same time, it

has got the authority to regulate online games of skill. The definition of

“online gambling” under Section 2(i) of the impugned Act shall be read

as restricted to “games of chance” and not games involving skill.

Section 2(l)(iv) of the impugned Act would not be entirely valid. The

games of rummy and poker are games of card, but are games of skill.

Section 2(l)(iv) is being read down, to mean, it excludes games of skill

viz., rummy and poker.

38.2. Having held that the State has got the authority to legislate

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on online games of chance, as gambling would be betting on the

games of chance, it is not necessary to declare Sections 7, 8 and 9 of

the impugned Act as ultra vires. As discussed above, it has been

authoritatively held by the Apex Court in a catena of judgments, so

also this Court that the games of rummy and poker are games of skill.

The State has miserably failed to demonstrate that online games of

rummy and poker are different and distinct from offline games of

rummy and poker. The apprehension expressed by the State that bots

may be used or the dealer (software) would know the cards are

without any substantive material. In view thereof, the Schedule under

Section 23, incorporating rummy and poker as games of chance, is set

aside.

38.3. The State may make regulations as contemplated under

Section 5 of the impugned Act, thereby providing reasonable

regulations for the time limit, age restriction or such other restrictions

in regard to playing of online games.

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38.4. Section 10 of the impugned Act may not be declared as

ultra vires as it will be necessary for the State to know about the

online games providers operating within its State and that they are not

indulging in any games of chance. If the State comes across the usage

of bots or any dubious methods in the play of games of rummy and

poker, it can take action and for that purpose also it will be necessary

to uphold Section 10 of the impugned Act. The State may frame

regulations as contemplated under Section 5 of the impugned Act.

39. In the light of the aforesaid, the writ petitions, as such, stand

partly allowed. The prayer to declare the entire impugned Act of 2022

as ultra vires is negated. The Schedule of the impugned Act, including

the games of rummy and poker, are set aside. Sections 2(i) and

2(l)(iv) of the impugned Act shall be read as restricted to games of

chance and not games involving skill, viz., rummy and poker. There

will be no order as to costs. Consequently, W.M.P.Nos.12944, 13271,

13272, 13398, 13399, 13400, 13403, 1405, 13406, 14202 and 1204

of 2023 are closed. W.M.P.Nos. 13269, 13397, 13402 and 14201 of

2023, filed to permit the petitioners to file a single writ petition are

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allowed and disposed of, as they have paid separate sets of court fee.

(S.V.G., CJ.) (P.D.A., J.) 09.11.2023

Index : Yes/No Neutral Citation : Yes/No

sasi/drm

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To:

1. The Chief Secretary, The State of TamilNadu, Secretariat, Fort St. George, Chennai - 600 009.

2. The Principal Secretary, The State of Tamil Nadu, Department of Home, Secretariat, Fort St. George, Chennai - 600009.

3. The Principal Secretary, The State of Tamil Nadu, Department of Law, Secretariat, Fort St. George, Chennai - 600009.

4. The Director General of Police, State of Tamil Nadu, Office of the Director General, Kamarajar Salai, Chennai – 600004.

5. The Union of India Through Ministry of Electronics and Information Technology Electronics Niketan, 6, CGO Complex, Lodhi Road, New Delhi- 110003.

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THE HON'BLE CHIEF JUSTICE AND P.D.AUDIKESAVALU,J.

(sasi/drm)

W.P.Nos.13203, 13593, 13720, 13722 and 14704 of 2023

09.11.2023

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