INDIA

Time to unravel legal knots?

There are probably few gaming markets in Asia more complex than that of India, where various states take their own legal approaches and competing court judgements resolve similar questions in different ways.

A point that is clear, however, is that one of the most consequential axes of the debate is the division between games of skill and games of chance, and herein lies the possibility for an advance.

The stakes are considerable. According to a September 2019 study by KPMG India, the Indian online gaming industry alone is set to become a INR250 billion (US$3.5 billion) industry by 2024.

As explained by a study published by Nishith Desai Associates last October, titled The Curious Case of the Indian Gaming Laws: Legal Issues Demystified, the Constitution of India specifically delegates to the various state legislatures matters related to “betting and gambling,” which has basically ensured the lack of a unified national approach.

Moreover, there is nothing in the nature of a gaming commission in India, and many of the crucial policy decisions are in the hands of the courts to decide.

Thus you can have gambling legislation in Goa that permits casino gambling in licensed five-star hotels and in offshore vessels, and at the same time ordinances in the state of Telangana which effectively outlaw all forms of gambling.

Some degree of clarity is offered by a Supreme Court of India judgement that gambling laws should not be applied to games of “mere skill.” If it is determined that the outcome of a game is preponderantly decided by a player’s skill rather than by chance, then it should not fall under the scope of most state gambling laws.

But even this degree of legal clarity starts to break down in some cases, as different states and different courts have judged games to fall on either side of this line. For example, one case before the Supreme Court found that rummy was a game involving a preponderance of skill rather than chance. Nevertheless, the Kerala High Court later held that playing rummy for stakes would amount to the offense of gambling under their state law.

To add even greater complexity, some courts have treated online rummy differently than playing rummy face-to-face with other players.

Ranjana Adhikari, co-head of Media Entertainment & Gaming Practice at Nishith Desai Associates, one of the authors of the report, notes that “gambling in general has always historically been looked at as a social vice.”

Nevertheless, gambling has increasingly become an issue that policymakers cannot avoid, especially because, since the early 2010s, “there’s been a lot of internet penetration to the rural areas as well, and this increased smartphone usage.” With this wider access to mobile internet platforms came new forms of entertainment, including, of course, online gambling.

“Different states are doing whatever they deem fit because it is a states rights subject,” Adhikari notes. “It doesn’t work for an online business. There is no stability in policy that’s applicableto their businesses and therefore there’s no stability of business.”

Gowree Gokhale, partner at Nishith Desai Associates, another co-author of the report, believes that while games of chance are still unlikely to be widely accepted by Indian policymakers, the time may be ripe to at least bring order to the legal framework for skill gaming.

At the state level, she notes, “you usually see here are people trying to push the envelope under the skill gaming umbrella.” In the absence of regulatory certainty, some entrepreneurs are testing the limits of what they can get away with.

Different states are doing whatever they deem fit because it is a states rights subject.

“Our firm has been quite heavily pushing for a central law to govern skill gaming,” she says, “because we believe that this is in the best interests of the industry as well as the consumer.”

“If each state starts putting their own regulations even on skill games, it just creates a lot of uncertainties for the businesses, and in so far as consumers are concerned, what we really need is a solid regime to protect consumer interests,” she adds.

The time may have arrived for India to create a central government commission to regulate online skill gaming in particular, to which a large proportion of the population already has access.

Delta posts lacklustre Q3 results

Delta Corp reported stagnant results in the quarter ending December 31 with almost INR2.1 billion (about US$29.4 million) in income from operations, a figure that was virtually identical to the previous year.

The company’s profit in the quarter amounted to INR551 million (about US$7.7 million), which was 9 percent higher than the previous year’s figures. Although the income registered little change overall, revenues from the casino gaming division declined by 3.4 percent, while those from the online skill gaming division increased 8.7 percent.

The company said that one of its casino vessels, owned and operated by Dela Pleasure Cruise Company, underwent maintenance in dry-dock and was not operational for 25 days during the quarter, and this impacted the gaming revenue.

Supreme Court dismisses Dream 11 GST case

A division bench of the Supreme Court has dismissed GST evasion and gambling appeals filed against fantasy sports operator, Dream 11 – upholding a previous ruling from the Bombay High Court.

The appeals were filed by lawyer Gurdeep Singh Sachar, Department of Revenue, Union of India and State of Maharashtra, who claimed in June this year that fantasy games are luring people to play games of chance with their hard-earned money and amount to different forms of gambling.

Sachar also claimed that Dream11 was allegedly evading Goods & Services Tax (GST) by violating Rule 31A of the Central GST Rules and not paying 28 percent GST on the total value of deposits. However, Supreme Court Justice Nariman observed that there cannot be any doubt that fantasy sports are a game of skill.

The person who enters the contests needs to apply his mind and judgment on choosing one cricketer over the other. He further noted that if rummy is deemed to be a game of skill, then so would fantasy sports.