Does the central government put the cart before the horse?

The central government, led by Union Minister of State for Electronics and Information Technology Rajeev Chandrasekhar, and representatives from several ministries, in a welcome move, held a consultative meeting with stakeholders of the online gambling industry on June 7, 2022 to understand the ways in which the central government can facilitate the industry and enable a regulatory framework. (More sports news)

An inter-ministerial working group has also been set up by the central government to identify a nodal ministry, understand international best practices and recommend a uniform regulatory mechanism.

Although the minister apparently made no commitment on unveiling a regulatory framework for the dawn sector but asked stakeholders to come back with workable written suggestions on the regulatory model that the central government could follow to identify and distinguish games of skill from games of chance/betting. ; measures to combat addiction and violence, responsible gambling features that can be integrated, and a framework of self-regulatory organizations, which can co-regulate the industry with the government.

With skill-based online real money games like fantasy sports, rummy and poker taking the biggest blame from various state governments, political and social activists say betting on anyone which game, especially if done online, is akin to gambling and betting and should be prohibited. ; and several states like Tamil Nadu, Karnataka, Andhra Pradesh and Telangana passing laws banning all online games played for money, the central government’s decision to engage in a dialogue on gambling regulation in line is a positive step for the industry.

Center vs States: who will regulate?

Currently, state laws of Andhra Pradesh, Arunachal Pradesh, Telangana, Odisha and Assam prohibit all forms of real money gambling, including high stakes online gambling. Recent amendments to gaming laws passed by Tamil Nadu and Karnataka prohibiting online gambling for wagering or betting have been struck down as illegal, unconstitutional, grossly arbitrary and in violation of the constitutionally guaranteed right to trade and commerce by the respective state high courts, while a notice issued by the Kerala government banning online rummy on stakes was also overturned by the state high court on similar grounds.

Despite these apparent legal victories for the real-money gambling industry, the situation seems far from clear as the governments of Tamil Nadu and Karnataka have appealed the High Court’s decision to the Supreme Court claiming that the states have the right to prohibit online gambling, even if skill-based gambling for stakes, which is akin to gambling or betting when played for stakes or bets.

State governments have talked about the financial losses suffered in these online games by a large part of the population and hinted at problems such as suicides, growing debts and addiction due to these games.

Furthermore, these states even argued that online games like rummy and poker are susceptible to manipulation and fraud and questioned whether these games were skill-based. Notwithstanding the High Court ruling and the pending case in the Supreme Court, worried about a wave of suicides allegedly caused by online rummy, the Tamil Nadu government even formed a judge-led committee to the High Court’s retreat to consider recommending a new law after considering various aspects of how online games work, their advertisements and their addictiveness.

Supreme Court: the final arbiter?

The central government has decided to examine ways to regulate the online gambling industry even as a few states continue to push for a blanket ban on all real-money online gambling.

States, such as Tamil Nadu and Karnataka, argue that they have legislative jurisdiction to regulate online gambling by virtue of their power to regulate “gambling and betting”; ‘sports, entertainment and entertainment’; “law and order” and “commerce and commerce” according to the constitution’s list of states.

On the other hand, the central government could also argue that it has the power to regulate online gambling under its legislative powers to regulate forms of communication, interstate trade and commerce as well as general residual powers.

Given that the issue of jurisdiction to regulate gambling and online gambling is pending before the Supreme Court, the question arises whether it is appropriate for the central government to intervene at this stage, when the case is pending ?

Advantage Center?

If one were to look at the matter pragmatically, the central government is obviously in a better position to regulate the online gambling industry given that state level policing and enforcement of internet activity, that crosses interstate and international borders, is nearly impossible.

However, since the specific question of legislative jurisdiction over the Center and the States, and whether a blanket ban is constitutionally permissible, is pending before the Supreme Court, it would be appropriate for the central government to involved in the cases pending before the Supreme Court. and state clearly that it intends to provide a regulatory framework for the sector.

This would allow the court to resolve outstanding issues quickly, bringing political certainty and stability, while ending the quagmire of perennial litigation and disputes plaguing the industry.

It is hoped that the Supreme Court as well as the central and state governments will work collaboratively to provide clarity and stability for all stakeholders involved in the online gambling industry.

(The author is a technology and gaming lawyer based in Mumbai. Opinions expressed are personal).

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