All In Or Fold – The Legal Conundrum Of Real Cash Online Poker

Indian mythology suggests that playing and losing at a game of dice led to the Pandava brothers, their wife and mother being sent to exile. no matter this cautionary tale, the online gaming market in India has begun in India with revenues reaching Rs. 43.8 billion in FY 18 and expected to grow to Rs. 118.8 billion by 2023.1

The question of whether the state should permit businesses concerning betting and gambling was hotly debated within the Constituent Assembly Debates, with several members opposing constitutional sanctions to betting and gambling activities. Members drew support for his or her argument from sources as varied because of the apocryphal sufferings of the Pandavas to the ideals of Gandhi.

Notwithstanding their opposition, List II of the Seventh Schedule to the Indian Constitution places matters concerning betting and gambling within the legislative purview of state governments. This compromise allowed state governments to settle on to either prohibit or regulate (and tax) activities concerning betting and gambling.

States in India enthusiastically exercised their legislative rights to manage gaming/ gambling activities within their territory, passing a spread of betting and gambling laws (State Gambling Legislations). Approaches vary, with some states prohibiting betting and gambling altogether, others permitting a narrow range of betting and gambling activities, and yet one more contingent of states adopting the straightforward answer and modeling their enactments on the antediluvian central legislation on the topic, the general public Gambling Act, 1867 (together with the State Gambling Legislations, the Gambling Legislations).

Gaming Houses

Most Gambling Legislations predate online and envisage gambling activities happening in premises termed as “common gaming houses”. With the exceptions of Nagaland, Sikkim, and Telangana, Gambling Legislations don’t directly address gaming or gambling conducted on a virtual platform. The term “common gaming house” is usually defined broadly in Gambling Legislations, and it’s safe to assume that web servers which house online gaming websites are likely to fall within their ambit. Persons who own, occupy or manage common gaming houses are responsible for violations under most Gambling Legislations, with penalties being either a fine, imprisonment or a mixture of both.

Game of Skill v. Game of Chance

Gambling Legislations typically distinguish games of chance from games of skill – while the previous is equated to gambling and prohibited, the latter is usually distinguished from gambling and isn’t prohibited. Some exceptions to the present general rule are often seen within the Gambling Legislations of Assam, Odisha, and Telangana, which don’t carve out games of skill from restrictions on gambling.

While most poker players would argue vociferously that poker may be a game of skill, courts have typically had a harder time coming to the present conclusion. Some states, without going into the question of whether poker may be a game of chance or skill, have permitted and controlled poker under local Gambling Legislations. samples of this approach are often seen in West Bengal and Sikkim. Sikkim and Nagaland allow certain games (including poker) to be operated and played online under a license obtained from the government. Interestingly, with the exception of Nagaland, the term game of skill has not been statutorily defined within the Gambling Legislations3.

Given the absence of a statutory definition, courts have stepped in and sought to draw a line separating games of skill from games of chance. The Supreme Court’s decisions in Dr. K.R. Lakshmanan v. State of Tamil Nadu4, State of Bombay v. RMD Chamarbaugwala5and State of Andhra Pradesh v. K. Satyanarayana and ors.6 have prescribed the subsequent general rules:

The determination of whether a game constitutes a ‘game of skill’ depends on the extent of skill involved within the relevant activity.
If a game involves substantial skill but has a component of chance, it might be considered as a game of skill regardless of the element of chance.
While there’s a component of chance within the distribution of cards in games like rummy, rummy is predominantly a game of skill, on the idea that the autumn of cards during a game of rummy is required to be memorized and therefore the game itself involves considerable skill in holding and discarding cards. Similar arguments could apply to other card games.

Poker as a Game of Skill

Indian states/ courts have taken inconsistent views on whether poker may be a game of skill or chance. The supreme court of Gujarat in Dominance Games Pvt. Ltd. v. State of Gujarat7 distinguished between rummy and Texas hold’em poker and held that while rummy was a game of skill, poker may be a game of gambling and involves betting as an inseparable part of the sport play. Courts in Karnataka and West Bengal are less equivocal and have issued favorable rulings within the context of petitions filed to restrain police interference in clubs and associations where poker is played by members. However, these decisions don’t analyze whether poker may be a game of skill or chance.

There is no conclusive judicial order on whether poker may be a game of skill or chance. That said, in instances where courts have scrutinized this question, they need typically concluded that online poker may be a game of chance. The Supreme Court, in M. J. Sivani v. the State of Karnataka8, stated that the weather of gaming are the presence of prizes or consideration, and gaming involved playing of any game, whether of skill or chance, for money or money’s worth. within the context of games like poker double up, blackjack, and Pacman, the court noted that there was no scope for using one’s skill to reach the desired result because the electronic machines on which these games were played might be tampered with leading to the probabilities of winning becoming completely unrelated to the skill of the player. Accordingly, games played electronically were placed under the scope of ‘games of chance’. While the choice in M.J. Sivani was issued within the context of games played on a machine/video games, instead of internet poker, similar considerations could apply to real cash online poker.

The Additional District Judge, New Delhi in M/s Gaussian Networks Pvt. Ltd. v. Monica Lakhanpal and State of NCT [9] drew a difference between games played during a physical space and people played virtually and stated during this regard that playing ‘games of skill’ for money is legal only to the extent of the games being played in physical form. The court observed that while playing games on an online forum, various factors increase the degree of chance and therefore the predominance of skill over chance becomes questionable, as factors like randomness, cheating and collusion become prevalent. the first petition was subsequently withdrawn and hence the aforesaid decision was put aside.

Real Cash Online Poker

The legality of poker played for real money isn’t consistent across the varied states of India. The Supreme Court in M. J. Sivani, has taken a transparent stand that any game, whether of skill or chance, when played for “money or money’s worth” will fall within the ambit of gaming or gambling. apart from the limited states that have adopted laws to manage online gaming/ gambling, within the absence of a Supreme Court decision on this issue, it’s difficult to determine the parameters which will determine the legality of real cash online poker in other states.

Accordingly, while the legal position on whether the business of real cash online poker is compliant with Indian laws is uncertain, courts have typically held that poker may be a game of chance, particularly when played online or through video games. While arguments are often framed to support the contention that poker is predominantly a game of skill, regardless of the element of chance– these are judicially untested.