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admin 26.04.2014

Online gaming websites ranging from poker, rummy, card games, etc have been in a fix as to the legality of running such websites in India.
The position on date is that online card games websites in India are already in limbo and now the Supreme Court of India has made this position more uncertain and legally vulnerable.
Supreme Court has categorically mentioned that it would not decide the legality of online poker or online rummy till the Indian government comes out with a policy decision in this regard.
Now the ball is in Indian government’s court and it has to come up with rules and regulations regarding online game and online gambling activities in India. With the present Supreme Court’s order, cyber law due diligence (PDF) has become a necessity for online poker and rummy websites.
It would be a fatal mistake to assume that the refusal by the Supreme Court to decide about the legality of online rummy or online poker is a fee licence to engage in these activities.
Perry4Law hopes that the online rummy and online poker stakeholders would appreciate the seriousness of the situation and make their business activities and websites law compliant and this starts with drafting of appropriate terms and conditions and other legal documents for the websites.
In fact, online card games websites may be legally risky if not properly drafted and managed. For instance, a majority of online poker and rummy websites are flouting laws of India and they can be punished any time by the government. Unfortunately, this is not happening as on date and online gaming websites are openly flouting the laws of India. Perry4Law believes that the least various online gaming stakeholders can do is to comply with the maximum possible laws of India. While gaming and gambling entrepreneurs are still struggling to understand and apply the laws of gaming and gambling of various states, information and communication technology (ICT) has added another complicated dimension to this entire scenario. Meanwhile some stakeholders and entrepreneurs approached the Supreme Court of India to get clarity on the legality of online games like rummy, poker, etc. Indian Supreme Court is presently hearing a matter that can decide whether playing online rummy, poker and card games is legal or illegal in India. Realising the complex legal issues involved in the litigation, the Supreme Court of India referred the matter to Central Government for its opinion. Online gambling laws of India are complicated in nature  as gambling is a State subject and different State have enacted different laws regarding gambling activities in India.
To bring uniformity among various laws regarding gambling in India, the present Law Commission of India is analysing whether the Public Gambling Act of 1867 should be repealed or not. There are certain rules to decide whether online gambling and betting is legal in India or not. World over countries are finding it difficult to regulate online gaming, betting and gambling activities due to conflict of laws in cyberspace. Those planning to engage in online games including online rummy, online poker, etc must comply with techno legal requirements prescribed by various existing laws of India. However, we at Perry4Law believe that online rummy and online poker may still be illegal and punishable despite this judgement of Supreme Court.
The real trouble seems to be use of cash or stakes while conducting online rummy and poker competitions without following all the applicable laws of India. However, the Gibraltar Betting and Gaming Association (GBGA) has filed a legal challenge against the UK Gambling Commission’s decision of its new licensing system and a 15 percent point of consumption tax for gaming operators.
At Perry4Law we believe that Indian players involved in online gaming and gambling activities and targeting UK and Indian markets must comply with both Indian and UK laws.
Rummy has already been pronounced to be a “Game of Skill” by Indian Supreme Court on numerous counts and there is nothing new about this “Settled Legal Position” in the present litigation.
The major “Legal Fallacy” in the Online Gaming business activities in India is that entrepreneurs are applying the offline world’s standards and rules to the online environment.
Even if the Supreme Court reiterates that Rummy is a “Game of Skill” and declare that Cash Stakes are allowed, this decision would not make Playing, Displaying and Hosting of Online Rummy in India “Automatically Legal”. As more and mobile devices are being used for day to day transactions, mobile gaming market segment has also been targeted by these gaming entrepreneurs. States like Sikkim grants provisional and regular licence under the Sikkim Online Gaming (Regulation) Act, 2008.
Online rummy and online poker have attracted the attention of many gaming entrepreneurs in India. The Supreme Court of India is presently hearing a matter that would have a bearing on the interpretation of legality or illegality of online poker and online rummy in India. The mobile gaming and online gaming related regulations in India are also not duly complied with by various stakeholders. Mobile and online gaming industry of India is also fast maturing and as per various business reports it is going to grow further in the coming years.
Many mobile gaming stakeholders in India have explored the route of e-commerce as well without following the legal requirements. There are set online gaming industry laws in India that must be adhered to by various online gaming stakeholders, including the mobile gaming companies and stakeholders. For instance, a mobile gaming provider may be held accountable for the contents and games it provides to various consumers and users.
If a company is involved in the creation and marketing of mobile games, its directors can be held liable for cyber law violations through such mobile games.
In their own interest, mobile games providers in India must strictly comply with the techno legal requirements as prescribed by various Indian laws.
On a tip-off that betting will be placed on IPL cricket match between Sunrises Hyderabad and Mumbai Indians on 30 April, a raid was conducted and the accused were arrested.
The individuals who are indulging in illegal online gambling and betting have been operating from all corners of India. Use of gambling platforms for illegal transactions and money laundering has become a cause of concern for the tax authorities of India.
Now it has been reported that the income tax officials on Tuesday raided four offshore casino vessels and one onshore casino in Panaji, on a tip-off that they were indulging in illegal cash transactions. Meanwhile, the law enforcement agencies of India have been working hard to curb and punish online gambling rackets and activities in India.
The Sports Integrity Unit will also actively engage with the Indian Ministry of Youth Affairs and Sports in order to ensure that the law dealing with corruption in sports is put in place as soon as possible. The Tamil Nadu Government has recently moved the Supreme Court of India and rubbished the allegations by police officer Sampath Kumar relating to the IPL probe on betting and spot fixing. The Tamil Nadu Police has filed an application in the Supreme Court saying that suspended IPS officer Sampath Kumar had falsely deposed before the Justice Mukul Mudgal committee that investigated the Indian Premier League spot-fixing and betting scandal. The fine line and distinction between online gambling and online gaming in India is not appreciated and understood by online gambling and gaming enthusiastics of India. Perry4Law strongly recommends that online and mobile gaming entrepreneurs and businesses in India must ensure techno legal compliances before launching their respective ventures in India.
Online gambling and gaming is a very lucrative field and it is attracting the attention and interest of both national and international players. In the present case, CID Additional Director General of Police T Krishna Prasad said that Sikkim government and its marketing agent (Essel Group Lottery Company) organise online lotteries in the lottery free zone states including Andhra Pradesh and the Essel Group Lottery Company sells online lotteries through their website. The provisional and regular licence under the Sikkim Online Gaming (Regulation) Act, 2008 can be granted but they are not enforceable around the India. The laws and regulations for online gambling and online gaming in India are scattered under different statutes.
We believe that opening of a legally sustainable and legal online poker website in India is a continuous process. Similarly, lottery laws in India are different and they apply differently in different states of India. Since online gambling essentially involves use of information and communication technology (ICT), conflict if laws are bound to arise. The online poker laws in India have also evoked much interest from both national and international stakeholders and entrepreneurs. The online gaming market of India is fast booming but regulatory compliances are still to be adhered to. Ignoring the techno legal requirements for establishing online gambling and online gaming business and website in India could prove fatal in the long run.
Till now the matter was pending for adjudication before the Supreme Court of India and they were hoping that the legality or illegality of such online poker or online rummy websites would be decided by the Supreme Court very soon. As per the latest order of the Supreme Court, it has refused to decide the legality or illegality of online games like poker, rummy, etc. In the past Supreme Court asked the Indian government to clarify its stand regarding online rummy but the government refused to provide any opinion in this regard. The Indian government has to decide not only about the skills versus gambling criteria but also the techno legal aspects that are attributable to use of technology. Most of them have failed to address crucial techno legal aspects by presuming that online rummy or online poker are legally permissible in India. On the contrary, it is a warning sign that the entire business structure revolving around online gaming and gambling industry of India need to be in strict compliance with applicable laws of India. India has also witnesses many companies and gaming stakeholders trying to establish their online gaming business. They are not at all complying with the cyber law due diligence (PDF) requirements of Indian cyber law.


Indian Government is neither clarifying its stand before the Supreme Court nor is bringing a suitable techno legal legislation to make the regulatory uncertainty clear.
This compliance requirement must consider technological, traditional and commercial laws of India. The Constitution of India has demarcated the legislation making powers between the centre and states.
Now gaming and gambling is being conducted in an online environment with the help of software, hardware and other ICT systems. This has not deterred various individuals and companies from exploring the online gaming industry of India. We at Perry4Law believe that this is a “subjective test” that is based upon the perceptions of individual or company analysing the same.
Meanwhile, those engaging in online betting and gambling are at risks of being arrested and prosecuted. Online gambling and gaming laws and regulations in India and conflict principles would be very difficult to resolve in these circumstances. As the stakes are high and online gamings being a lucrative market in India, many stakeholders have taken up the matter before the Supreme Court of India to get a clear legal position.
This is because Indian Supreme Court is not dealing with the legality of online rummy and online poker in strict and absolute sense. The Court has asked the Central Government for its legal stand regarding games like online rummy, online poker, etc. Regulations governing online gaming and gambling are also redrafted by UK to bring additional control over foreign online gaming and gambling service providers who are targeting UK territory and its citizens.  Internet service providers (ISPs) in UK were also asked to insert warning pages for gambling sites that are unlicensed in the UK.
The Act requires any operator wishing to transact with or advertise to British consumers to obtain an operating licence from the Gambling Commission and is expected to come into force on 01 October 2014.
While this would be a crucial decision yet it must be kept in mind that despite Supreme Court’s decision, online rummy and online poker may still be punishable in India. Supreme Court in this case is not concerned with Online Rummy and it is definitely not concerned with Online Poker. This is the reason that Supreme Court of India may not adjudicate upon the online part of gaming activities in India. Online Rummy and Online Poker would still remain Illegal unless certain Techno Legal Compliances are followed by the Gaming Entrepreneurs of India. Lots of entrepreneurs are exploring Indian market in this regard and they have come up with many innovative ideas and games. On the other hand, some Indian States expressly prohibit any form of online gaming and gambling in their jurisdictions. Indian government is devising many new methods to make e-commerce and online gaming and gambling websites taxable for their business transactions. However, till the matter is conclusively decided by the Indian Supreme Court, it would be a sound business practice to comply with all the applicable laws of India while running various online poker and online rummy websites in India.
Recently, the police of Delhi, Ahmedabad, Mumbai, etc have made arrests relating to illegal online bettings in India. This is natural as well as website developers and software makers are also required to ensure cyber law due diligence (PDF) in India. Information and communication technology (ICT) has also expanded the reach and scope of entertainment and media industry in India. However, the mobile application developers in India are not complying with Indian laws as on date. Surprisingly, the e-commerce due diligence in India is neglected by even the investors and financial institutions.
Individuals and companies providing online and mobile gaming facilities and services must not only comply with traditional laws of India but also with the Information Technology Act, 2000 (IT Act 2000) and many other techno legal regulations as applicable in India.
Mobile games providers are also “Internet intermediary” within the meaning of IT Act, 2000 and they can be held liable for violation of Internet intermediary obligations.
The liability of directors can be found under various Indian laws like IT Act, 2000, Companies Act, 2013, Code of Criminal Procedure, 1973, Indian Penal Code, 1860, etc. Online gambling and betting in India is strictly regulated and any deviance is considered to be a crime. Recently, the Enforcement Directorate (ED) raided and searched many Bitcoin companies operating in India. As many of the high-rollers do not divulge the source of the money they spend gambling, the casinos are also unable to keep an account of the same,” said an I-T sleuth.
The CBI said that by setting up the new unit, India will become one of the few nations in the world to have a dedicated set up as part of its federal investigative agency that focuses on sporting frauds. Patnaik and Ibrahim Kalifulla had already reserved orders on the plea of Cricket Association of Bihar for a further probe by an independent panel, preferably by Justice Mudgal panel itself.
The court wants Justice Mudgal to lead the probe again, but the Board of Control for Cricket in India is for a new man to head the second round of investigations. As a result they are frequently prosecuted in India for violating online gaming and online gambling laws of India. Whether by design or ignorance, online poker websites in India are violating these laws of India. Entrepreneurs in these fields have started exploring Indian markets to establish their ventures in India. However, we have no dedicated online gambling laws in India and the legal jurisprudence in this regard is still evolving. As the matter involved information technology and the website has an online presence, the issues of internet intermediary liability and cyber law due diligence (PDF) would also arise.
Although online gaming market in India is booming yet regulatory compliances cannot be ignored. Accordingly, a letter has been addressed to the Director, Indian Computer Emergency Response Team (CERT-In) at New Delhi, with a request to block the operations of the website in Andhra Pradesh, which is a lottery free state, the CID chief said in the statement. We are also frequently approached regarding the legality of opening an online poker website in India. However, online poker activities are governed by multiple laws of India and all of them need to be duly complied with to run a legal online poker activity. Similarly, the laws pertaining to online poker are also scattered under different legislations.
There is also a general confusion regarding online gaming and online gambling regulatory requirements in India. An online gambling or online poker website may be legal in one country but it may be illegal in another country like India. Few of them have even considered using Bitcoins for online gambling and online gaming purposes. For instance, compliances in the field of encryption, cloud computing, cyber law due diligence (PDF), Internet intermediary obligations, payment gateways, mobile applications development, online gaming websites development, etc are still not taken care of by various online gaming and online gambling websites and entrepreneurs.
Perry4Law strongly recommends that online gaming and online gambling entrepreneurs must duly comply with techno legal compliances before launching their project and website. The Supreme Court has clarified that the present petitions before it pertain to offline rummy only and managing online rummy or online poker is still a legally risky area.
Thus, legality of online poker or online rummy is still a grey area and online gaming and gambling stakeholders must comply with the applicable laws of India till Indian government comes up with some policy or law in this regard. It is true that till now managing online poker or online rummy activities in India are not governed by a dedicated legal framework but this is no reason to ignore the provisions of Information Technology Act, 2000 and other applicable laws of India.
This has exposed all those who are playing card games with stakes to numerous litigations across the India. The power to make rules and laws regarding gaming and gambling has been conferred upon the states. As a result Indian government is finding it very difficult to deal with online gambling in India. This has also resulted in increased numbers of arrests and prosecutions of various individuals and companies in India. For one an online game may be skills based game hence allowed whereas for another it may be an act of gambling hence punishable. This means that till the time Supreme Court actually says that online rummy, online poker and online card games are legal in India, majority of these gaming stakeholders may be exposing themselves to legal risks and civil and criminal liabilities. Recently the owner of an online betting website for IPL 7 was arrested in Mumbai for allowing betting on his website. Other issues that require techno legal legislation skills on the part of Central Government are blocking of illegal gambling websites in India, taxation issues, online gaming regulations, mobile gaming regulations, payment gateways issues, mobile payment issues, mobile applications legal issues, etc. The decision of Indian Supreme Court may establish legality or illegality of online games like rummy, poker, etc. The Court issues a notice to the Centre asking it to spell out its position on the legality or otherwise of the online game of rummy and card games involving stakes. The Gambling (Licensing and Advertising) Act 2014 of UK (PDF) has made some significant changes in the way oversees online gaming and gambling service providers have to operate in UK or target UK players.
The Act has also introduced 15 percent point of consumption tax applied to gaming operators. GBGA Chief Executive Peter Howitt explained in a statement released on Monday, “The only beneficiaries of this change are the UK domestic industry and the Gambling Commission itself, which has persuaded the UK government that it should be the global regulator of this high tech and complex industry.” The GBGA also claims that this regime impedes the right to free movement of services as outlined by Article 56 of the Treaty of the Functioning of the European Union.


The position as on date is that online rummy and online poker are still legally risky in India. This has made the Legal Position regarding Online Games like Rummy, Poker, etc really confusing and murky.
However, Online Gaming Entrepreneurs are very hopeful with the decision of the Supreme Court that may be pronounced in late 2014 or in the year 2015.
Further, parallel analogy and interpretation vis-a-vis Online Poker is not only misplaced but is also not in question before the Supreme Court of India.
And applying the offline version of the gaming activities to online games, including upon Online Poker and Online Rummy, by Gaming Entrepreneurs of India is “Not a Legally Sound Strategy”. In short, Online Rummy and Online Poker may still be an Offence and Punishable in India unless proper Cyber Law Due Diligence (PDF) and Techno Legal Compliances are followed by Gaming Entrepreneurs. While this is a good sign for Indian economy and business community yet it is also important for Indian government to suitably regulate the business affairs of these gaming portals.
As on date we have no dedicated online gaming and gambling law in India and application of old laws to this new segment is creating many problems. Now it has been mandated that foreign companies and e-commerce portals would be required to register in India and comply with Indian laws. In fact, most of the e-commerce websites of India are already on the regulatory scanner of Enforcement Directorate (ED) for possible foreign exchange and foreign direct investment (FDI) violations. Otherwise, civil and criminal prosecutions may occur and that would be a major setback for the gaming entrepreneurs of India. The sports integrity unit of Central Bureau of Investigation (CBI) would also curb illegal sports betting in India.
He has been booked under various IPC sections of gambling, cheating, forgery, breach of trust and Information technology (IT) act and will be produce in the court on Wednesday.
Even mobile application developers are liable for violation of Indian laws through their applications. Along with these growth trends there are also many challenges that must be taken care of by these industries.  These include cyber law due diligence requirements (PDF) and cyber security compliances as well. While online gaming market of India is fast growing yet when it comes to rules and regulations various gaming stakeholders are very lax in following the same.
Even the legal risks for companies developing e-commerce and online and mobile gaming applications and websites in India are well known.
However, online gambling and online betting are still not considered to be legal in India except in certain circumstances. Many online poker players in India also play the same in active violation of the laws of India in this regard. Some of them have even established their businesses in neighbour countries like Nepal and Sri Lanka so that the moment Indian market is liberalised they can easily establish their venture in India.
Both the Indian government and law enforcement agencies of India are trying to tackle technology related crimes and offences in India but without much success. As per media reports, the Crime Investigation Department (CID) of the Andhra Pradesh police had sought a ban on the website of “Playwin” which has allegedly been selling online lotteries banned in the state. It seems online gaming and online gambling industry of India is not considering regulations while conducting their businesses in India. Most of the online poker websites in India are violating Indian laws and may be prosecuted as well in the near future.
The ultimate test of legality of an online poker website in India is whether it is complying with different applicable laws of India.
Recently, Kerala refused permission to Future Gaming Solutions India Private Ltd to sell Nagaland lotteries in the state. Any entrepreneur who wishes to explore multiple markets around the world must keep in mind the conflict of laws aspect of online gaming industry.
However, it is of utmost importance that an online poker website in India must be legally opened and managed in a lawful manner from time to time. Recently, the Mumbai Crime Branch busted an online gambling network spreading across India. However, in the absence of a holistic and comprehensive regulatory framework in this regard, online card games and online games are still legally risky ventures.
As a result different states have passed different laws upon gaming and gambling in their respective states. For instance, recently the owner of an online betting website for IPL 7 was arrested in Mumbai for allowing betting on his website.
In short, legality of online gambling and online gaming is still a grey area that requires extensive legal research and compliances before launching the website in this regard. The court also extended its stay on Madras High Court judgment that had held these games illegal as these involved gambling. We at Perry4Law strongly recommend that online gaming entrepreneurs must ensure techno legal compliance in order to stay on the right side of the law till legal position is made clear in this regard. Due to diverse legal actions and situations, the matter has reached before the Supreme Court of India. This would require many techno legal compliances on the part of these companies especially following of the cyber law due diligence (PDF) and e-commerce due diligence in India.
Similar is the case with online rummy and none can clearly say that online rummy is legal in India to play till the matter is settled by either the Parliament or the Supreme Court of India.
The Andhra Pradesh CID has requested Cert-In to block Playwin’s online lotteries website in AP. He alleged that the Chennai Police had indulged in a cover up operation and had not conducted the probe in a free and fair manner.
Amazon is also targeting home entertainment segment as it bought Videogame Studio Double Helix Games.
However, these players have to resolve many techno legal issues before they can establish their businesses in India. The truth is that opening of an online poker website and playing online poker in India may be both legal and illegal depending upon the facts and circumstances of each case.
This is partly due to lack of awareness and partially due to indifference of Indian government to bring suitable policy reforms in this field.
This, unfortunately, is not happening presently and like Bitcoins the online poker websites may found themselves on the wrong side of law very soon.
Further, online betting laws in India are also differently applicable to different situations. The state of Sikkim grants provisional and regular licence under the Sikkim Online Gaming (Regulation) Act, 2008. There are very specific legal requirements regarding opening a legal online poker website in India. Some states have absolutely prohibited gambling in their jurisdiction whereas some have allowed the same to be done within their jurisdictions.
The Supreme Court of India has to decide these complicated issues in the present litigation.  If the SC holds online rummy, online poker and card games for stakes as gambling, the states could prosecute those engaged in such activities within their jurisdictions.
However, there are great misunderstandings and misconceptions regarding the nature of present legal proceedings before the Indian Supreme Court.
In fact, ancillary laws applicable to online poker and online rummy are flouted by almost all the poker and rummy websites operating in India whether they are Indian or foreign. In the past, Kerala refused permission to Future Gaming Solutions India Private Ltd to sell Nagaland lotteries in the state. Further, taxability of online poker websites of India is another crucial issue that is frequently ignored by poker entrepreneurs.
India is also contemplating formulating anti match fixing laws to prevent illegal online betting and match fixing in various games.
The Central Bureau of Investigation (CBI) has also established a Sports Integrity Unit to investigate illegal sports betting in India. In Sikkim, a provisional And Regular Licence can be obtained under the Sikkim Online Gaming (Regulation) Act, 2008.
However, if the Supreme Court decides in favour of such online games with stakes, then the Central Government would be required to bring uniform legislation for India. If we analyse these negative developments, it is clear that online betting in India is more on the side of contravention of laws than their compliances. The laws and regulations for online gambling and online gaming in India must be religiously followed by all the stakeholders in their own interest. Presently many mobile application developers are violating Indian laws and may be prosecuted in the near future. The legality of use of Bitcoins for gaming and gambling in India is also doubtful and full of legal risks.



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