Supreme Court rejects gaming firms’ review pleas, upholds Tamil Nadu and Karnataka online gaming bans

The Supreme Court has dismissed a batch of review petitions challenging its May judgment that upheld the validity of the Tamil Nadu and Karnataka laws banning online games for stakes.

While dismissing a batch of review petitions filed by gaming companies led by Junglee Games India, a Bench comprising justices JB Pardiwala and R Mahadevan said: "We have carefully gone through the Review Petitions and the connected papers. We find no merit in the Review Petitions and the same are, accordingly, dismissed."

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The Supreme Court had on May 27 upheld bans by Tamil Nadu and Karnataka on online gaming, rejecting the arguments of industry groups and skill-based gaming companies. The court said states can ban online games, including those of skill, if they pose a threat to them and the wellbeing of the public.

The bench of justices JB Pardiwala and R Mahadevan had then endorsed the laws enacted by Tamil Nadu and Karnataka criminalising online games, irrespective of whether they are games of skill, if played for a bet, money or any other stake.

“Since betting and gambling are treated as res extra commercium (things outside commerce), no fundamental right can be claimed to carry on such activities,” it said.

If games of substantial skill are conducted in a manner that they start to pose problems for the state or cause harm to the public, states will not be powerless to regulate such games, the apex court ruled.

“When the element of betting and gambling enters the picture, the nature of the game ceases to be of relevance,” the judges held, adding that staking money on an uncertain event raises concerns of addiction and drives the desire to gain even more.

The May judgment said online money gaming has been disturbing the tranquility of the public by making betting and gambling more normalised and accessible. Therefore, states can invoke public order and seek to curb it, the court said.

The state's competence to regulate certain activities also enables it to prohibit them, the top court said, adding that the Tamil Nadu and Karnataka laws are supported by empirical data, contrary to the gaming companies' assertion.

The SC judgment had come on various appeals filed by Karnataka and Tamil Nadu against their respective high courts’ decisions that struck down the bans on online gaming.

Skill-based gaming firms Junglee Games, Play Games24x7 and Head Digital Works as well as the All India Gaming Federation and Federation of Indian Fantasy Sports had supported the high court rulings revoking laws banning online rummy and poker with stakes.

They argued that games of skill are a distinct class and that this had been recognised by courts as distinct from games of chance. This distinction is vital because states do not have legislative competence over games of skill but may regulate games of chance, the firms said, adding that when one is playing a game of skill, whether it is played physically or virtually, it makes no difference.

Stating that cybercrime had reached epic proportions as 28,000 cases were filed in just three years, the state governments argued that a law against online gaming is needed to maintain public order. Several people have committed suicide and families have been ruined due to online gaming, they said.

“Therefore, the Karnataka Police (Amendment) Act, 2021, which made criminalising wagering, betting or risking money on the unknown result of an event was specifically required to be suitably deal with the evolving situation arising from the ill effects of online gambling," the Karnataka government stated in its appeal.

The Madras High Court had struck down the Tamil Nadu Gaming and Police Laws (Amendment) Act of 2021 that banned playing of games such as rummy and poker online with stakes. However, the high court had said that there was nothing to prevent the state from enacting a new law to regulate these games.

The Karnataka High Court had quashed the state government's ban and the legal provision that criminalised betting and playing games of skill, including online games. It had held the 2021 Amendment Act as unconstitutional, saying there cannot be any ban on online games of skill. It had restrained the state enforcement agencies from interfering with the online gaming business and allied activities. However, it said that nothing in its judgment should be construed to prevent appropriate legislation on betting and gambling in line with the constitution.