ONLINE GAMING IN INDIA

Gaurav Shanker
Who thought that one day Shakuni’s dice game would go online? Yet that happened.

Gaming or gambling dating back to the ancient times was one of the most prominent leisure activities in India. Be it the board games in the ages of Ramayana or Shakuni’s dice game in the epic tale of Mahabharata, India had it since the very beginning.

Evidently, Indians have very well kept the age-old tradition alive and has witnessed growth in the gaming industry. The gaming industry is currently valued at $900 million (approx.) with an expected annual growth rate of 14.3%. India with the world’s largest youth population of 356 million people (300 millions of which consist of gamers) is all set to lead the global gaming market in the coming years.

Gaming or Gambling? – the two distinguished

So, evolution happened. It isn’t the old times, we’re talking centuries after the Ramayana or Mahabharata took place, now gaming has found a place of its own and gambling is mostly prohibited by law.

The courts in India have defined gambling as wagering or betting on games of chance, excluding games of skill. India happens to be one of those countries which have distinguished gaming based on games of ‘skill’ and ‘chance’.

A game of skill is one where success depends principally upon superior knowledge, training, attention and capabilities of the player. Whereas, games of chance are those games where the outcome of the game depends on sheer luck or chance of the player.

In India, games of chance are prohibited as they are covered under the definition of gambling, whereas, games of skill are permitted in India. However, the State of Odisha, Assam and Telangana has specifically outlawed both ‘games of skill’ and ‘games of chance’ in their jurisdiction.

Online Gaming

Who thought that one day Shakuni’s dice game would go online? Yet that happened.

With the modernization and evolution, internet came in and soon everything went online. The Indian gaming industry [, as well,] was no alien to this trend. The country has since seen a rapid growth in online gaming and its users. Games like Poker, Roulette, Rummy, Virtual sports/ Fantasy sports are available online for the users.

However, the legality of online gaming remains in question as currently, only Sikkim and Nagaland have codified laws regulating online gaming in India. Apart from these two States, no other State has come up with specific laws on online gaming. However, there are few States that are passing judgments favoring online gaming in their jurisdictions. The courts of Punjab, Bombay and Rajasthan have passed judgments stating fantasy sports to be a game of skill and legal in India. Those judgments were passed in favor of Dream11, an online gaming platform for virtual/fantasy sports in India that allows users to play virtual cricket, hockey, football, kabaddi and basketball.

Due to absence of any specific law on online gaming, one can also find online casinos and other foreign gambling websites allowing Indian users to gamble, but there remains an uncertainty that they may go for a toss once specific laws on online gaming are in place in India.

Foreign investment in the Indian gaming industry

Gambling is allowed in many countries but, not in India, therefore, investors should take note of certain restrictions as to investment in the Indian gaming industry. In India, investment by a person resident outside India is strictly prohibited in lottery businesses/ online lotteries, gambling and betting including casinos, etc. Certain operations such as fantasy sports games offered in India may be classified as games in which an element of skill predominates elements of chance, foreign direct investment may be permitted in such games.

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About the author

M&A Lawyer | Managing Partner

- India

Gaurav is the Managing Partner at Business Law Chamber. Gaurav’s area of practice includes corporate, project finance and real estate laws, he has advised clients on varied aspects of mergers and acquisitions (in-bound & out-bound), venture capital or private equity investments, general corporate advisory, banking finance. On real estate, he has advised on regulatory issues including FDI, SEZ, NCDs listing, and title searches. In 2012, Gaurav was awarded with the Rising Lawyer of the Year  by 'Legal Era'. Before Business Law Chamber, Gaurav has worked in leadership capacities with tier 1 law firms in India. Gaurav has extensively worked alongside various international law firms and successfully advised on the Indian laws. He has deep understanding of transaction issues, deal structuring and negotiating issues relevant to Indian and cross border transactions. Gaurav also supports the startup ecosystem by advising early-stage companies.

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