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IT Rules 2021: How will it impact real money gaming websites

By Jay Sayta

Over the last few months, there has been a great deal of discussion and debate on the legality of real money games like poker, rummy and fantasy sports and whether such online games played for stakes should be regulated or banned.

Last year, two southern states, Andhra Pradesh and Tamil Nadu passed ordinances to ban real money online games. The Kerala government issued a notification a couple of weeks ago removing the exemption for online rummy played for stakes from the list of skill-based games. On the other hand, the Meghalaya government issued an ordinance last month bringing all games of skill and chance under a licensing regime.

Other states like Karnataka, Gujarat and Madhya Pradesh, on being nudged by their respective High Courts are also said to be contemplating similar bans for online real-money games, gambling, and betting.

After the Andhra Pradesh amended the Andhra Pradesh Gaming Act, 1974, to outlaw all kinds of online games played for money or stakes, Chief Minister YS Jagan Mohan Reddy wrote a letter to Union Minister for Communications, Electronics, Information & Technology, Law & Justice, Ravi Shankar Prasad on October 27, 2020, asking his ministry to direct ISPs to block a list of websites involved in online gambling, betting and skill-based games for stakes.

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Reddy noted that if the ISPs do not take steps to block access to online gaming and gambling websites and apps in Andhra Pradesh, the ISPs would also be deemed to be assisting the operation of online gaming and are liable for punishment.

Position for blocking gambling websites under the old IT Rules

Under the old Information Technology (Intermediaries guidelines) Rules, 2011 (“Old Rules”), the position as to whether state governments could ask ISPs to block access to content was not fully clear. Perhaps due to this ambiguity, Reddy had chosen to urge the Union IT Minister asking the centre to block ‘gambling’ websites rather than directing ISPs himself.

As per Rule 3(2)(b) of the Old Rules, intermediaries such as ISPs, hosting providers, search engines, online market places etc. are required to inform users not to host, display, upload, modify, publish, transmit, update or share any information that inter alia is relating to or encouraging gambling.  

Further, under Rule 3(4) the intermediary on obtaining knowledge or being brought to knowledge by an affected person of any content violating Rule 3(2) was obligated to disable such information within 36 hours of receipt of such request. 

This sub-clause was however read down by the Supreme Court in the Shreya Singhal case and the court ruled that an intermediary was liable to disable content only on receipt of a court order if such content is covered under reasonable restrictions given in Article 19(2) of the constitution.

Changes in IT Rules

The Information Technology (Intermediaries Guidelines and Digital Media Ethics Code) Rules, 2021 (“New Rules”) published by the central government on February 25, 2021 make significant changes to the due diligence procedure to be followed by intermediaries as well as brought a regulatory framework for OTT and online news platforms. The implications of the New Rules and whether they are constitutional valid is justifiably being widely debated, and a conclusive answer to some of the legal questions that are raised against the rules will likely be answered by the Supreme Court in the near future.

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However, as the New Rules stand today, there are no significant changes in the language used in the Old Rule 3(2)(b) and new Rule 3(1)(b)(ii), requiring intermediaries to prominently publish rules and regulations, privacy policy and user agreement requiring the user to not publish, host, transmit or share any information that is inter alia relating to or encouraging gambling.

Significantly, under the new Rule 3(1)(d) of the New Rules, an intermediary is obligated to not host, store or publish content which is prohibited by any law for the time being in force in relation to the interest of the sovereignty and integrity of India; security of the State; friendly relations with foreign States; public order; decency or morality; in relation to contempt of court; defamation; incitement to an offence relating to the above, or any information which is prohibited under any law for the time being in force.

The prohibition on content relating to sovereignty and integrity, security of the state, friendly relation with foreign states, decency and morality, contempt of court and incitement to offence are all covered under reasonable restrictions to free speech under Article 19(2) of the Constitution and also referred in the Shreya Singhal judgment as categories of content that may need to be removed by intermediaries. However, besides these categories there is a further addition of ‘any information which is prohibited under any law for the time being in force’ that is brought within the ambit of the new Rules. Further, under the proviso of the sub-rule, Appropriate Government or its Authorised Agency can direct the intermediary to remove or disable any content that is prohibited under any law for the time being in force. 

The terms ‘Appropriate Government’ and ‘law’ are not defined under the New or Old Rules, but have been defined under the parent IT Act. Appropriate Government has been defined to mean state government, in respect of matters relating to List II of the Seventh Schedule of the Constitution (‘State List’) and law includes Acts passed by state legislatures or Ordinances promulgated by the state government. 

Consequences for real money gaming companies

The ambit of the term “any information prohibited under any law” is fairly broad. It is also important to note that gambling and betting falls squarely within the state list, and the central government has also specified this vis-à-vis legality of online gambling and betting on numerous occasions (including while answering questions in Parliament).

Consequently, it is now possible for any state government where all online real money games played for stakes or money are under the ambit of their Gaming Acts (including ‘skill game companies’ fantasy sports, rummy and poker websites, which have been held to be legal by some High Courts), to direct ISPs to block websites which they deem to be gambling and consequently violative of their state laws.

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Given that Andhra Pradesh has already made such a request to the centre just few months ago and the Chief Ministers of Tamil Nadu and Puducherry have also asked the centre for similar bans, it remains to be seen if state-wise orders are now given to ISPs to block real money gaming websites and whether ISPs limit the blocking to the territorial limits of a particular state. 

The regulatory issues of real money gaming companies may only have compounded due to the changes in the New IT Rules. It remains to be seen how they will be practically implemented.


Jay Sayta is a lawyer and has advised several online gaming companies on legal, regulatory and policy issues. Views expressed are personal.

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