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Madras High Court strikes down Tamil Nadu gambling ban on constitutional grounds

The judgement termed the gambling ban as excessive and disproportionate while criticising the government for not providing data to back up its arguments. 

The Madras High Court on Tuesday struck down Tamil Nadu’s ban on gambling on constitutional grounds. The Tamil Nadu Gaming and Police Laws (Amendment) Act, 2021, and an ordinance having a similar effect passed shortly beforehand, were passed by the state’s prior AIADMK-led government. This amendment made it illegal to participate in any form of gambling that involved stakes, and provided for a punishment of up to two years or a fine of up to Rs 10,000. The Act “is declared to be ultra vires the Constitution in its entirety and struck down as a consequence,” the Madras High Court said. The petitioners in the case included online rummy platforms, poker platforms, and the All India Gaming Federation.

Petitioners in this case argued that they have had this argument validated over the years by courts (see below). They further argued that the constitution’s State List entry on gambling regulation only allowed states to regulate games that relied on stakes, a limitation that the Madras High Court determined the state government breached.

MediaNama has reviewed a copy of the judgement that was pronounced in the Junglee Games v. State of Tamil Nadu hearing.  The judgement was pronounced by Chief Justice Sanjib Banerjee and Justice Senthilkumar Ramamoorthy.

“Excessive and disproportionate”

The Madras High Court reasoned its striking down of the order with the following observations. “The State finds itself in the lonely, opposite corner, as it seeks to assert the virtues of life without betting and gambling,” the court said near the beginning of the order and chided the state government for not providing data to back up its arguments on manipulation of odds on betting websites, in spite of the government being urged repeatedly to do so.

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Constitutional challenges

  • Capricious, irrational: The state government acted “capriciously” and “irrationally,” the judgment said, terming the law excessive and disproportionate. “The legislature erred in expanding its field of legislation by widening the scope of gambling and ascribing a connotation to betting that the relevant Entry in the State List does not envisage,” the High Court reasoned. The Entry refers to the State List entry that gives states the power to regulate gambling.
    • MJ Sivani precedent refused: The state government relied on the 1995 judgement M.J. Sivani v. State Of Karnataka to justify that the definition of gaming as set out in the law (any game played for skill or chance) was supported by jurisprudence. “But such dictum of a two-Judge Bench rendered in 1995 must be seen to have been tempered by the clear enunciation of the law in such regard in the later judgment of K.R. Lakshmanan, rendered by a three-Judge Bench, when it observed that gaming would mean wagering or betting on games of chances and it ‘would not include games of skill,’” the court pointed out, essentially meaning the precedent did not withstand the scrutiny of subsequent precedent.
  • State List challenge: “The law as declared defines gambling as a game of chance which skill cannot control; and, the authority conferred on a State legislature by the relevant Entry appears to be confined to the arena of betting in games of chance. Viewed in such perspective, the impugned legislation does not appear to be genuinely referable to the field of legislation allotted to the State under Entry-34 of the State List,” the court observed. (emphasis added) Essentially, the judges said that a game is only a game of chance if skill can in no way determine outcomes.

Ban not proportionate

Why it is disproportionate: “The absurdity of the amended provisions has more to do with all forms of games – where games must be understood to be distinct from gaming, whether in the ordinary parlance or as per the convoluted meaning ascribed to it in the impugned legislation – being prohibited in cyberspace, if played for any prize or stake whatsoever. The cause for bringing the amendments does not appear to have any nexus with the effect that has resulted thereby; and that, in essence, is the unreasonableness and grossly disproportionate feature of the impugned statute.” — Madras High Court (emphasis added)

  • Prohibition criticised: The judgement observed that the government had tried to prohibit an activity that can at best be regulated under existing precedents. “The unwavering mantra of the impugned legislation is prohibition and not regulation. The Amending Act fails the constitutional test as stricter scrutiny has to be exercised when vast swathes of apparently permissible activities are sought to be prohibited rather than regulated,” the court observed.
    • Commercial activity defence: The petitioners cited the defence that stakes-based gambling that was skill-based was covered under business activities protected under the constitution, and cited a 1957 Supreme Court case, The State Of Bombay vs R. M. D. Chamarbaugwala, where this right was upheld. The High Court judgement did not consider this argument too exhaustively, as it had already determined that the law was unconstitutional and disproportionate.
  • Burden of proportionality: The court said that the burden of proportionality fell squarely on the government. “Although
    the State could contend with some degree of justification that its legislative competence extends beyond Entry 34 by drawing on, for instance, Entries 1, 26 or 33, in such event, the State should have discharged the burden of establishing proportionality,” the court said. Those three entries give states the power to control “public order,” trade and commerce within the state, and “entertainments and amusements”. In spite of this argument, the court said, there was a standard of “least intrusive” regulation that the state had failed in upholding, leading to the observation that it violated Article 19(1)(g) of the Constitution, which is the right “to practise any profession, or to carry on any occupation, trade or business”.
  • Unseverable: The court observed that it was impossible to delete just some parts of the law, as “the concept of the expanded meaning of gaming runs through the entirety of the Amending Act; so much so that it cannot be gauged with any element of certainty as to which part of the amendments the legislature would have intended to be retained as valid even if the legislature was aware that some parts thereof were invalid. In fine, it must be said that the Amending Act in its application to the Act of 1930 is so disproportionate to the objects that it sets out to achieve that no meaningful part of it – even a sliver – can be reasonably allowed to be retained or upheld as valid.” (emphasis added)

The court held that this order wouldn’t prevent the state government from regulating gambling within the constitutionally established limitations. “Whatever the financial losses the petitioners may have faced, since the object of the exercise by the State cannot be seen to be as pernicious as the law enacted for the purpose was, there will be no order as to costs,” the court concluded, indicating that while the state’s intentions were noble, the law that it came out with was harmful.

Gambling regulations in India

Gambling is a state subject, and as such, it is state governments that have been regulating the activity. Fantasy sports, online rummy, and poker platforms have proliferated in recent years, and different states have approached the subject with different attitudes; however, the operators of these sites have obtained favourable judgements from the Supreme Court and multiple High Courts that constrain state governments from banning games like rummy that have been determined to rely substantially on a player’s skill rather than pure chance.

Andhra Pradesh has banned real money gaming altogether while Uttar Pradesh has announced plans to do so respectively. It would not be surprising if these moves failed to survive legal challenges if they go as far as the Tamil Nadu law. Karnataka is reportedly planning to introduce regulations for online gaming, but its draft bill for the purpose is not yet in the public domain. Some states in the North East of the country have licensed real money gaming activities or permitted them more liberally:

  • Nagaland introduced a licensing system for games of skill, including those that are stakes-based
  • Sikkim updates its gaming laws regularly to govern betting and stakes-based gaming, and allows games that depend on player skill
  • Meghalaya has legalised both games of skill and games of chance

Update (August 6): Article updated after editorial inputs with more detail.

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