1. Are Games of Skill for stakes legal in India?
The jurisprudence on the legality of skill-based games in India is derived from the principles set out in the Public Gambling Act, 1867 (“PGA”) and the Prize Competition Act, 1955 and the various state legislations on the subject. Section 12 of the PGA provides that games of mere skill are exempt from the application of the PGA. The Hon’ble Supreme Court of India and various High Courts in India differentiated between games of skill played casually and games of skill played for stakes and have opined that a game of mere skill is a game in which the element of skill predominates over the element of chance. No penalty can be imposed upon a person for playing such games of skill.
In Dr. K.R. Lakshmanan v. State of Tamil Nadu, (1996) 2 SCC 226, the SC laid down a basic principle for classification of games; a game of chance is one in which the element of chance predominates over the element of skill and a game of skill is one in which the element of skill predominates over the element of chance and held that betting on horse racing was a game of skill since factors like the fitness and skill of the horse, the weather conditions, the skill of the jockey must be accounted for by a person placing a bet.
In R.M.D Chamarbaugwala v. Union of India, (1957) 1 SCR 930, the Hon’ble Supreme Court held that competitions where the success depends upon a substantial degree of skill are not ‘gambling’ and further observed that ‘games of skill’ are business activities and shall be afforded the protection under Article 19(1)(g).
In State of Andhra Pradesh v. K. Satyanarayana AIR 1968 SC 825, the SC specifically tested the game of rummy on the principal of skill versus chance and held that rummy was not a game entirely based on chance like the ‘three-card’ game (i.e., ‘flush’, ‘brag’ etc.), which were games of pure chance. It was held that Rummy was a game involving a preponderance of skill rather than chance.
Pertinently, as per the Seventh Schedule to the Constitution of India (Entries 34 and 62 of List II), the respective state governments have been authorized to make laws on betting and gambling. In furtherance to these powers, various States have enacted legislations that allow the activities of paid games of skill, whereas some states prohibit the activities pertaining to games of skill for stakes (Assam, Tamil Nadu, Telangana, Andhra Pradesh, and Odisha).
Recently, in D. Siluvai Venance v. State represented by The Inspector of Police &Ors., Crl. OP. (MD) No. 6548 of 2020 and Crl. MP. (MD) 3340 of 2020, the Madurai bench of the Madras High Court noted that the PGA, various state gambling acts and decisions (barring a few) are only in respect of physical premises and do not refer to virtual gaming platforms. Post this order, the Tamil Nadu Gaming and Police Laws (Amendment) Ordinance, 2020 was promulgated, amending the Tamil Nadu Gaming Act, 1930 which now prohibits all games (including games of skill) for stakes.
The Andhra Pradesh Gaming (Amendment) Ordinance, 2020, amended the Andhra Pradesh Gaming Act, 1974 and now prohibits all games (including games of skill) played for stakes.
Additionally, certain states have regulated the activities of paid games of skill and chance by requiring the operator to obtain necessary licenses from the respective state governments (Sikkim, Nagaland, and Meghalaya).
2. Is the gameplay offered on Rainmaker application legal in India?
Fantasy Stock/ Crypto gaming is a game of skill since it requires the player to possess psychological skills, knowledge of statistics & probability and strategizing skill. These include creating a portfolio/ team based on the performance and value of the stock/ cryptocurrency available within the standardised benchmarks set within the application by analyzing past data, graphs, statistics and formulating strategies to build a winning portfolio / team to compete against other users in various gripping contests on the Rainmaker. The winners on the Rainmaker application are determined based on the outcome of a user’s accuracy, analysis and preponderance of skill.
The fantasy stock and cryptocurrency game and contests offered by Rainmaker are classified as, and fall within the purview of ‘games of skill’, as per principles determined under applicable laws and precedents set by the hon’ble judiciary of India. Rainmaker is a gaming platform operating as a legitimate business concern, outside the purview of gambling or betting related activities in any manner.
Let’s get gaming and “Make it Rain” !