Petition before Madras HC against unregulated conduct of Online Rummy games
Litigation News

Petition before Madras HC against unregulated conduct of Online Rummy games

The petition moved by a practising lawyer argues that online portals, including Online Rummy portals, are being misused by several companies in the name of online business and online entertainment.

Meera Emmanuel

A PIL petition has been moved in the Madras High Court seeking a ban on Online Rummy games in which foreign companies have a stake, and for the Indian Government to regularise Online Rummy where no such stake is there (M Vinoth v. UOI and ors).

"Many foreign companies have invested in the online rummy business more particularly Chinese Companies have invested in the business in India. The stake held by them is more than 70% of the total investment. It is obvious that the money earned goes to Foreign countries. It will have its adverse impact in the Indian economy and also our internal security. If the online rummy portals are not checked, regularised and monitored, it will ruin the life of youngsters and many families in India", reads the petition.

The petition moved by a practising lawyer, M Vinoth argues that online portals, including Online Rummy portals, are being misused by several companies in the name of online business and online entertainment.

Companies are "mining money by way of online Rummy as a business without any Rules and Regulations by the State and Central Government", the petitioner says.

Concerns are raised that the widespread use of smartphones in India is being taken advantage of by these companies to make people addicted to Online Rummy gambling.

In this regard, the petitioner further highlights that the smart phone industry in India is under the control of China and that various foreign companies have invested in Online Rummy in India.

The companies so named in the petition include Alibaba, French videogame company “UBISOFT”, American game company “Rockstar Games”, Noida Headquartered E-Commerce and Payments Firm PayTm and Alibaba Groups, Chinese gaming company Youzu interactive, Vietnam game developer “STOM STUDIO” and Chinese internet and gaming giant “TENCEND.”

"The major profit earned out of online rummy business in India goes to Foreign Companies. It is pertinent to note that the Government of India in its Foreign Direct Investment Rules (FDI) prohibits entities involved in gambling and betting including casinos. It also prohibits Lottery north government and private and online lottery."
PIL petitioner

The petitioner goes on to assert that Online Rummy cannot be viewed as a game of skill (as opposed to gambling or games of chance). It is stated that Online Rummy is based on algorithms, rather than skill.

The petitioner details that information regarding games played is stored in the database of the Rummy company. Algorithms then analyse this data and "make you a victim when you play continuously."

"Once you are marked as a victim you cannot make any money", the plea states.

The petitioner also disputes the claim by the game companies that Online Rummy does not have any fake players, pointing out that some players are found online 24 hours and at three tables at the same time. "Definitely a human does not have the capacity to play 3 tables at a time", the petitioner argues.

Asserting that the real-life, physical game of Rummy, which is a game of skill, cannot be compared to Online Rummy, the petitioner has contended,

"When skill based games are played or money in virtual space, it would be illegal as the degree of skill involved in games played in physical forms cannot be equated with those played online. There is possibility of manipulation including randomness, cheating and collusion in online space."
PIL petitioner

Whereas Article 19 (1) (g) protects business activities in the physical form, "online gambling conducted by gaming houses under the guise of skill game or websites are illegal in states where gambling is prohibited", the petitioner adds.

After being lured to play this game, the petitioner argues that young people lose money and die by suicide.

Concern is further raised that the Ministry of Corporate Affairs said in a RTI reply dated February 26, 2020, that the owner of four online rummy websites www.rummyculture.com, www.ace2three.com, www.khelplayrummy.com and www.paytmfirstgames.com could not be furnished. In March this year, the RBI is also stated to have replied that information regarding how the companies are making revenue and the GST applicable could not be furnished.

Asserting that the unregulated conduct of Online Rummy would be dangerous to India's economy and security, apart from having the potential to ruin lives, the petitioner has made two prayers:

  • Ban online rummy with stakes by foreign companies,

  • Direct the regularisation of online rummy without such stake.

The plea is likely to be taken up next month.

On a related note, the Madurai Bench of the Madras High Court recently asked the State to consider bringing in a law to regulate online gaming, observing that while real-world gambling has been prohibited, there is no corresponding law for online gambling.

A plea seeking action against celebrities for endorsing online gambling websites has also been moved before the Court.

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