Nagaland legalises Online “Skill Games”

Nagaland legalises Online “Skill Games”

Murali Krishnan

In what may very well be the first of its kind, Nagaland has passed a law facilitating licensing of online gaming websites, reports Glaws.

The Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Bill, 2015 has received Governor’s assent and will be published in the gazette anytime soon. The Act states in its preamble that its object is to prohibit gambling and regulate and promote online games of skill.

It enables any person or company or limited liability company which is incorporated in India, and has a substantial holding and controlling stake in India to apply for a license to generate revenue by offering game of skill on their website, mobile, television or any other online media.

The Act provides that,

“to offer “games of skill” on their website, mobile platform, television or any other online media, and earn revenue from the same whether by means of advertising revenue or taking a percentage of winnings of gameplay or charging fixed fee for membership or for downloading the game etc., it shall be necessary for the entity to obtain a valid license as prescribed under this Act.”

In fact, what the Act does is, it legalises online gaming while at the same time regulating it by laying down conditions for grant of license. Section 3 of the Act reads as follows:

“So long as the Licensee is acting in accordance with the terms and conditions of the license and is not providing the ‘games of skill’ to players from territories they are prohibited or considered to be gambling under any law applicable to that territory, the same shall be considered to be a genuine business venture not amounting to gambling.”

The Act defines Game of Skill as follows:

“Games of skill” shall include all such games where there is preponderance of skill over chance, including where the skill relates to strategising the manner of placing wagers or placing bets or where the skill lies in team selection or selection of virtual stocks based on analyses or where the skill relates to the manner in which the moves are made, whether through deployment of physical or mental skill and acumen.”

Since anybody in India can apply for a license under the Act, there is a provision in the Act to redress the complaints other States and Union territories which can bring violation of the Act or Rules to the notice of the Licensing Authority in Nagaland.

The Act prescribes a fine of Rs. 20 lakh at the first instance if found engaging in ‘games of chance’ or gambling activities. For a second violation, the punishment is simple imprisonment of 6 months.

Games like chess, sudoku, rummy, solitaire, racing games, virtual cricket, virtual soccer are some of the skill games permitted under the Act.

Vaibhav Gaggar, Managing Partner of law firm, Gaggar & Associates, spoke to Bar & Bench on the new law.

“I think it could be ground breaking. It is for the first time that an attempt is being made to bring games of skill in a regimented and regulated manner which is bound to promote the interests of the players, investors, authorities and the companies operating these games.”

Gaggar said that a genuine business venture can be prevalent all over India and there cannot be any inter-State restriction

“As law stands in India, the difference between gaming and gambling is whether game is one of skill or one of chance. If it is game of skill, then a Constitution Bench of the Supreme Court has held that it will be counted as genuine business venture. If it is a genuine business venture, it can be prevalent all over India. For example an e-commerce website might be based out of Delhi but it can supply good all over the country. So, the rationale is that you cannot restrict flow of trade between states.”

Regarding the impact of the Act, Gaggar had this to say:

“There is a lot of ambiguity regarding whether a game is one of skill or not. Some courts are also confused regarding the same. This statute is really one which helps these players come on board.

Also they are putting in systems for financial audit and audit of legal and technological certifications. This is to make sure that the companies are genuine business concerns. It creates a lot of value for players and investors. Hopefully other States would follow suit.”

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