24 Jul 2015 Jonas Lemberg

Breaking news: Nagaland set to become first Indian state to pass a law on online games of skill

In a move that is bound to shake the Indian gaming industry, Nagaland is set to become the first Indian state to pass a specific law on online games of skill as per local media reports. As per reports by regional news agency The Morung Express, Chief Minister TR Zeliang of the ruling Nagaland People’s Front (NPF) introduced the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Bill, 2015 in the floor of the legislative assembly on 23rd July and the Bill is likely to be passed by the assembly in the next few days.

Given the comfortable legislative majority of the ruling NPF, the passage of the Bill is a foregone conclusion. Following is the extract of The Morung Express report:

According to the statement (of the Bill), “Gambling means and include wagering or betting on games of chance but does not include betting on wagering on games of skill.”

“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 stock based on analyses or where the skill relates to the manner in which the moves are made, whether deployment of physical or mental skill and acumen.

In the statement of objects and reasons, Chief Minister stated the object of the Bill is to give effect to the provisions of the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill 2015” in order to regulate and promote the conduct of online “Games of Skill” under issue of licence by the Government of Nagaland.

The statement stated that the sector of online games of skill is already well developed and established in India and other parts of the world. However, it is yet to be regulated in the country under a formal legal framework by any state of union territory, although there is no law that presently bars the conduct of online games of skill. The law as established in this country by rulings of various courts, including the Apex Court, clearly distinguish “Games of Skill” to be not gambling, and playing “Games of Skill” with or without stake to be a genuine business venture and not amounting to gambling since winning such games depend more on skill than chance.

“The Bill seeks to regulate and promote the conduct of online “Games of skill” with the primary objective of earning revenue for the state government by way of licensing fees and royalty,” the Chief Minister stated.

It is understood that games like poker and rummy will be included within the ambit of the new Bill and a tax will be imposed on license holders. This move of the Nagaland government will add credence to the proposition that games of skill can be legally played for stakes, whether online or offline. Nagaland government’s initiative may prompt other states to regulate and license games of skill and earn revenues from the activity. Further this law once enacted would also give strengthen online rummy companies’ arguments in the pending Supreme Court Mahalakshmi Cultural Association matter that games of skill can be legally played for stakes across India, though state governments may be at liberty to impose some regulations and fees.

[Note: We are trying to get a copy of the Bill and more details on its contents. We will post latest updates and analysis on this issue very soon].

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