Kerala HC lifts ban on Online Rummy games by declaring it ‘game of skill’; says notification prohibiting same on account of stakes violative of Articles 14 and 19(1)(g)

Read Judgment: Head Digital Works Pvt. Ltd vs. State of Kerala &Ors

Pankaj Bajpai

Kochi , September  29, 2021: The Kerala High Court (Ernakulam Bench) on Monday declared the notification dated February 23, 2021, issued under Kerala Gaming Act, 1960, as arbitrary, illegal and violative of the fundamental rights guaranteed to the petitioners under Articles 14 and 19(1)(g) of the Constitution of India and hence not enforceable.

The Single Bench of Justice T.R. Ravi observed that since the notification has been issued in relation to a game which already stands exempted from the provisions of the Act under Section 14 of the Kerala Act and since the game does not come within the meaning of ‘gambling’ or ‘gaming’, providing a platform for playing the game, which is in the nature of business cannot be curtailed. 

Thus, the notification is in effect a prohibition of Online Rummy played for stakes and not a reasonable restriction under Article 19(6) of the Constitution of India, added the Bench. 

The observation came pursuant to petitions challenging the power of the Government to include the game “Online Rummy played for stakes” within the purview of the Kerala Gaming Act, 1960.

Going by the background of the case, the Section 14 of the Kerala Gaming Act, 1960 provides that it will not apply to any game of mere skill. However, the provision said that the Government may by notification in the Gazette exempt any game from the Act if satisfied that in such game the element of skill is more predominant than the element of chance.

Accordingly, under Section 14A, the State issued a notification exempting ‘rummy’ from the Act on the condition that no side betting shall be allowed. But, later, in February 2021, the State issued another notification amending its previous notification by inserting the words “except Online Rummy when played for stakes”.

Challenging the same, four companies engaged in the business of developing and offering online games of skill in India approached the High Court.

The counsel on behalf of the petitioners submitted that Section 14A of the Gaming Act is made to grant an exemption and not to take away an exemption that is already granted.They pointed out that while rummy played with stakes is valid, Online Rummy which is identical to rummy when played for stakes would come within the purview of the Act as per the recent amendment, which was without any rationale.

Asserting that the game of rummy was a game of skill, it was submitted that mere fact that the game was addictive did not make it a game of chance so as to come under the purview of the Act.It was also brought to notice that such amendment in the notification was not a restriction, but a total prohibition of the business.

Opposing the same, the counsel on behalf of the State contended that gambling and betting come under Entry 34 in List II and that the State was empowered to legislate on the same.

It was further contended that Online Rummy is not a game predominantly of skill and there was an element of cheating involved and that even the deal of cards was manipulated.

After considering the arguments and precedents, the High Court observed that Rummy will not come under “gambling” since “gambling” can only be on a game of chance, and therefore, the notification contended to be legislative in nature, cannot stand the test of constitutionality since under the guise of legislating on “betting and gambling”, there cannot be any legislation on something which is not betting or gambling.

Justice Ravi declared that Online Rummy played either with stakes or without stakes remains to be a ‘game of skill’, and “mere skill” contained u/s 14 and “any game the element of skill is more predominant than the element of chance” contained u/s 14A do not suggest that skill in playing a game is in any manner dependent on stakes.

Regarding the question as to whether the power available to the State to issue a notification u/s 14A to exempt a game, clothe it with a power to notify a game which is a game of mere skill u/s 14, Justice Ravi held that once a game comes within the purview of Section 14, any notification u/s 14A exempting it further as a game involving skill predominantly is only superfluous, and even without such a notification, the game stands exempted.

Therefore, the High Court concluded that what matters is not the stakes but the profit or gain made by the owner of the house, and hence, gambling was never intended to form any part of this ancient country’s trade, commerce or intercourse to be declared as free under Article 301.