In a significant ruling, the Supreme Court on Wednesday held that there is no fundamental right to engage in betting or gambling. The Court upheld laws enacted by Tamil Nadu and Karnataka that prohibit online games played for money or stakes, including rummy, poker, and fantasy sports.
A Bench comprising Justices J.B. Pardiwala and R. Mahadevan delivered the judgment in State of Tamil Nadu v. Junglee Games. The Court set aside earlier decisions of the Madras High Court and Karnataka High Court, which had struck down the respective State laws.
Betting and Gambling Not Protected Under Fundamental Rights
The Supreme Court reiterated that betting and gambling fall within the doctrine of res extra commercium. This doctrine treats certain activities as outside the scope of lawful trade and commerce.
The Bench observed that individuals cannot claim a fundamental right to carry on betting or gambling activities. Since these activities fall outside protected commercial activity, Article 19(1)(g) of the Constitution does not apply.
Skill vs Chance Becomes Irrelevant When Money Is Staked
The Court clarified that the distinction between games of skill and games of chance loses significance once betting or wagering is involved.
According to the Bench, the nature of the game becomes irrelevant when participants stake money on uncertain outcomes. Whether the game involves skill or chance, the introduction of wagering brings it within the scope of betting and gambling laws.
The Court rejected the argument that betting on skill-based games falls outside the legislative powers of States. It acknowledged that games of skill may not amount to gambling by themselves. However, States can regulate or prohibit betting on such games.
Public Health and Social Concerns
The Bench highlighted the harmful effects of online money gaming. It noted that wagering on uncertain outcomes can lead to addiction, financial losses, and compulsive behaviour.
The Court also accepted the States’ concerns about the broader social impact of online gaming. These concerns included financial distress, family problems, and reported cases of suicide linked to gaming addiction.
On this basis, the Court held that the impugned laws serve legitimate public health and public order objectives and are constitutionally valid.
Tamil Nadu Law and High Court Challenge
Tamil Nadu first introduced an ordinance in November 2020. It later replaced the ordinance with the Tamil Nadu Gaming and Police Laws (Amendment) Act, 2021.
The amendment expanded the definition of “gaming” under the Tamil Nadu Gaming Act, 1930. It inserted Section 3-A, which prohibited wagering in cyberspace. The law also removed protections previously available to games of skill.
As a result, online games such as rummy and poker became punishable when played for stakes.
The State defended the law by citing concerns about addiction, fraud, and suicides associated with online gaming.
Gaming companies challenged the amendment before the Madras High Court. They argued that courts had consistently recognised rummy as a game of skill. They relied on decisions such as Chamarbaugwala, K. Satyanarayana, and K.R. Lakshmanan.
In August 2021, the Madras High Court struck down the amendment. The Court held that the law was overly broad and unconstitutional. However, it allowed the State to enact a fresh law that complied with constitutional requirements.
Karnataka Law and High Court Decision
Karnataka enacted the Karnataka Police (Amendment) Act, 2021, to regulate online gaming involving stakes.
The law expanded the definition of gaming to include online wagering through electronic transfers, virtual currency, and similar mechanisms. It also increased penalties and made several offences cognizable and non-bailable.
Gaming companies and industry groups challenged the law before the Karnataka High Court.
The State defended the legislation by referring to numerous gaming-related incidents and concerns about public health and public order.
In February 2022, the Karnataka High Court struck down the amendment. The Court held that moving a game from a physical platform to an online platform does not change its character as a game of skill.
Supreme Court Affirms States’ Regulatory Powers
Both Tamil Nadu and Karnataka appealed against the High Court judgments.
The Supreme Court examined whether State legislatures have the power to regulate or prohibit online gaming involving stakes. The Bench answered the question in the affirmative.
The Court held that States can impose restrictions in the interests of public health and public order. This power extends even to games of skill when betting or wagering forms part of the activity.
Accordingly, the Supreme Court upheld the validity of the challenged laws and affirmed the States’ authority to regulate online gaming involving monetary stakes.
