Disappointed with Tamil Nadu govt’s ordinance to ban online gaming: E-Gaming Federation

A day after Tamil Nadu promulgated an ordinance to ban online gambling, including online games of chance comprising rummy and poker, and setting up regulations for online gaming, Sameer Barde, chief executive officer (CEO) of E-Gaming Federation, has expressed his disappointment on the decision.

“We are surprised and disappointed at the Ordinance issued by the Tamil Nadu Government, which categorises Rummy as a game of chance. Being a game of skills, Rummy has been settled by the Supreme Court and held to be a protected trade under Article 19(1)(g) of the Constitution,” he said in a statement.

Tamil Nadu governor RN Ravi’s assent to ban online gaming as well as regulate such companies follows a cabinet decision to take the ordinance route to crack down on online games involving wagering, acting on a report by a committee headed by a retired judge that was evidenced addictive behavior, debt traps, and suicides caused by playing games involving stakes online.

On online rummy, the report underscored that the algorithms are known to the developers, rendering the code “pseudo-random,” and added that the possibility of deploying bots to interact with users has always existed.

“No mechanism is available for auditing the centralised server architecture of the gaming systems,” the government notification released on Friday said, referencing the report.

Barde said Tamil Nadu bringing Rummy under the ambit of a game of chance is directly in violation of the Supreme Court judgments and the recent judgment of the High Court of Madras, which overturned the law banning online games including Rummy.

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“In its detailed judgment, the Honorable High Court of Madras reaffirmed the preponderance test for distinguishing between games of skill and games of chance, especially in the context of rummy, reinforcing that both rummy and poker are games of skill.”

He added that his organisation was examining the Ordinance and would take appropriate action in due course.

Overall landscape

There have been a lot of deliberations on structuring online gaming policies as well as simultaneous crackdowns on gaming companies on allegations of tax fraud.

Last month, ET had reported that the
income tax department issued show-cause notices to seven online gaming companies and about three dozen high-value players active on their portals.

The possible tax evasion in these cases was expected to be about Rs 28,000 crore, sources hasd told ET. Income tax authorities had in February uncovered an online gaming portal with 8 million registered players and gross earnings of about Rs 58,000 crore over a three-year period.

In September,
a government panel suggested that India should create a regulatory body to classify online games as based on skill or chance, introduce rules to block prohibited formats, and take a stricter stance on gambling websites,

The panel of Prime Minister Narendra Modi’s top officials has for months been drafting regulations for the country’s online gaming sector, where foreign investors such as Tiger Global and Sequoia Capital have backed gaming startups Dream11 and Mobile Premier League, hugely popular for fantasy cricket.

The Central Board of Direct Taxes is also working out detailed guidelines on taxability of the online gaming sector to clear any ambiguity regarding taxation. Gross winnings face a flat 30% tax. The gaming portals are required to deduct tax at source at the rate of 0.1% for winnings of over Rs 10,000.

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