States are competent to regulate online gambling, read a 2014 letter from an Ministry of Home Affairs official to Sikkim’s Finance Department clarifying the legality of online gaming.
Tweeted by gaming lawyer Jay Sayta yesterday, the letter, which seemingly uses gambling and gaming interchangeably, added that this power draws from Entry 34 of List II of the Indian Constitution, which gives India’s states the powers to regulate betting and gambling.
The letter was shared with Sayta when Sikkim began the process of issuing licences to online gaming outfits under its gaming law. Games like poker, roulette, and blackjack are currently legal in the state. Other media houses have also reported on the letter over the past decade.
Why it matters: The 2014 letter complicates the Indian government’s stance that it can regulate online gaming at large in India.
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Remember: States have the powers to regulate gambling (and online gambling) in India. Some states thought that they could also regulate games held to be non-gambling games of skill by various courts (like rummy and poker)—and banned both online varieties. Multiple courts overturned these bans, arguing that states were overreaching, as they could only regulate online gambling, not online skill-based gaming. Although this regulatory skirmish remains unsettled, the Indian government has stepped in with new rules regulating ‘online games’ that don’t distinguish between games of skill or gambling games, arguably creating regulatory tension between states and the Centre. For example, one IT Minister said the Indian government has constitutional powers to regulate the sector (while saying little about state powers to do so). Another said that it was “meaningless” for states to regulate the Internet in response to online gambling bans. So, the 2014 letter compromises this stance—and could support the interests of states like Tamil Nadu that seem keen on challenging the Centre’s gaming rules on jurisdiction grounds.
Although @Rajeev_GoI says states cannot regulate online gambling & betting, a 2014 letter from Ministry of Home Affairs to the Sikkim govt says states are competent to regulate online gaming within their territorial boundaries under Entry 34 of state list of constitution.… pic.twitter.com/3DkPRO772C
— Jay Sayta (@jnsayta) June 13, 2023
Gaming & gambling are used interchangeably in almost all state gaming statutes. Online skill games may not amount to betting, gaming or gambling but by virtue of entry 33 & using the same logic as in the 2014 letter would fall within the legislative domain of states. Further,…
— Jay Sayta (@jnsayta) June 13, 2023
Letter adds that online gaming should be confined within state boundaries: “On-line gambling would have to be restricted within the State only, and cannot traverse to other States/Union Territories of India,” said the letter.
Amendments to Sikkim’s gaming law in 2015 subsequently restricted offerings of online games. “The concept of the game is to be played through intranet (terminals) which cannot traverse outside the State of Sikkim,” says the Sikkim government.
The letter added that online gaming cannot be equated with lottery, which involves drawing lots.
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