Gaming Business in India - All You Need To Know About

Gaming Business in India - All You Need To Know About

LegalKart Editor
LegalKart Editor
05 min read 697 Views
Lk Blog
Last Updated: Apr 10, 2024

The Public Gambling Act, 1867 ("Gambling Act"), which dates back to British administration in India, and the Prize Competitions Act, 1955, are the two most important central gambling regulations in India ("Prize Act"). The anti-gambling discourse prevailing at the Gambling Act's implementation is reflected in current Indian jurisprudence. The Gambling Act applies to 16 states and union territories, although not to skill games. List II of the Indian Constitution's Seventh Schedule gives state governments the authority to control betting and gambling regulations.

Various states have adopted the antiquated parts of the Gambling Act, with the majority prohibiting betting on games of chance, which is considered gambling, while allowing participation in games of skill. Where state legislation exists, it takes precedence over the PGA's regulations. Courts have echoed this sentiment, prohibiting society from participating in skill-based games and treating gambling as a bad and dangerous vice in the past. In addition, courts have ruled that gambling is not included by Article 19 (1) (g) of the Indian Constitution, which states that the freedom to conduct business is a basic right. Gaming companies find it incredibly difficult to operate in India due to a lack of clarity around approved activities.

Requirements to Start a Gaming Business in India:

  1. A professional developer will analyse popular games and build a structure along those lines. Gaming software will set up the entire structure and add lucrative content and offers so that the gamer will spend more time and play more to earn points or offer-related items.
  2. A merchant account, which allows for easy financial operations. It must be ensured that it takes all major credit cards and that the gamer has the greatest possible experience while transacting for any game, regardless of the game module used.
  3. A dedicated server is necessary because it provides more memory and storage capacity than any other hosting solution, allowing for a quick connection to the client's favourite game and ensuring stability and reliability.

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Registration and Approval of License:

The Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2016 and the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Rules, 2016 allow for the offering of online skill games (from now on referred to as the "online game of skills law").

Law gives licences for online skill games involving activities that require players to expend effort and skill. Chess, Sudoku, Quiz, Rummy, Virtual racing, Virtual sports (Soccer/ Cricket/ Archery/ Snooker/ Bridge/ Pool), Fantasy games, and others are among the games for which the specified licence is granted. As a result, the players put up a greater effort and approach than their opponents to win.

Following receipt of the application, verification of the same by the Director, Nagaland State Lotteries, and compliance with the formalities prescribed concerning the payment of the requisite fees, the licence is granted to the applicant by the Nagaland State Lotteries within 6 months from the date of receipt of the application under the online game of skills law.

Under the online game of skills law, the licensee can provide their services to any state or union territory where games of skill are legal. The licence also allows online companies to advertise their games and gaming services in all jurisdictions where skill games are not considered gambling. The government access is required for the authorities to ensure that the licensee's actions are carried out in real time.

The licensee must pay a gaming tax/royalty of 0.5 percent of gross income, minus any service tax, bonuses, cashbacks, payment gateway fees, and so on. The licence would be valid for five years from when it was granted.

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Legal Precedents:

The Hon'ble Supreme Court concluded in the Satyanarayan Case[1] that Rummy was a skill-based game and that gambling laws should not apply. This is how various courts and states arrived to the dramatic conclusion that games of skill are not covered by the applicable states' gambling laws.

The Hon'ble Supreme Court ruled in M.J.Sivani& Ors v. State of Karnataka[2] that poker was a game of chance. The Hon'ble Supreme Court further noted that the presence of a reward is an essential aspect of gaming, and that gaming entails playing any game, be it of skill or chance, to exchange money or consideration worth money.


[1]State of Andhra Pradesh v. Satyanarayana and Ors, 1968 AIR 825.

[2]M.J.Sivani & Ors v. State of Karnataka, (1995) 6 SCC 289.