Rummy A Game Of Skill When Played With or Without Stakes: Kerala High Court While Lifting Ban On Online Rummy

The Kerala High Court on Thursday while lifting the ban on Online Rummy in the State made key clarifications on some common questions surrounding the game, particularly that online rummy played either with stakes or without stakes remains to be a 'game of skill'. 

Following the suit of the Madras High Court, Justice T.R Ravi added:

"The notification is declared 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." 

Background:

Section 14 of the Kerala Gaming Act, 1960 provides that it will not apply to any game of mere skill.

Section 14A, inserted later on, provides 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.

However, in February 2021, the State issued another notification amending its previous notification by inserting the words "except Online Rummy when played for stakes".

Aggrieved by the same, four companies engaged in the business of developing and offering online games of skill in India moved the Court.    

Contentions on behalf of the petitioners:

The primary argument put forth by the petitioners was 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. This was alleged to be arbitrary and without any rationale. 

Drawing support from the landmark decision in State of Andhra Pradesh v. K.Satyanarayana [AIR 1968 SC 825], they asserted that the game of rummy was a game of skill. 

Calling the State's counter-affidavit a 'moral lecture rather than legal contention', the petitioners further argued that the 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 of the Court that such amendment in the notification was not a restriction, but a total prohibition of the business.

Contentions on behalf of the State:

On the other hand, the Government submitted that gambling and betting come under Entry 34 in List II and that the State was empowered to legislate on the same.

The case of the respondents was 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. 

The legal contention they put forth was that the decision in the K.Satyanarayana case was delivered before Section 14 A was introduced, which made it impractical to apply the decision on all fours since the Supreme Court was not considering a case wherein the enactment contained Section 14A.

Findings:

The Court drew parallels of deciding the case to a game of rummy with a difference. 

"The Counsels have placed all their cards on the table. My effort is to arrange them in sets and to declare. If I arrange the cards skillfully and declare, then "Rummy is a game of MERE skill". If I arrange the cards without any skill and still manage to declare, then "Rummy is a game of chance". Since much water has flown below the bridge, the only skill possibly required is to understand the precedents having a binding force. And since the cards were placed before me online, this could possibly be named Online Rummy."

The question raised in these writ petitions was regarding the power of the Government to include the game "Online Rummy played for stakes" within the purview of the Kerala Gaming Act, 1960.

The Court analysed the decision in the K.Satyanarayana (supra) case where it was held that the protection of Section 14 is available in the case of a game of Rummy.

However, it also noted that a Division Bench of the Court in Ramachandran K. v. Circle Inspector of Police [2019 SCC OnLine Kerala 6788] had taken a different view. 

Nevertheless, the Bench upon finding that the conclusions drawn in the said judgment were not in accordance with the statutory provisions and the law laid down by the Supreme Court in the Satyanarayana case, concluded that the said decision was per incuriam. 

Reliance was also placed on Junglee Games India Pvt Ltd & Anr. v. State of Tamil Nadu & Ors. [2021 SCC OnLine Mad. 2767] to establish that when it comes to card games or board games when played in the physical form or in the virtual mode, there is no distinction on the basis of the skill involved. 

Important Takeaways:

(a) Rummy will not come under "gambling" since "gambling" can only be on a game of chance. The impugned 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.

(b) It was declared that Online Rummy played either with stakes or without stakes remains to be a 'game of skill'.  As such playing for stakes or playing not for stakes can never be a criterion to find out whether a game is a game of skill. The "mere skill" contained in Section 14 and "any game the element of skill is more predominant than the element of chance" contained in Section 14A do not suggest that skill in playing a game is in any manner dependent on stakes. 

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

(d) The notification has been issued in relation to a game that 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 a business cannot be curtailed. 

(e) 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.

The notification was thereby declared 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. 

Case Title: Head Digital Works Pvt. Ltd v. State of Kerala & Ors

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