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TMI Blog2012 (9) TMI 1235X X X X Extracts X X X X X X X X Extracts X X X X ..... some other particular act specified in the agreement. (2) Every case stated under this rule shall be divided into consecutively numbered paragraphs, and shall concisely state such facts and specify such documents as may be necessary to enable the Court to decide the question raised thereby. 2. The petitioner M/s Gaussain Network Pvt. Ltd. is a company registered under the Companies Act 1956 with its head office at W 6, Greater Kailash II, New Delhi. The site for its server is however based at Kolkata. The present petition has been filed by its Director Mr. Anuj Gupta, who has been duly authorised by the Board Resolution dated 12.02.2012. As averred, the petitioner company is an internet startup company founded by eminent alumni from IIT, Delhi and other professionals with great experience in internet and financial domains. While the petitioner, through professional representatives, would conduct the on line business and carry out the operation, respondent no. 1 is an independent investor wanting to make a financial contribution which would grant her a share in the equity in the aforesaid business. 3. An agreement dated 14.02.2012 was entered into between the parties. Respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent no. 1 would not be involved in the daily operation except for important decisions which may have bearing on the equity structure. The agreement between the parties is Ex.PW1/3. Since the petitioner company is a start up venture and is not adequately funded, therefore both the parties have decided to merge expertise with necessary resources. As per the agreement, it was specifically agreed that release of the payment by respondent no. 1 would be contingent on the respondent no. 1 satisfying herself qua the legalities of the games to be launched on the website. The petitioner has therefore approached this Court to seek the opinion whether the games enumerated in the agreement fall within the ambit of Games of Skills and not Games of Chance . The petitioner therefore seeks opinion of this Court on the following queries : i. Whether games of skill are considered business activity , protected under Article 19(1)(g) of the Constitution of India. ii. Whether the Games of Rummy, Chess, Golf, Poker, Bridge, and Snooker are games of skills? iii. Whether there is any restriction on playing the aforementioned games of skill with stakes on the websites making profit? iv. Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. It is further brought to the notice of this court that some of the top Management and Technology universities have recognised Poker as an accredited academic subject. Massachusetts Institute of Technology (MIT), amongst the top ranking world universities, offers it as an academic course. Document evidencing the Poker course at the in MIT is Ex. PW1/11. 9. Reliance is also placed by the petitioner on a detailed studies conducted by Stevin D. Levitt and Thomas J. Miles on The Roll of Skill V. Luck in Poker which conclude Poker to be a game of skill. Stevin D. Levitt is an American Economist and a co author of best seller Frekonomic . The work paper along with relevant details of the authors is marked PW1/12. The Global Poker Strategic Thinking Society by Harvard Professors also conducted a detailed study on the role of skill in poker and concluded that poker is a game of skill. The study is Mark PW1/13. Poker is also taught as a strategic subject at the Harvard Law School by Prof. Charles Nesson. Website of Harvard University evidencing the schedule of the course is Ex. PW1/14. It is further testified that Bill Chen, a renowned mathematician with academic degrees from the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, it would not amount to gambling. The petitioner has also relied upon the decision of the Apex Court in the matter of State of Bombay V. RMD Chamarbaughwala reported in AIR 1957 SC 699 holding that a competition where success depends on substantial degree of Skill is not Gambling. It was also held that despite there being an element of chance, if a game is predominantly a game of skill, it would nevertheless be a game of mere skill. It is staking on chance where skill is the controlling factor. Wagering or betting on a game of skill does not come with the definition of gaming or gambling. 14. The decision of the Apex Court in the matter of K.R. Lakshmanan (Supra) and Chamarbaughwala (Supra), was relied upon in the case of The Executive Club formed by Laitha Real Estate Pvt. Ltd. V. State of A.P. reported in 1999 Cr. L.J. 35, holding that Rummy is a game of Skill and therefore whatever be the stakes involved in playing such games, would not be of any consequence. 15. The game of Chess also involves a high degree of skill. The World Championship FIDE acknowledges the superiority of a champion through his skill. It is also recognized as a mind game by the International Mind S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a game of Skill, many States in the US and other places seek to prosecute people gaming Poker. 21. In view of the material placed before this Court and the observations of the Apex Court in the matter of Dr. K.R. Lakshmanan V. State of Tamilnadu, the games of Rummy, Chess, Golf, Bridge and Billiards can definitely be opined as games of skill, the element of chance being negligible or insignificant. Poker however cannot be accepted to a game of skill. It would be legal to play Poker within the States which do not hold it as illegal, such as within the State of West Bengal as the West Bengal Gambling and Prize Money Act has specifically excluded it from the ambit of gambling. 22. It would also not be out of place to mention that the Hon'ble Madras High Court has recently held the game of Rummy to be illegal gaming in the matter of Director General of Police V. Mahalakshmi Cultural Association. The said decision is under challenge before the Apex Court and pending adjudication, has been stayed. Till such time, the game of Rummy is being opined as a game of Skill in terms of the decision of the case laws cited and the provisions of the West Bengal Gambling Prize Competitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . To answer this, a crucial factor, and perhaps the most determining one which has to be considered, is the role of the service provider offering various games (even those acknowledged as games of Skill) on payment of money. There are various sites which offer games of Skill online, free of charges. There is no illegality involved. But when the service provider partakes a slice of the winning component, it is no better than a gaming house which are illegal. 27. What constitutes a gaming house is defined under Section 3 of the Bombay Gambling Act. Section 3 of Bombay Gambling Act defines a common gaming house to include any house, room or place whatsoever, in which any instruments of gaming are kept or used for profit or gain of the person owning, occupying, using or keeping such house, room or place by way of charge for the use of such house, room or place or instruments or otherwise howsoever. 28. The facilities offered by a gaming portal would be covered within the definition and ambit of a gaming house offering games of skill on taking commissions from the winning hand. Attracting business or enticing players by alluring them with prize money is illegal. Such portals mere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Constitution of India played in the physical form. However, as held above, online games conducted by gaming houses or websites are illegal in States where gambling is prohibited. The aforesaid Article of the Constitution guarantees the citizens of India, the right to practice any profession and carry out any trade or business. This right is subject to the legality of any trade or business. Gaming is a State subject and a State can prohibit and make laws imposing reasonable restriction in the interest of general public. Gambling activities or conducting online games for profit on the gaming portals are extra commercium and cannot be included within the words trade , business or commerce . Sports betting is an offence in India and Bookies earning money from bets laid on games of Skill cannot be granted protection under Article 19(1)(g) of the Constitution of India. So, while betting or playing for money amongst players on a game of Golf, Chess, Bridge or Billiards may be permitted, they cannot be considered legal if operated by a gaming house. Such an online business activity would not be protected under Article 19(1)(g) of the Constitution of India. iv. Restriction on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for explosion and there is an increasing penetration of industry and other big houses into online gaming business. This industry continues to thrive in the environment of the ongoing development of worldwide online games. Our legislation is silent and oblivious of the issues involved. Online gaming is replacing the brick and mortar Casinos/gaming houses. They are wiping out Casinos and replacing them by offering facilities to gamblers to bet within the comfort and confines of the four walls of their own domain. The demographics and customer transaction is changing with a shift to the younger generation. There is little mechanism to check the transfer of money through the international routes. Information stored in clouds leads to jurisdictional issues. Lack of regulation results in total evasion of taxes, though vide the due diligence rules in Information Technology made in 2011, an attempt to transfer money involving online gambling is prohibited and excess to such content may be blocked. Payment gateways of gambling sites are also blocked by the Reserve Bank of India. 36. Before concluding, this Court regrets that despite service to the Government of NCT though its Law Depa ..... 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