Not Proper If Anything Left Unregulated: Madras HC On Gaming Companies' Plea Against KYC, Time Restrictions In Real-Money Games

A group of online gaming companies have approached the Madras High Court challenging the regulations brought in by the Tamil Nadu Online Gaming Authority making KYC verification mandatory for playing real money games and also instructing gaming companies to impose a 'blank hour' from 12 am to 5 am restricting the players from playing real money game during this time. The bench of Justice SM Subramaniam and Justice K Rajasekar issued notices to the State Government and the Union Government returnable by 2 weeks. The court refrained from passing any interim directions.“Prohibition is different from regulation. Merely because the game is not prohibited, you can't say it shouldn't be regulated. If anything is left unregulated, it won't be proper,” the court remarked. The gaming companies sought to declare Section 5(2) read with Sections 14(1)(c) of the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act 2022 along with Regulation 4(iii) and Regulation 4(viii) of the Tamil Nadu Online Gaming Authority (Real Money Games) Regulations 2025 as arbitrary void, illegal and unconstitutional. Section 5(2) of the Act gives power to the authority to make regulations providing for time limits, monetary limits, age restrictions or such other restrictions in regard to playing online games and the procedure to regulate its own functions. As per Section 14(1)(c) of the Act, no non-local online game provider shall allow the playing of any other online games contrary to the regulations. The regulations in challenge provided for mandatory KYC regulation for initial logging with AADHAAR to be authenticated by 2nd layer verification of OTP sent to the phone number linked with the Adhaar number. The regulation also stated that blank hours be implemented for the real money games from 12 midnight to 5 am (Indian Standard Time) and no logging of the games be permitted during these restricted hours. Challenging the Act and the Regulations, Senior Advocate Mukul Rohatgi (appearing for one of the gaming companies) argued that the Rule was a prohibitory one. He argued that Section 5, which gave power to regulate itself, was invalid and inoperative in view of the central legislature – the Information Technology Act and the Rules made therein, which essentially dealt with the issues. It was argued that the aspect of timing, age, money and all was provided under the IT Regulations, and when the same existed centrally, the State could not make its own laws. He argued that if every state started imposing its own regulation, it would, in effect, destroy the business of the companies. Drawing attention to the Tamil Nadu Shops and Establishments Act, Rohatgi argued that the State had allowed gambling at clubs at any time of the day, and the only restriction was on a person playing the game in his own house. He thus argued that there was discrimination between physical rummy and online rummy. He also submitted that the restriction imposed by the State does not pass the test of reasonable restriction under Article 19(6) of the Constitution. Adding to these points, Senior Advocate Sajan Poovayya (also appearing for gaming companies) submitted that when the courts in the country have held that rummy is a game of skill and not a game of chance, the State could not prohibit the same. He submitted that when the game itself is legal, there could not be any restriction on it, and the State could not ask the game to be played during particular hours, and such a view would be paternalistic and won't satisfy the least intrusive test. It was also submitted that mandatory KYC verification for playing the games would violate the privacy of the individuals and would be against the Supreme Court's judgment in KS Puttaswamy upholding the right to privacy. Senior Advocate Raghavachari, who was representing an association of players, submitted that rummy being a game of skill, the exercise of skill cannot be taken away between 12 midnight and 5 am. He argued that when the players were allowed to play the game in the morning, how could the government say that the game cannot be played in the night when it was not prohibited? As an example, he pointed out that the government could not say smoking is injurious to health but could prevent a person from smoking only during particular hours. At this point, Justice Subramaniam, however, pointed out that merely because the game was not prohibited, it could not be said that it couldn't be regulated. To this, Raghavachari submitted that the player played the game sitting inside his home and he could do anything he wished inside his home as long as it was legal. He pointed out that once rummy was declared to be a game of skill and that it's not illegal, the state could not say that the game could not be played during certain hours. He added that the same would even be violative of Article 21 of the...

Not Proper If Anything Left Unregulated: Madras HC On Gaming Companies' Plea Against KYC, Time Restrictions In Real-Money Games

Upasana Sajeev

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