'No Constitutional Protection For Betting On Games Of Skill' : Supreme Court Upholds TN, Karnataka Laws Banning Online Games With Stakes

The Supreme Court recently upheld the constitutional validity of Tamil Nadu and Karnataka laws that prohibit online betting and wagering on games, holding that State legislatures are competent to legislate on betting even when the underlying game is one of skill.A bench of Justice JB Pardiwala and Justice R Mahadevan held that States have power to regulate and prohibit betting on games of skill under Entry 34 of List II of the Seventh Schedule of the Constitution, which empowers States to legislate on “betting and gambling”. The constitutional protection available to games of skill does not extend to wagering or betting conducted on such games, the Court held.“While it may be true that games of skill may not get covered by the expression “gambling”, it is not correct to say that even “betting” on games of skill would be out of the competence of the State Legislature to legislate upon”, the Court held.The Court also held that online gaming companies do not have a fundamental right under Article 19(1)(g) to carry out trade involving betting and gambling."As far as the contention of the online gaming companies that the legislation violates their fundamental rights under Article 19(1)(g) is concerned, it has to be rejected at the outset for the simple reason that once the trade being carried out by the companies is classified as a “betting and gambling” enterprise, it becomes res extra commercium and the question of applicability of Article 19 does not arise", the Court held.The Court allowed appeals filed by the States of Tamil Nadu and Karnataka against judgments of the Madras and Karnataka High Courts that had struck down amendments targeting online gaming platforms. The dispute arose out of the Tamil Nadu Gaming and Police Laws (Amendment) Act, 2021, the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Gaming Act, 2022/2023, and the Karnataka Police (Amendment) Act, 2021.Tamil Nadu and Karnataka had amended their laws to address online betting and wagering conducted through computers, mobile applications and other digital platforms. The laws removed earlier statutory protections that had exempted wagering on games of skill and brought online betting activities within the scope of penal provisions.Both High Courts had held that games such as rummy and poker were games of skill and could not be brought within the scope of “betting and gambling” under Entry 34 of List II of the Seventh Schedule and had consequently struck down the impugned provisions.The Supreme Court observed that both High Courts had adopted an unduly narrow interpretation of Entry 34, effectively rendering both the States powerless to prohibit the activity of betting and gambling. The Court rejected the view taken in the impugned judgments that the expression “betting and gambling” should be interpreted as meaning only “betting on gambling”. “The finding in the impugned judgments that the expression “betting and gambling” ought to be interpreted as “betting on gambling” is a clear Constitutional aberration, tinkering with the Constitution or actually rewriting the Constitutional text which Courts are not legally entitled to do”, the Court held.The Supreme Court held that the Constitution does not deprive States of the power to regulate or prohibit betting merely because the betting takes place on a game that predominantly involves skill. The Court clarified that although games of skill may not themselves amount to gambling, betting on such games does not automatically enjoy constitutional immunity.The Court held that once betting and wagering enter the picture, the nature of the underlying game becomes irrelevant. It observed that both betting and gambling involve staking money on an uncertain event and are associated with addiction and the desire for monetary gain. Consequently, States have long been permitted to regulate or prohibit such activities. The Court also rejected the argument that the impugned enactments were manifestly arbitrary or disproportionate. The Court held that betting and gambling activities do not enjoy protection under Article 19 of the Constitution. While games of skill themselves are protected by Article 19, betting or wagering on such games is not entitled to constitutional protection unless the legislature expressly creates an exception, the Court held. The Court held that in the absence of protection under Article 19, a total prohibition on such activities would not fail the test of proportionality.“Games of skill would be protected by the constitutional guarantee laid down under Article 19, but betting or wagering on any game, be it a game of skill, would not be entitled to receive any such protection, unless the Legislature creates an exception in favour of such betting on games of skill”, the Court held.Apart from Entry 34, the Court held that the States could also draw legislative support from Entry 1 of List II relating to public order. The Court observed that the impact of online betting...

'No Constitutional Protection For Betting On Games Of Skill' : Supreme Court Upholds TN, Karnataka Laws Banning Online Games With Stakes

Amisha Shrivastava

While games of skill may be protected by Article 19, wagering on games of skill does not enjoy such protection, the Court held.

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Amisha Shrivastava

'No Constitutional Protection For Betting On Games Of Skill' : Supreme Court Upholds TN, Karnataka Laws Banning Online Games With Stakes

Amisha Shrivastava

While games of skill may be protected by Article 19, wagering on games of skill does not enjoy such protection, the Court held.

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INR 1099+GST

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Amisha Shrivastava

This is a premium content
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