Allahabad High Court orders formation of committee to examine regulation of online gaming, betting

The Allahabad High Court recently directed the Uttar Pradesh government to constitute a High-Powered Committee to examine the need to have a law for the regulation and monitoring of online gaming and betting [Imran Khan and another v State of UP and another]..Justice Vinod Diwakar said the panel shall be headed by Professor KV Raju, the Economic Advisor to the Uttar Pradesh government, and may include the Principal Secretary, State Tax, as Member Secretary, besides other experts as members. The Court said a law must be enacted to meet the transformative changes in online betting and gaming, and took suo motu cognizance of this issue.“Their [Committee] collective input should be used to develop a comprehensive and well-structured legislative framework for regulating and monitoring online gaming and public betting,” it ordered..The Court passed the order while dealing with the petition moved by two persons accused in a case under the Public Gambling Act for quashing of the charges and trial proceedings against them.As per the police, the accused were running an online betting racket from their residence and earning crores of rupees, leading the locals in Agra to gamble away their earnings.While dealing with the case, the Court noted that the Public Gambling Act, 1867, is a colonial-era law meant to address conventional gambling like card games, betting on dice and similar forms held in physical gambling “The Public Gambling Act is a pre-digital law. It makes no mention of digital platforms, servers, or cross-border transactions. Its enforcement is limited to physical gambling houses and has no jurisdiction over virtual gambling environments accessed via mobile phones, computers, or offshore servers,” it added..The Court further observed that in the era of online gambling, the existing law has lost its impact and relevance, as there exists no definition or regulation of online gambling. It also highlighted that the law presently only provides for negligible penalties, which do not deter large-scale operations. “There is a lack of clarity on the legal status of fantasy sports, poker, and e-sports. Jurisdictional issues also arise, as online platforms operate across state, national, and international boundaries,” the Court further said..Fantasy sports in India lie in a legal grey area, straddling the line between games of skill (permitted) and games of chance (prohibited).Allahabad High Court.The Court referred to the rise of fantasy sports platforms like Dream11, MPL, and My11Circle and said that they have reshaped the Indian digital gaming landscape. It noted that in response to the sector’s rapid growth and associated legal ambiguities, NITI Aayog had released a policy paper titled “Guiding Principles for the Uniform National-Level Regulation of Online Fantasy Sports Platforms in India” in December 2020. The Court, however, noted that these guidelines are not binding in the State. “Fantasy sports in India lie in a legal grey area, straddling the line between games of skill (permitted) and games of chance (prohibited under the Public Gambling Act, 1867). Multiple High Court rulings — notably in Punjab and Haryana, Rajasthan, and Bombay — have recognized fantasy sports as a game of skill, thereby legitimizing platforms under Article 19(1)(g) of the Constitution of India -right to practice any profession,” it added..The Court also flagged that online gaming platforms use psychologically manipulative algorithms, reward systems, and notifications to encourage prolonged use. This has led to a rise in gaming addiction, anxiety, depression, and social isolation, especially among adolescents and young adults, it said.“Students are increasingly distracted by online gaming, often at the cost of their academic performance and family relationships. The disruption of sleep cycles, lack of discipline, and social withdrawal are common consequences,” it added.The Court further said that many online betting operations function outside India's jurisdiction, with servers located abroad and transactions routed through unregulated channels. This poses challenges for law enforcement and increases the risk of money laundering, financial fraud, and terror funding, it observed..Thus, the Court said a modern, technology-sensitive legislation was urgently needed to address the psychological, social, and national security implications of online gaming“Till a robust legislative framework is enacted, recognizing the digital nature of gaming and imposing clear regulatory safeguards, the fines and imprisonment terms may be revised in line with inflation and the scale of operations in Uttar Pradesh by bringing necessary amendments in the existing law, thereby making the offence non-cognizable,” it added.Meanwhile, on the merits of the case against the accused, the Court said that since it involved a non-cognizable offence, the police could not have probed it without an order of the magistrate.Accordingly, it quashed the proceedings against the accused. However, the police were granted the liberty to initiate a fresh investigation after complying with the law..Advocate Rajiv Lochan Shukla represented the accused. Advocate HP Singh represented the State. .[Read Order]