Will Notify Rules Under Online Gaming Act Soon: Centre To Delhi HC

The Centre on Tuesday (September 2) reportedly informed the Delhi High Court (HC) that it plans to “soon” constitute a regulatory authority and frame rules and regulations under the new online gaming law.

“We are in the process of framing rules and contemplating constituting the authority also. The government is promoting online gaming. We are not against it. But online money gaming results in addiction in children, suicides etc,” Solicitor General (SG) Tushar Mehta was quoted as saying by Economic Times.

The comments came as a division bench of the Court, comprising Chief Justice DK Upadhyaya and Justice Tushar Rao Gedela, was hearing a petition filed by real-money gaming (RMG) platform Bagheera Carrom.

The plea reportedly urged the Delhi HC to strike down the Act on the grounds it was promulgated “in haste, without stakeholder consultation and in violation of the fundamental rights, due process of law, federal principles, and the doctrine of separation of powers.”

SG Mehta also told the HC that steps will be taken to constitute the regulatory authority and frame the requisite rules once a notification is issued under Section 1(3) of the Act. It is pertinent to note that while the Act has received President Droupadi Murmu’s assent, it has not been notified yet.

Making his case, the SG also said that online money games resulted in addictions and suicides, particularly among children.

After hearing the government’s arguments, Justice Upadhyaya reportedly told the petitioner that “unless a notification is issued, this Act cannot come into being… your (petitioner’s) apprehension that you will be prosecuted is not live as of today. We expect the government to frame rules. There cannot be an assumption that they won’t constitute the authority. They may constitute the authority also. We are to wait”.

While observing that apprehensions regarding the new online gaming laws may be “ironed out” after the rules are framed, the bench posted the matter for next hearing after eight weeks.

Meanwhile, the petitioner’s counsel Harsh Jaiswal told ET, “The stand taken by (the) court is a big relief for all the stakeholders in the market. The whole apprehension of danger is gone. The SG has clarified that (the) Act has not been enforced and will not be until rules and regulations are in place”.

Bagheera Carrom Vs Centre

In its petition before the Delhi HC, the gaming company termed that the new online gaming Act is “ultra vires, unconstitutional, arbitrary, vague, (and) disproportionate”. The plea also called the new rules violative of Articles 14, 19, and 21 of the Constitution, and beyond the legislative competence of Parliament.

It has also pitched for “reading down” of the prohibitions laid down under various provisions of the Act to bring them in line with judicial precedents holding skill-based games legally valid. The company has also called for preserving the constitutional distinction between games of skill and games of chance to protect its “right” to carry on its legitimate business activity.

Bagheera Carrom also alleged that the online gaming Act “indiscriminately” banned all forms of online money games, irrespective of whether they are games of skill or chance.

“The Act imposes a blanket prohibition which is wholly disproportionate to its stated objectives and disregards the possibility of achieving regulatory safeguards through less restrictive means such as age-gating, monetary caps, and prohibiting manipulative algorithms. The Act further violates Article 21, … creating legal uncertainty, a chilling effect, and exposing genuine businesses like the Petitioner to penal consequences without fair warning,” the plea reportedly read.

The petitioner also alleged that its legitimate business, despite “lots of investment”, has been “jeopardised by the vague, unfair and overbroad provisions” of the Act.

Notably, this comes a week after the Karnataka High Court sought Centre’s response on the petition filed by RMG platform A23’s parent Head Digital Works against the government’s complete ban on online real money games.

This follows the Parliament passing the contentious Bill last month, which outlawed all money-based online games. While operating such platforms is illegal, banks and other financial institutions will also face fines for facilitating transactions for these players.

The aftermath saw real-money gaming giants like Dream11, MPL, WinZO and Games24x7 shut down their RMG operations, with their valuations and business models evaporating overnight.

With the Bill, an industry worth about INR 30,000 Cr has been razed to the ground and the companies are firing employees in droves as they look for new monetisation streams.

The post Will Notify Rules Under Online Gaming Act Soon: Centre To Delhi HC appeared first on Inc42 Media.