Recently, the Governor of Nagaland gave his assent to the
Nagaland Prohibition of Gaming and Promotion and Regulation of
Online Games of Skill Bill, 2016, and consequently, the Nagaland
Prohibition of Gaming and Promotion and Regulation of Online Games
of Skill Act, 2016 (Gaming Act) was promulgated. The Gaming Act
contemplates the regulation and promotion of "games of
skill" through the issuance of licenses.
Games of Skill
Taking into account judicial precedents on gaming thus far, the
Gaming Act has defined "games of skill" as
"including all such games where there is a preponderance
of skill over chance, including where the skill relates to
strategising the manner of placing wagers or placing bets, or where
the skill lies in team selection or selection of virtual stocks
based on analyses, or where the skill relates to the manner in
which the moves are made, whether through deployment of physical or
mental skill and acumen."
In addition to this inclusive definition of "games of
skill", certain specific "games of skill", including
poker, rummy, virtual football and virtual cricket, have been
expressly set out in a schedule.
The Gaming Act contemplates the issuance of a license to conduct
"games of skill" (on websites, mobile platforms,
television or any other online media) to a person, firm, company or
limited liability company (LLC) incorporated in India which is
substantially held and controlled in India.
A license may only be granted to persons, firms, companies, or
LLCs, who have no interest in any online or offline gambling
activities in India or overseas. Further, the executive
decision-making power of the licensee is required to be based in
India, and technology support, including hosting and management of
the website and placement of servers, is to be located in
Revenue from organising games of skill
The Gaming Act expressly permits a licensee to earn revenue from
"games of skill" including by means of advertising,
taking a percentage of winnings, charging a fixed fee for
membership, or for downloading the game.
The Gaming Act helpfully clarifies that once a license for
"games of skill" has been obtained, wagering or betting
on online "games of skill" or making a profit by
providing a medium for playing "games of skill" will not
amount to gambling (which is illegal and punishable under various
central and state gambling laws).
Offer of games of skill throughout India
A licensee is allowed to offer "games of skill" across
India, in states where such games are not classified as gambling.
Additionally, a state government, which is of the opinion that a
licensee is offering "games of skill" in such state in
contravention of the Gaming Act or local statutes, may bring such
contravention to the attention of the licensing authority under the
The Gaming Act discusses the framing of rules for its proper
implementation, and for setting out the terms and conditions under
which a license may be issued. These rules may also discuss the
license fee payable by a licensee to the state government and other
administrative issues. These rules are presently being prepared and
is expected to be notified in 2 to 3 months.
The Gaming Act has taken a strong step in advancing "games
of skill" in India by defining, and providing a licensing
regime for offering, "games of skill" across India.
However, by limiting licensees to persons, firms, companies, and
LLCs owned and controlled in India, the Gaming Act is curtailing
foreign investment in this booming sector.
The content of this document do not necessarily reflect the
views/position of Khaitan & Co but remain solely those of the
author(s). For any further queries or follow up please contact
Khaitan & Co at email@example.com
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