Gujarat High Court folds on Poker

 

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By Sakshi Pawar (Co-founder and Managing Editor of KhelAdhikar).

An onslaught of litigation pertaining to the legality of poker has suddenly gripped multiple high courts across India. The dilemma arises due to the diverse and ambiguous gambling laws that have been enacted in the country. Gambling although regulated and licensed in countries such as US and UK, is completely prohibited in India. Each state has the mandate under List II Entry 34 of the Constitution of India to decide which games would constitute gambling under the state and whether to legalise gambling. Most states (except for Sikkim and Goa) have enacted gambling laws prohibiting gambling within their jurisdiction. These Acts have a generally drafted exception clause which exempts ‘games of skill’ from the definition of gambling. This prejudice towards gambling and the ambiguous exemption clause is the result of a straight-jacketed application of the pre-independence Prevention of Gambling Laws Act, 1887.

Over time the ambiguous exemption clause which prevents “games of skill” from falling within the definition of gambling came to be interpreted by the Honourable Supreme Court. Slowly the test of predominance was evolved and betting on horse racing[1], rummy[2], bridge[3], video games[4] came to be excluded from the definition of gambling and were legally played. It is pertinent to note however, that regardless of these cases, states in India have continued to lack foresight and define which games will be permitted or excluded (certain states such as West Bengal and Nagaland are exceptions). This is the  reason why the question of legalisation of poker has now arisen in the states of Gujarat, Bombay and Delhi, with the Dominance Games Pvt Ltd v. State of Gujarat[5] (Dominance Games judgement) in Gujarat at its helm.

Before the article analyses the merits of the case, let us briefly understand the position of gambling laws in the country (for detailed analysis on gambling laws look here). Any game in which the skill predominates the game and determines the outcome of the game is considered as game of skill. This is the test of predominance which flows from US case laws. In UK on the other hand, a game where even an element of chance will affect the outcome of the game will be considered as gambling. This was seen in the R v Kelly judgement where the court considered poker as gambling merely on the basis of an element of chance.

In anticipation of the Dominance Games judgement, KhelAdhikar had already posted an article on the arguments of legalisation of poker. The single judge bench decision provided by Justice Shukla on December 4^th, 2017 considered nearly the same amalgamation of arguments, except for an unforeseen analysis of the skill element of bluffing in poker. In this instance, section 13 of the Gujarat Prevention of Gambling Act, 1887[6] which exempts ‘games of skill’ is being subjected to interpretation.

Petitioner’s (Indian Poker Association) Arguments

1. Counsel spent a considerable time laying that the test of predominance was the standard by which to determine whether poker was a game of skill or chance. For this he relied on the Supreme Court judgements of State Of Andhra Pradesh v. K. Satyanarayana & Ors., (rummy, bridge)(Satyanarayana) and Dr. K.R. Lakshmanan v. State of Tamil Nadu & Anr. (horse racing)(Lakshmanan). The judgement of Satyanarayana has observed that any game possesses the element of chance and therefore, the mere presence of chance cannot make a game akin to gambling. Therefore, the test of predominance was adopted.
2. Placed reliance on Research & Review Journal by Robert C. Hannum Anthony N.Cabot, “Towards Legalization of Poker : The Skill Vs. Chance Debate” to state that skill predominated the game and could determine its outcome and there was skill   involved in learning how to bet[1].
3. Drew a parallel to rummy, by showing that random allocation of cards is not sufficient to declare it as a game of chance. Rummy requires skill in memorising the fall of cards and therefore deviates from games of pure chance such as teen patti, flush or brag. Poker, in the same manner, employs an evaluative skill in determining whether to fold or bet or to continue playing the game. With time players learn the skill of bluffing and reading the body language of players and improve their chances of winning at the game[2]
4. Poker involved a mix of betting and analysis which was akin to horse racing. Evaluative skill in poker is a factor that determines the outcome of the game. Therefore, it cannot be said to be gambling[3]
5. That the West Bengal Gambling and Prize Competitions Act, 1957 and Notification issued by the Government of Nagaland, Department of Justice & Law, Kohima, Nagaland dated 02.04.2016 have exempted poker from the ambit of gambling[4]
6. Therefore, poker did not fall within the ambit of gambling and was protected as a trade and profession under Article 19(1)(g). The petitioners can henceforth not be prevented from carrying on their business[5].

Arguments of Government Pleader

1. Substantially relied on portions of RMD v Chamarbaugwala[6] to show that gambling corroded the social fabric of society and resulted in the loss of hard earned money.
2. Poker requires the ability to match the cards you already hold to the ones that have been distributed. The random distribution of cards seals the fate of the game and the skill is employed only in determining how to use them[7].
3. Referred to the Britannic Dictionary’s definition where poker is included in the definition of gambling[8].
4. Also relied on M.J. Sivani v. State of Karnataka judgement where ‘poker double up’ was considered a game of chance. Although poker double up was a casino game, it was argued that the method of playing between Texas Hold’em and Poker Double Up did not substantially differ[9].
5. Poker originates from games such as Teen Patti and Brag which are pure games of chance[10].
6. Also stated that by being played in a tournament the aforementioned circumstances do not change and poker would continue to be played as a game of chance[11].
7. Since poker is gambling, it is res extra commercium and cannot be protected under Article 19(1)(g). Res extra commercium is a roman doctrine which goods that cannot be traded or services that cannot constitute a profession[12]

Judgement:

1. The judgment clarified that while poker is permitted in other countries it is also regulated on account of its possible social implications[1].
2. Relied on RMD v Chamarbaugwalla[2] and held that gambling created an addiction in hard working men which led them to splurge their money. It is unacceptable to allow this in India’s social context where people lack awareness and are still struggling for necessities[3]. Also relied on texts of Manu and Yajnavalkya. While gambling was prohibited in the texts of Manu it was required to be regulated under Yajnavalkya[4].
3. Legalisation of horse racing cannot be considered as legalisation of all forms of betting, as an exception for it has been specifically created in the statutes of the states. This implies that only horse racing as betting is legal and not all forms of betting, such as the one involved in playing Poker[5].
4. Placing reliance on Satyanarayana to show that betting and analysis in horse racing are similar to the analysis involved in Poker would be incorrect. The skill element in Poker relies on deception and bluffing of opponents. Such deception and bluffing could be considered as fraudulent misrepresentation designed to mislead a person while playing the game. Such deception will be considered as cheating under section 420 of the Indian Penal Code, 1860 (IPC). Therefore, the skill component of Poker cannot be practiced[6].
5. The court also held that the manner in which a person chose to bet or fold did not depend necessarily on his evaluative skill but also upon his risk taking nature and the depth of his pockets[7]. This leaves the game with the players having to rely on a random distribution of cards. Therefore, the game is one of pure chance and is to be considered as gambling.
6. Relied on Satyanarayana to hold that any game, irrespective of whether it is predominated by skill, if played with stakes would be considered as a gambling[8]. Therefore, it derived two tests from the Satyanarayana judgement. First, that predominance of skill meant that it was not gambling and secondly, any game, even of skill, would be considered as gambling. It differentiated between rummy and poker, by showing that rummy did not inherently require betting of money to play the game, but poker did. Therefore, poker could never be played as a game of skill.
7. Adjudicated that poker could not be covered under Article 19(1)(g) as it was gambling and therefore res extra commercium[9].

Analysis of the judgement:

1. The court has selectively picked a portion from the Satyanarayana judgment which mentioned that even when games of skill are played with stakes, it will be considered as a game of chance. The judgement in Satyanarayana wished to prevent a common gaming house from charging customers more than an administrative fee and earning wages from the amount of bets placed and won[10]. Hence, it provided that any game that is played with the operator earning more than the administrative fees would be considered as gambling. Although, this argument does not seem necessary to qualify a game as gambling, it has now been adopted by the Supreme Court of the country and unless it is reconsidered, the high courts must follow it. However, in this case there has also been a skewed interpretation of the judgement to proclaim that any game of skill played with stakes would be considered a game of chance. It would imply that even if two people were to bet money regarding which one of them would win a game of chess, it would be considered as gambling.
2. The court’s analysis of the skill-based element of bluffing does not pass the litmus test required to prove cheating under the IPC. Cheating under section 420 of the IPC requires a party to be induced fraudulently into doing or omitting to do something which it would not have done save for the influence of the person cheating them. In this case, bluffing or deceiving the opponent is part of the rules for poker and anyone playing the game would expect the other person to bluff. If someone agrees to bluffing or misrepresentation as a part of a skill-based game, then it hardly constitutes as an illegal act.
3. Moreover, in considering whether any skills are used in playing poker, the court did not consider all facets of the gameplay. Aside from bluffing and the random distribution of cards, poker involves skills such as strategizing about which cards to play and the ability to understand the body language of other players.

Developments

A Letters Patent Appeal has been filed by KN Suresh, secretary of Indian Poker Association. The matter will now be heard on 28^th February, 2018 by a division bench of the High Court comprising of Chief Justice R. Subhash Reddy and Justice Vipul M Pancholi. It is hoped that this appeal will reconsider the legality of poker and clarify the tests that are needed to determine games of skill.

[1] Dr. K.R. Lakshmanan v. State of Tamil Nadu & Anr., (1996) 2 SCC 226.

[2] State Of Andhra Pradesh v. K. Satyanarayana & Ors., 1968 AIR 825.

[3] Id.

[4] M.J. Sivani v. State of Karnataka, 1995(3) SCR 329.

[5] (Special Civil Application No. 6903/2017)

[6] Section 13 of the Gujarat Prevention of Gambling Act, 1887: “Nothing in this Act shall be held to apply to any game of skill wherever played.”

[1] Para 45 of the order:

“Now a days, sports betting has started getting approval subject to legal frame work and regulations in different parts of world like Australia, UK, USA. However even in that, there is legal frame work and gambling per se is not approved.”

[2] Para 46 of the order:

“However, historical background needs to be considered in India as well as abroad. The Hon’ble Apex Court in a judgment in case of R.M.D. Chamarbaugwala & Anr. (supra), has made the observation.”

[3] Para 45 of the order:

“However one must not overlook the ground realities in India or the country like India, where the majority of the population is struggling for the basic necessity and there is lack of awareness amongst the people and if they are permitted by betting in the craze of easy money, they do not know what to do if the things go wrong.”

[4] Para 51 of the order:

“Thus, while Manu condemned gambling outright, Yajnavalkya sought to bring it under State control but he too in verse 202 (2) provided that persons gambling with false dice or other instruments should be branded and punished by the king. Kautilya also advocated State control of gambling. Gambling has been prohibited by Manu because it destroyed truth, honesty and wealth and some of law­givers have advocated for the State control.”

[5] Para 74 of the order:

“In other words, when the Legislature in its wisdom has not provided for any such licensed area or specific placed with license making it permissible under the Act, it cannot be said that the Legislature was oblivious of such fact particularly when in case of horse­racing, there is a specific provision made by the respective State Legislature like Bombay Race­Courses Licensing Act, 1912 providing for such license for such race called at a particular place, where the race should take place. In other words, such provisions have not been contemplated or made by the State legislature while enacting the provision of the Gambling Act and it cannot be read into it.”

[6] Para 58 of the order:

“Further if it is accepted as bluffing and such strategy as a skill then a person with ill- design to misguide and deceiving people, could be considered as skill or art though it would amount to an offence under the Indian Penal Code or other statute.”

[7] Para 58 of the order:

“Further much depends on individual personality, his upbringing and his attitude in life as well as circumstances. For example, a person with good luck and/or money may have more temptation or inducement to play game even if he has average card. On the other hand, a person with consecutive upbringing with lesser amount of money would be slow while betting. Thus, it will depend how deep pocket one is having on that day and/or flow of money.”

[8] Para 61 of the order:

“Therefore, the issue that even it is a game of skill but played with stakes, may be considered as gambling. These two relevant aspects or the tests will have to be born in mind.”

[9] Para 71 of the order:

“Thus the activities which are dealing in articles or goods which are res extra commercium, could not have been intended to be permitted in the first instance by Article 19(1)(f) and (g) relating to the fundamental rights to property, trade or business, or by Article 301 relating to the freedom of trade and commerce, with permission to the State to restrict or prohibit them.”

[10] Para 15 of State Of Andhra Pradesh v. K. Satyanarayana & Ors.:

“Of course, if there is evidence of gambling in some other way or that the owner of the house or the club is making a profit or gain from the game of Rummy or any other game played for stakes, the offence may be brought home. In this case, these elements are missing and therefore we think that the High Court was right in accepting the reference as it did.”

[1] Para 10 of the order:

“In game of skill, player can alter the expected outcome; not so for a game of pure chance. …. The expected win in poker, on the other hand, depends on the skill or strategy employed by the player. In poker, certain knowledge can be brought to bear on the decisions made during the game, resulting in a greater expected win. While there are arguably various facets of ‘skill’ in poker, the combinations of these facets are expressed through one element, betting the decision on how much money (if any) to invest. Betting strategy in poker whether to fold or bet and how much to bet is a decision made of a player’s own free will and is something at which a player can become skilful. A player’s betting methods can get better or worse.”

[2] Para 8 of the order:

“He, however, submitted that like game of Rummy, when the cards are shuffled, at that stage, it is a chance, however, it is thereafter when the player is having card and how he plays the game would make the difference and, therefore, it is a game of skill.”

[3] Para 28 of the order:

“submitted that when even betting is a part of a game, it is a skill inasmuch as even for the purpose of betting, person or a player will have to use the skill like assessing rival players’ reaction while keeping your own reaction concealed as poker face and making other players to play further and bet. He submitted that how to play and making assessment with every turn of the card or fall of the card is a skillful play of the game. He, therefore, tried to submit that to the extent that there is an element of chance because distribution of the card is not according to any set pattern but thereafter even while batting how the person plays, is a skill.”

[4] Para 8 of the order:

“He submitted that in the State of West Bengal and Meghalaya, it has been accepted as legal and by Legislature, it has been held to be not gambling. He referred to the Notification by the West Bengal Gambling and Prize Competitions Act, 1957 and also Notification issued by the Government of Nagaland, Department of Justice & Law, Kohima, Nagaland dated 02.04.2016.”

[5] Para 9 of the order:

“Learned Senior Counsel, Shri Mihir Thakore submitted that poker is a predominantly game of skill and, therefore, such right could not be taken away as it is protected under Article 19(1)(g) of the Constitution of India.”

[6] Para 46 of the order:

“However, historical background needs to be considered in India as well as abroad. The Hon’ble Apex Court in a judgment in case of R.M.D. Chamarbaugwala & Anr. (supra), has made the observation.”

[7] Para 22 of the order:

“Therefore, it was emphasized that in the process, player does not have to show any skill as largely it is depending upon the expectation of the card, which is laid there and how it would match with card held by the player already distributed. This itself would suggest that it is merely a chance that would alter the game or decide the game or win and there is no element of skill involved.”

[8] Para 23 of the order:

“Britannic dictionary definition: Some games are dull or nearly meaningless without the accompanying betting activity and are rarely played unless wagering occurs (coin tossing, poker, dice games, lotteries).”

[9] Para 39 of the order:

“MJ Sivani stated that there is no scope for using one’s skill to arrive at a desired result in the games like Royal Casino, Super Continental, Five Line, High Low, Black Jack, Poker Double Up, Skill Ball, Pac Man and Golden Derby. They were classified as games of chance. By allowing such games, the innocent children and the common public would lose hard­earned money. ”

[10] Para 13 of the order:

“She submitted that Flush is a game of chance and it is the same thingas game of poker. She strenuously submitted that any other game played for stakes where predominantly it is a matter of chance as to how the card is distributed, is a game of chance and not a skill.”

Para 58 of the order:

“Teen Patti has originated from Brag and both poker and Brag have same root with slight modification or variation. Therefore as the poker and Teen Patti have originally roots in the Brag and straight poker, they are played and it is evident that the chance is dominant factor in the game. The Hon’ble Apex Court has also considered the same issue and has observed that Flush, Brag and Teen Patti are the game of chance.”

[11] Para 41of the order:

“Learned Government Pleader, Ms.Shah,therefore, submitted that reference to the details regarding the tournament, which have been played, would not make it a game of skill merely there is tournament or there is some kind of discussion in the University. She submitted that reference to the psychological aspect from the probability and what is discussed with reference to the game on principle of probability has nothing to do with the game as such.”

[12] Para 19 of the order:

“She, therefore, submitted that one cannot claim fundamental right to carry on trade and business, which is prohibited by the Legislature by the statute like Gambling Act. She also referred to the judgment of the Hon’ble Apex Court in case of M.J. Sivani & Ors. Vs. State of Karnataka & Ors., reported in (1995) 6 SCC 289 and referred to the observations made in Paragraph Nos.18, 19, 20, 29 and 30.