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Meghalaya Regulation of Gaming Ordinance 2021

Author: Gaurav Shanker, Managing Partner And Yamini Mishra, Associate |

Article by Business Law Chamber

Legality of online gaming such as fantasy sports has been recognized by various courts in India, however, currently, there is no specific central legislation regulating online gaming in the country. Many companies like Dream11, MyTeam11, My11Circle, etc. who are in the online gaming industry are making the most out of the judgments passed in favor of fantasy sports by advertising and claiming their games to be a “game of skill”. Due to lack of regulation, the online gaming industry is facing continuous setbacks here and there from the legislative and judicial actions. In such hard times, the recently passed Meghalaya Regulation of Gaming Ordinance 2021 (“Ordinance”) comes as a positive news for the stakeholders in the gaming industry.

The government of Meghalaya has legalized games like fantasy sports, poker, rummy, teen-patti, betting on horse racing, etc. The Ordinance regulates game of skill and game of chance in the state. As per the Ordinance, game of skill includes all such games where there is preponderance of skill over chance, whereas, game of chance includes those games where there is a preponderance of chance over skill. However, the Ordinance is not applicable to the games regulated under Meghalaya Regulation of the Game of Arrow Shooting and the Sale of Teer Tickets Act, 2018 and the lotteries regulated under Meghalaya Lottery (Regulation) Rules, 2019.

Further, the Ordinance provides for a license-based regime to keep an eye on the gaming industry. According to the Ordinance, whoever operates in games which is classified as of game of skill or game of chance, including betting or wagering of money or money’s worth in the state through telecommunication devices, nonrestricted geo fenced internet, instruments of gaming at a physical premise or through any other mode shall have to obtain a prior license from the state government. The license will remain valid for a period of 5 years unless cancelled, suspended or surrendered. Apart from the license-based regime, the Ordinance lays down various obligations for regulating the gaming industry in the state.

Under the Ordinance, licenses can only be granted to Indian citizens or companies incorporated in India. Every licensee is required to pay to the licensing authority, a “Gaming Royalty” i.e., a certain percentage of gross gaming revenue from time to time. Gross gaming revenue includes a sum of total amounts of all bets made and revenue generated from advertising, marketing and promotion activities, in accordance with the Ordinance, deducting the value of all winnings and prizes, bonuses, discounts, cashbacks and payment gateway and banking charges. Additionally, the licensee will have to submit a certain sum of money as security deposits.

Clearly, the Ordinance is a ray of hope for the stakeholders in the online gaming industry especially when other state governments like Andhra Pradesh, Telangana and Tamil Nadu are imposing complete prohibition even on games of skill. Further, the Ordinance is also a welcome move for the foreign entities in online gaming as the Ordinance seeks to grant the license to Indian citizens and companies incorporated in India, in this case, the foreign entities can incorporate a subsidiary company in India and the license may be obtained by an Indian authorized representative of the subsidiary in India.

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