The online gaming industry in India is witnessing a major legal battle as gaming companies challenge Tamil Nadu’s regulations on real-money games. The state government, concerned about addiction and financial risks, has imposed strict rules, including mandatory KYC verification and restricted gaming hours. However, gaming firms argue that these measures are excessive and unconstitutional. This case, now before the Madras High Court, could set a precedent for online gaming laws in India.
What’s the Dispute?
The Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022 introduced several regulations to control online gaming, particularly those involving monetary stakes. Gaming companies, including Play Games 24×7, Head Digital Works, and Junglee Games, are contesting two key provisions:
1. Aadhaar-Based KYC Requirement
Rule: Players must verify their identity using Aadhaar, authenticated via an OTP.
Gaming Companies’ Objection:
This requirement is intrusive and raises privacy concerns. It exceeds the state’s authority, as digital identity verification falls under central laws like the Aadhaar Act.
The Supreme Court has ruled against making Aadhaar mandatory for private transactions.
2. Restriction on Gaming Hours
Rule: Players cannot participate in real-money games between midnight and 5 a.m.
State’s Justification:
Studies suggest that gaming addiction peaks at night, leading to financial losses and mental health issues. The government argues that this measure is in public interest and protects vulnerable players.
Gaming Companies’ Objection:
The restriction violates individual freedom and lacks a strong legal basis. There is no clear data proving that restricting gaming hours will reduce addiction.
What Happened in Court?
Gaming companies requested interim relief, asking the Madras High Court to pause these rules until a final decision is made. However, the court denied this request, meaning the regulations will remain in force for now.
A division bench comprising Justices S.M. Subramaniam and K. Rajasekar made a key observation:
“Prohibition is different from regulation. Just because a game is not prohibited, you cannot argue that it should not be regulated. If something is left unregulated, it would not be appropriate.”
The court has asked the central and state governments to submit their responses within two weeks.
Government’s Justification for the Regulations
Tamil Nadu’s Advocate General P.S. Raman defended the law, arguing that the state has the constitutional authority to regulate online gaming in the interest of public welfare.
Key arguments made by the state:
1. KYC Verification Prevents Fraud & Ensures Accountability. This measure prevents underage gaming and protects users from scams. Aadhaar-based verification is a secure and reliable method.
2. Time Restrictions Reduce Addiction Risks
Research suggests gaming addiction and financial losses spike late at night. By restricting play during these hours, the state aims to curb compulsive gambling behavior.
3. State Laws Do Not Conflict with Central Laws
The government insists that online gaming is a state subject, and Tamil Nadu has the right to regulate activities within its jurisdiction.
Gaming Companies’ Counterarguments
Senior advocates Mukul Rohatgi and Sajan Poovayya, representing the gaming firms, raised several objections:
1. Regulations Violate the Right to Do Business
The restrictions infringe upon Article 19(1)(g) of the Constitution, which guarantees the freedom to carry out any trade or business. The state cannot impose excessive regulations on a legal industry.
2. Aadhaar-Based KYC is Legally Questionable
The Aadhaar Act and Supreme Court judgments prohibit forcing individuals to use Aadhaar for private transactions. Other forms of KYC exist, making this rule unnecessary and unconstitutional.
3. Time-Based Restrictions Are Arbitrary
No concrete evidence supports the claim that banning late-night gaming will reduce addiction or financial harm. If addiction is a concern, the state should focus on awareness programs rather than imposing blanket bans.
4. State Laws Conflict with Central Regulations
The Information Technology (IT) Act governs digital platforms, and gaming firms argue that only the central government can regulate online gaming. If every state introduces different laws, it will lead to regulatory chaos and hamper business growth.
What’s Next?
Since the Madras High Court refused interim relief, the gaming restrictions remain in place until the court delivers a final judgment.The case will now proceed with the central and state governments submitting their official responses. The court will then decide:
- Whether Tamil Nadu’s regulations are valid and enforceable.
- If Aadhaar-based KYC violates privacy rights.
- Whether the time restrictions are reasonable or overreaching.
Why This Case Matters
This legal battle could shape the future of online gaming regulation in India. If the court upholds Tamil Nadu’s law, other states may implement similar restrictions, leading to tighter gaming regulations nationwide. However, if the court rules in favor of gaming companies, it could set a precedent limiting state control over digital platforms.
About Author
Kusha Mehta is a law student at Campus Law Centre, University of Delhi, with a background in economics. She has experience in legal research, writing, and analysis, Passionate about advocacy and policy, she has also completed online certifications from Harvard University. She has authored two research articles namely, Mustard Dhara – An exploration of legal and regulatory aspects in the agricultural sector and Surrogacy in India: Comparative Analysis with Global Legal Trends (coauthored with Akshita Garg) – Published in IJLLR.
