An act to prohibit Online gambling and to regulate Online games receives assent in Tamil Nadu impacting payment gateway providers and online games providers across the nation

The Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022 has received the assent of the Governor. The law aims to prohibit online gambling and to regulate online games in the State.

Need for the Act :

The Act acknowledges that the issues of online gaming and gambling cannot be dealt with by the old binary of game of chance versus game of skill and a provides a new conceptual framework which incorporates understanding of how information technology operates at basic level.

It is an established scientific fact that true random outcome is not feasible in a software and any randomness will depend upon the specific algorithm written by the developer and that audit of the algorithm makes it difficult to detect any hidden algorithm designed to favour the game provider and that overlay of artificial intelligence in the online gaming can make the gaming scenario completely unfair to the game player/customer, with the game service provider / facilitator literally being able to hold all the cards; and that no scientifically validated algorithm for testing of even pseudo randomness is available at present.

Due to the inherent addictiveness by design of the online games and the money being put in by the game players, the complete gaming scenario amounts to an exploitative, addictive service, causing not only health hazards but also social and economic harm.

Many research studies on the effects of online gambling and online gaming addiction on youth, have highlighted negative effects such as development of aggressive behaviour, poor eye sight, reduced concentration, diminished analytical thinking, decreased productivity and hence should be viewed as a potent vice that would affect the long term prospects of the State and its population.

Compliance Obligation :

1. Online gambling is prohibited.
2. Playing of online games of chance (Rummy and Poker), with money or other stakes is prohibited.
3. No online games provider shall provide online gambling service or allow playing of any online game of chance (Rummy and Poker), with money or other stakes or playing of any other online game in contravention of the regulations.
4. No person shall make or cause to make any advertisement in any media including electronic means of communication, in the State, which directly or indirectly promotes or induces any person to indulge in online gambling or play any online game of chance (Rummy and Poker), with money or other stakes.
5. No bank, financial institution or payment gateway provider shall engage in any transaction or authorization of funds towards payment for any online gambling or any online game of chance (Rummy and Poker).
6. Non-local online game providers* should ensure that they have exercised due diligence or has provided geo -blocking in the State. A Non-local online games provider shall be deemed to have exercised due diligence if it had,—
   1. informed prospective customers that the State prohibits online gambling and playing of certain online games to customers who are physically present in this State;
   2. required the customers to enter into contracts with an express condition that the customers shall not use the service, if they are physically present in this State;
   3. required the customers to provide personal details sufficient to establish that they were not physically present in this State;
   4. obtained data that indicated that the customers were not physically present in this State when the relevant customer accounts were opened and throughout the period when the service was provided to the customers; and
   5. taken all other reasonably practicable measures to ensure that no person physically present in this State could have access to online gambling service or to online games of chance prohibited under the Act.

 *“Non-local online games provider” means any online games service provider who is not a local online games provider.

“Local online games provider” means an online games provider,—

1. whose central management and control of the service is in this State; or
2. whose service that is available for access by the customers, is hosted in this State

Source : Government of Tamil Nadu