In the world of gaming and gambling, distinguishing between games of skill and games of chance is crucial. While both offer entertainment and opportunities for rewards, they operate on fundamentally different principles.
There is a very famous quote by Doyle Frank Brunson, Poker Hall of Fame Inductee “Everyone gets lucky once in a while, but no one is consistently lucky.”
GAME OF SKILL
Games of skill are activities where the outcome is primarily determined by the player’s knowledge, strategy, and skill level. These games rely on the player’s abilities rather than luck or chance. It is based mainly on the mental or physical level of expertise of a player, rather than a chance. One of the most significant benefits of a game of skill is that it provides freedom to the players to explore their capabilities in the sport. These games invigorate the players to get accustomed to a certain set of rules while looking for ways to improve and implement different strategies through consistent practice. It is false that the game of skill does not have a chance component, in fact to a certain extent they do. However, it is the individual skills that determine the success rate. Example: Chess, Carrom, Rummy, Teen Patti, Horse Racing and Fantasy Sports are said to be games of Skill.
CHARACTERISTICS OF GAME OF SKILL
1. Strategy and Decision-Making: Games of skill involve strategic thinking, requiring players to make informed decisions that directly influence the outcome.
2. Practice and Improvement: Success in games of skill often comes with practice and experience, as players refine their skills and strategies over time.
3. Player Control: Players have a significant degree of control over the outcome, as their actions directly impact the game’s result.
4. Examples: Chess, poker, esports (such as competitive video games like Dota 2 or Counter-Strike), and sports betting (where knowledge of the sport influences betting decisions).
GAME OF CHANCE
Games of chance, also known as gambling or luck-based games, are activities where the outcome is primarily determined by random or unpredictable factors. These games rely on luck rather than skill. A Game of chance however is determined mainly by a random factor of any type. In games of chance, the usage of skill is present but a higher level of chance determines success. Games like playing cards, roulette, rolling a dice, or even picking a numbered ball are reflected upon as chance-based games. It is pertinent to note that players here do not have control over the outcome of the result. Example: Blackjack, Roulette.
CHARACTERISTICS OF GAME OF CHANCE
1. Randomness: The outcome of games of chance is determined by random events or factors beyond the player’s control, such as dice rolls, card shuffles, or spinning a roulette wheel.
2. Probability and Odds: Success in games of chance is influenced by probability and odds, with players facing uncertain outcomes.
3. Limited Player Control: Players have little to no control over the outcome, as luck plays a predominant role in determining results.
4. Examples: Slot machines, roulette, lottery, scratch cards, and most casino games.
LEGAL IMPLICATIONS
The distinction between games of skill and chance has significant legal implications, particularly in areas where gambling regulations apply.
1. Legality: Games of skill are often exempt from gambling laws or subject to less stringent regulations compared to games of chance. This is because skill-based activities are generally considered less susceptible to exploitation or harm.
2. Skill-based Gaming: Skill-based gaming competitions, such as esports tournaments or fantasy sports leagues, are gaining popularity and are often treated differently from traditional forms of gambling under the law.
3. Regulation: Games of chance are subject to strict regulations and licensing requirements to prevent abuse, protect consumers, and maintain the integrity of the gaming industry.
4. Grey Areas: Some activities may blur the line between skill and chance, leading to legal debates and challenges. For example, certain variations of poker or fantasy sports may involve elements of both skill and chance.
In the Indian legal framework, a game is classified as a game of skill if it is predominantly determined by skill, whereas a game reliant largely on luck is considered a game of chance.
There has been numerous cases filed by groups and gaming organisations to classify them as a game of skill to get legal status and never be termed as illegal. However when the Hon’ble Courts of India are posed with difficult questions. The Courts have from time to time, weighed skill and chance carefully in each game to determine the predominance of one over the other and decide that betting in such games would amount to gambling.
It has been held in Manoranjithan Manamyil Mandram vs State of Tamil Nadu1 that whether a game is considered to be one of chance or skill is a question of fact to be decided on the facts and circumstances of each case.
1 AIR 2005 Mad 261
2 1968 AIR 825 SC
3 1957 AIR 699 SC
The Supreme Court of India has clarified the term “mere skill”, specifying that games in which success relies more on skill than on chance will not be classified as gambling, but will be recognised as games of skill.
RUMMY AS A GAME OF SKILL
In the case of State of Andhra Pradesh v K. Satyanarayana2 & Ors. and State of Bombay v R.M.D. Chamarbaugwala3, the SC specifically tested the game of rummy based on the principle of skill versus chance and held that rummy is a game of skill, unlike three-card games such as “Teen Patti Flush”, which is a game of chance. While the SC has stated that any game involving the shuffling and dealing of cards contains an inherent element of chance due to the
unpredictable distribution of the cards in the shuffled deck, it ruled that rummy is a game of skill as it requires a certain amount of skill particularly in memorising the sequence of falling cards and strategically holding or discarding cards to build a strong hand. Such competitions are akin to business activities, protected by Article 19(1)(g) of the Constitution of India, 1950 (the “Constitution”) pertaining to the right to practice any profession or carry out any occupation.
HORSE RACING AS A GAME OF SKILL
In the case of Dr. K.R. Lakshmanan v. State of Tamil Nadu4, the Hon’ble Supreme Court while dealing with the issue of horse racing, held that horse racing is neither to be considered as ‘gambling’ nor ‘gaming’, but a game of ‘mere skill’ and that the expression ‘mere skill’ would mean a substantial degree or prevalence of skill.
4 1996 AIR 1153 SC
5 AIR 2005 MADRAS 214
This was interpreted so on the reasoning that horse-racing is based on the inherent capacity of the animal, the competence and proficiency of the jockey riding it, the form and physical fitness of the horse, the weight it can carry and the distance of the race which are all equitable facts capable of being assessed or studied by race-goers. Thus, it was held that the prediction of the result of the race is the result of knowledge, study and observation viz. skills and not a mere chance.
In 2005, the Madras High Court, in the case of Manakadu Elainger Nala Sports, Narpani Mandram v State of Tamil Nadu5, ruled that games such as chess and carom, even when involving payment of club fees, i.e, payment of consideration, did not amount to gambling as the games were predominantly games of skill rather than chance. As such, they were classified as games of skill and exempted under the Public Gambling Act, 1867.
In India, the States have the exclusive power to regulate betting and gambling, under Entry 34, List II of the Constitution. As such, there is no set or fixed law regulating the gaming sector, and this applies to online gaming too. However, recently the central government has also imposed certain responsibilities on gaming entities via amendments to the Information Technology Act,
2000 and the Information Technology (Guidelines for Intermediaries and Digital Media Ethics Code) Rules, 2021.
POKER AS A GAME OF SKILL
With reference to the game of Poker, the Hon’ble High Court of Karnataka, in the case of Indian Poker Association (IPA) v. State of Karnataka6 observed that Poker is a game of skill and that no license is required for conducting a game of skills, including Poker, in club premises meant for recreational purposes, as long as they are conducted in accordance with the law enacted by the State. It further held that since Poker is not included within the head of gambling activities under West Bengal Gambling and Prize Competitions Act, 1957, the officers of the law cannot interfere with such games.
6 2013 SCC KAR 8536
7 2013 SCC GUJ 1838
8 2013 CRI LJ 3836
However, the Hon’ble Gujarat High Court, had a contrary view in Dominance Games Pvt. Ltd. V. State of Gujarat7 while following the Supreme Court’s decision in K. Satyanarayana’s case has held that Poker is a “game of chance”. However, an appeal to this decision is pending in the same Court.
DREAM 11 AS A GAME OF SKILL
The Hon’ble Punjab and Haryana High Court in Varun Gumber v. Union Territory of Chandigarh8 has held that games such as horse, boat and foot racing, football, baseball, chess, golf are games of skill and significant judgement and not a game of chance. However, in a fantasy game, a participant user who builds a virtual team would require considerate skill, knowledge, judgement and discretion, as the participant has to estimate the relative value of each athlete/sportsperson as against all athlete/sportsperson available for selection. He is required to study the strengths and weaknesses of the athlete which would determine the result of the game and his chances of winning a contest. The Hon’ble Court further held that a better result in a fantasy sports game like Dream 11’s basically arises out of a user’s own exercise of superior knowledge, judgement and attention to detail. It was therefore held to have involved the element of skill which had a dominant influence on the outcome of the Dream 11 fantasy, therefore, not
falling within the activity of gambling which was prohibited and was termed as a “game of skill”. An appeal was filed in the Supreme Court but the same was dismissed in 2019.
A similar finding was also reached by the Hon’ble Bombay High Court in the case of Gurdeep Singh Sachar Vs. Union of India9 and Ors. wherein the Court observed that it was evident that the success in Dream 11 fantasy sports depends upon the user’s ability to exercise his skill based on superior knowledge, judgement and attention. Therefore, the result is not dependent on the winning or losing of a particular team in the real world game on any particular day. It is without an iota of doubt, a game of skill and not a game of chance.
9 (2019) 75 GST 258 (BOMBAY)
10 2020 SCC RAJ 264
The Rajasthan High Court in October 2020 in the case of Chandresh Sankhla vs State of Rajasthan10 dismissed a writ petition filed in the nature of a Public Interest Litigation and it opined that the issue of considering Dream 11, the fantasy sports game, having any element of betting/gambling is no more res integra in view of the judicial dictums and orders passed by the Bombay High Court, Punjab and Haryana High Court and SLPs that have been dismissed against the orders of these High Courts.
Due to the varying legal positions adopted by different states, largely influenced by political considerations, the legal landscape for gaming in India is constantly evolving. Some states have gone as far as to classify certain online gaming platforms as “common gambling houses”, even if they are providing games of skills, an interpretation at odds with the position taken by other states. As a result, the distinction between games of skill and games of chance is usually assessed on a case-by-case basis by the respective state.
CONCLUSION
Understanding the distinction between games of skill and chance is essential for both players and regulators. While games of skill reward knowledge, strategy, and practice, games of chance rely on luck and randomness. By recognizing the characteristics and legal implications of each, individuals can make informed choices about their gaming preferences and ensure compliance with relevant regulations. Whether you’re honing your skills in a competitive e-sports tournament
or trying your luck at a casino, knowing the difference between skill and chance can enhance your gaming experience and help you navigate the diverse world of gaming and gambling responsibly.
This is a Guest Post contributed by Advocate Himanshu Sanga, who is practising at the Punjab and Haryana High Court.
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