Just a few days after the Tamil Nadu government notified its online gambling law, the gaming industry body All India Gaming Federation (AIGF) has moved to Madras High Court, seeking a stay on the same.

“The Tamil Nadu government has passed an unconstitutional law, which bans multiple online skill games. The law disregards over six decades of established legal jurisprudence and seems to be based on a completely wrong understanding of technology,” AIGF secretary Roland Landers told Inc42.

The Madras HC will hear the case on April 27.

Earlier this month, Tamil Nadu Governor RN Ravi gave his assent to the bill, which proposed a complete ban on online gambling in the state and brings online gaming platforms under the state government’s ambit.

Called the Tamil Nadu Prohibition of Online Gaming and Regulation of Online Games Act, 2022, the new law has specified a fine of up to INR 5,000, or imprisonment of up to three months, for those participating in online gambling.

The new Act also specifies a jail term of up to three years for the organisers of such games.

The saga regarding online gambling platforms started in 2021 when the then AIADMK government enacted a law to regulate the online gaming space. Afterwards, the matter was dragged to the court and the bill was scrapped.

Recently, the Ministry of Electronics and Information Technology (MeitY), too, has notified the rules for online gaming, following months of consultation.

However, states have the power to legislate ‘sports’ and ‘betting and gambling’ under the List-II of the Seventh Schedule of the Constitution of India.

MoS Rajeev Chandrasekhar said while notifying the rules that the government saw over the last several months, many startups were crying foul of state regulations. He added that it is often confusing for startups to have to deal with ambiguous legal frameworks.

“We hope that these rules will create a much more stable, consistent, predictable framework for all those startups that are interested in the online gaming ecosystem,” he said.

Despite the regulatory flux faced by gaming startups, the industry has only grown over time. The size of the Indian gaming industry was estimated to be $2.6 Bn in FY22 and is expected to increase to over $8.6 Bn by FY27, according to a report by VC fund Lumikai. The number of gamers in India stood at 507 Mn in FY22, growing at a CAGR of 12% from 450 Mn in FY21.