Meghalaya Gaming Rules Impose Conditions for License and No Entry for Locals

On December 14, the Meghalaya Cabinet approved the Meghalaya Regulation of Gaming Rules, 2021. (Rules). This allows the state excise department to put the Meghalaya Regulation of Gaming Act, 2021 into effect (Act).

According to Chief Minister Conrad Sangma in a tweet, this will allow the state excise department to tap the revenue potential of online and physical gaming and regulate gaming in the state. On December 21, 2021, the Rules were published on the Meghalaya.gov.in website.

On March 26, 2021, the Act was published in the Official Gazette, making Meghalaya the third state in the northeast to enact a gaming regulation in recent years. The other two northeast states that have passed gaming legislation are Sikkim and Nagaland.

Locals are not permitted to enter the physical gaming premises under the Rules. This prohibition is similar to what the Goa government proposed, which was later upheld by the Bombay High Court’s Goa bench in October.

When it comes to online games, they can only be played through intranet (terminals) that cannot be accessed outside of the state of Meghalaya. This is similar to the system that is currently available in Sikkim. Only those over the age of 18 are permitted to play, and operators are not permitted to accept cash payments in excess of INR 25,000.

The law requires gaming establishments to obtain a licence, which can only be issued to an Indian citizen or a legal entity incorporated in India. An operator is required to open an office in Meghalaya within 30 days of receiving a licence.

License valid for five years from the date of grant

Once granted, a licence is valid for five years from the date of grant and can be renewed on application. According to the Rules, the applicant must have a minimum of 5 (Five) years of continuous experience in conducting skill or chance games.

According to the Rules, an applicant for a licence must not be barred from conducting skill or chance games in any part of India and must not have been convicted of violating foreign exchange laws. The licensee is required to pay an annual licence fee of 2 (two) crore rupees, as well as a royalty of 2% of the gross gaming revenue (GGR) generated on a quarterly basis. A licensee must execute a bank guarantee in the amount of 2 (two) crore rupees in favour of the government as a security deposit, which must be renewed annually.

The licenced operators are required to pay “Gaming Royalty” on a regular basis as 2 percent of Gross Gaming Revenue, which is calculated as the total amount of all bets made and revenue generated from advertising, marketing, and promotion less the value of all winnings and prizes, bonuses and discounts, and cash backs, as well as payment gateway and banking charges during the gaming period.

Lawyers, Chartered Accountants, Finance Experts, and reputable IT Companies with a minimum of 5 (five) years of experience in their respective fields of work and registered with the licencing authority will assist in scrutinising the applications.

Laws to be implemented once the Rules are published in Official Gazette

Once the Rules are published in the Official Gazette, the law will go into effect. Gaming companies such as Dream11, My11Circle, JungleeRummy, RummyCircle, and others do not currently operate in Sikkim and Nagaland, where a licence is required. If the operators do not obtain a licence, they must cease operations in Meghalaya. This will result in a departure from another state, following the recent departure from Karnataka.

The Karnataka online gaming ban law, which was notified in October, prohibited all forms of gambling for monetary gain. The law was challenged in the Karnataka High Court, which heard the parties at length and reserved its decision. The gaming ban law, officially known as the Karnataka Police (Amendment) Act, 2021, makes all forms of gaming for stakes, including online gaming, a cognizable and non-bailable offence.

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