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Karnataka Government’s Bill To Ban Online Games Draws Flak

On 17th September 2021 Karnataka state government tabled a bill in its legislative assembly. The bill seeks a ban on all forms of online gaming, wagering, betting and iGaming except lottery and horse racing. This bill enables the Karnataka state government to make iGaming of all kinds a non-bailable and cognisable offence. Karnataka will join the ranks of Tamil Nadu, Andhra Pradesh and Kerala, the states that have already introduced regulations to curb iGaming. 

Karnataka Home Minister, Araga Jnanendra tabled the bill, which also includes a ban on tokens valued in terms of money which is paid via electronic means, virtual currency, electronic transfer of funds for any game of chance. Jnanendra told The Print, “We intend to ban all games that involve profiting, betting and stakes. We have taken lessons from the Madras High Court’s decision to strike down similar legislation in Tamil Nadu and have changed our bill accordingly. The state has data on how many people have been affected by online betting and iGaming during the pandemic and this bill hopes to put an end to it.”

In a statement on Karnataka’s latest bill, Justice Vikramajit Sen, a former Judge of the Supreme Court and former Chief Justice of the Karnataka High Court, said, “The Indian regulatory framework has differentiated between games of skill and games of chance in India. Just because games of skills may involve an entry fee, they cannot be considered iGaming. Games of chance are considered iGaming as it involves luck rather than skill and thus it is expressly prohibited by the law, wherein games of skill are legal across most states. 

ALSO READ: Madras High Court Calls Tamil Nadu Online Gaming Ban ‘Invalid’

The sector needs the support of the state governments to promote initiatives towards responsible gaming and recognition of the All India Gaming Federation’s (AIGF) ‘Self-regulation Framework’. AIGF and its advisory members look forward to an opportunity to engage stakeholders within the state government to make an industry representation on the matter.”

Commenting on the bill, Roland Landers, CEO, AIGF said, “India is the fifth largest online gaming market globally and skill-based gaming, a sunrise sector, is giving birth to an increasing number of unicorns within the country, especially Karnataka. The sector has been a strong financial contributor to the Indian economy even during an unprecedented period of slowdown and is further expected to generate revenues of over $3 billion by 2025. The move by the Karnataka government in tabling the Karnataka Police (Amendment) Compliance Act, 2021 can be seen as a setback to the state’s reputation of being a tech-hub and start-up capital.”

PK Misra, President Players’ Association – AIGF and former senior IAS, also shared his views on the matter. He said, “The move will affect the online skill-based gaming sector, putting an end to player’s right to earn their livelihood. There is no clarity on this law, and we remain in constant fear of the players’ livelihood being banned without prior information or dialogue. 

Around 10-12% of India’s gaming community is based in Karnataka, and many of these players who compete at the international level are afraid for not only their livelihoods but also their ability to pursue their dreams of becoming professional players on international platforms. 

I certainly hope the state government distinguishes iGaming and games of skill. Since 1957, the Supreme Court has reiterated games of skill as a legitimate business protected under Article 19(1)(g) of the Indian Constitution, also supported by the Karnataka High Court in multiple judgments.”

ALSO READ: Advocates’ Association Urges Government To Ban Online Gaming

Recently, Madras High Court struck down a law passed by the Tamil Nadu state government that imposed a ban on online gaming. The court clarified that entry 34 of the State List under the Constitution, which allows states to decide independently on the subject, cannot be used to govern skill games. Entry 34 can ban/regulate games of chance. It is to be noted that the Karnataka state government cited entry 34 while drafting its latest bill.

The Supreme Court of India has clarified that skill-based games are not iGaming and that offering skill-based games is not illegal and the same is recognized by the Indian Constitution. A similar sentiment is shared by multiple high courts from time to time, including the Karnataka High Court.

The lack of central legislation in online gaming has led to such obscurity in the regulatory framework, since states have the final say in the matter. Various state governments have made different interpretations of the Supreme Court judgement and hence the future of online gaming hangs in the balance. 

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