Karnataka Assembly passes bill to ban online gam(bl)ing

By: |
September 22, 2021 3:34 PM

The bill is based on the same report that Tamil Nadu government had used in February 2021 and was later struck down by Madras HC in August

While online gaming is banned, lottery and betting on race horses continues to remain legal and legitimate.While online gaming is banned, lottery and betting on race horses continues to remain legal and legitimate.

The Karnataka Assembly on Tuesday passed the Karnataka Police (Amendment) Bill banning online gambling or betting in the state with maximum imprisonment of three years and penalty up to Rs one lakh. The bill bans online games, involving all forms of wagering or betting, including in the form of tokens valued in terms of money paid before or after issue of it. It banned electronic means and virtual currency, electronic transfer of funds in connection with any game of chance’. “The bill is intended to curb gaming through internet or mobile applications. It also enhances the punishment for gaming for the orderly conduct of citizens and to wean them away from the vice of gambling,” Karnataka state Law and Parliamentary Affairs Minister JC Madhuswamy said. The bill was much opposed by the online gaming stakeholders.

With Karnataka’s capital Bengaluru being the hub of startups, this move by the government comes as a surprise in the times when online gaming is gaining international recognition and is considered a legitimate sport. The move to pass the bill is a setback to the online skill gaming industry as well as to the state’s reputation as a tech-hub and start-up capital, Roland Landers, CEO, AIGF, told BrandWagon Online. “A clear distinction needs to be drawn between games of skill such as bridge, Esports and games of chance. While we appreciate and agree with the intent to ban offshore illegal betting companies that in fact have become more blatant with their advertising targeting Indian audiences but to expand that ban to the legitimate industry that has led to the creation of many unicorns, job creation and is growing to be a significant contributor to the Indian Economy is not justified. We really hope the state reviews the position of online skill-gaming in Karnataka,” he added.

Interestingly, Tamil Nadu had passed the same bill earlier this year imposing a blanket ban on rummy, poker and all other games played online for a wager, bet, money or other stake irrespective of it being a game of skill or a game of chance. The bill was struck down by the Madras HC in August after a petition was filed by Junglee Games and other online gaming companies. The Madras HC also highlighted that the 276th report of the Law Commission from which the bill drew its power, stresses upon regulation and not prohibition, adding that the ban must be regarded as something done by the legislature capriciously and irrationally. “In the absence of any scientific or empirical study, the impugned legislation may be seen to have been born out of a sense of morality and a bid to play to the galleries in election season in a societal ethos where smoking and drinking are regarded as less immoral than when indulged in before elders… That the Bill faced no opposition in the House has more to do with the optics,” the judges had said. What’s more is that the Karnataka government has used the same 276th report to draw its power for the Amendment bill.

South India is a big market for skill based games such as rummy, poker. As per industry estimates, nearly 30-40% of the overall revenue in skill based gaming comes from the Southern part of the country. Furthermore, Bengaluru houses 250-300 game developers and many game studios including Technicolor. “At a time when other states have realised online gaming’s potential and are working on policies to attract investment from gaming companies, for Karnataka to pass a bill banning online games is disconcerting,” Dinker Vashisht, vice president, corporate affairs, Games24x7, said.

However, after multiple High Courts including the Karnataka HC, and the Supreme Court issuing verdicts in the favour of the online gaming industry, it is perplexing to see a repetitive cycle of new states banning the industry, using the same law which the courts overruled. It is important to point out that the motivation behind the ban is drawn from the need to “wean people away from the vice of gambling”, lottery and betting on race horses continues to remain legal and legitimate.

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