The Karnataka government on Friday tabled the ‘Karnataka Police (Amendment) Bill, 2021,’ in the assembly to ban online gambling or betting in the state with maximum imprisonment of three years and penalty up to Rs 1 lakh. Tabled by Home Minister Araga Jnanendra, the bill aims to ‘ban 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 concerns the nascent yet fast developing online skill gaming (OSG) industry as an increasing number of Karnataka based unicorns emerge from this sector. “The OSG sector has been a strong financial contributor to the Indian economy even during an unprecedented period of slowdown and is further expected to generate revenue of over $3 billion by 2025. The move by the Karnataka government in tabling the Karnataka Police (Amendment) Compliance Act, 2021 act can be seen as a setback to the state’s reputation of being a tech-hub and start-up capital,” Roland Landers, CEO, All India Gaming Federation, said.
To give perspective, Supreme Court has already given a verdict in favour of the OSG industry this year, stating that games of skill are not gambling, and offering of games of skill is a legitimate activity protected under the Indian Constitution. This verdict has been further reiterated multiple times by various high courts, including the Karnataka High Court.
Skill-based gaming cannot be compared with gambling, and banning is not a solution. The Indian regulatory framework has clearly differentiated between games of skill and games of chance in India, Vikramajit Sen, a former Judge of the Supreme Court and former Chief Justice of the Karnataka High Court, said. “Games of chance are considered gambling as it involves luck rather than skill and thus it is expressly prohibited by the law, wherein games of skill are considered legal across most states including digital and online. The sector needs the support of state governments to promote initiatives towards responsible gaming,” he added.
The draft bill will also prohibit games likes online chess, archery, online quiz games, other Indian games, all digital versions of traditional sports, including games included in Asian Games and Olympic Virtual Series. In the backdrop of Asian Games announcing that 24 medals will be awarded for Esports at the next year’s edition, this law can be very problematic for the professional gaming players as this may affect the livelihoods and income of these gamers living in that state.
According to PK Misra, President Players’ Association – AIGF and former senior IAS, 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. “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 the scope of this law, and we remain in constant fear of the players’ livelihood being banned at any time without prior information or dialogue,” he said.
Multiple states including Tamil Nadu have tried to ban skill based online games. Madras High Court last month gave a detailed judgment striking down the Tamil Nadu law which prohibited online games of skill, as unconstitutional. The court clarified that any restriction on games of skill, whether online or offline needs to be narrow and the state should try and regulate, instead of ban. The HC also stated that Entry 34 of the state List under the constitution, from where the Karnataka amendment traces its power, cannot be used to regulate games of skill, and can only be used to ban/ regulate games of chance.