It’s nothing less than watching a daily soap when it comes to the online gaming industry and its issues. First, it was the Madras High Court (HC), then Kerala HC and now Karnataka HC is the latest one to join the bandwagon. On Monday, Karnataka High Court struck down key amendments to the Karnataka Police Act, 1963, banning online gambling or betting in the state with maximum imprisonment of three years and a penalty up to Rs one lakh. “After three back-to-back positive judgments, we are confident that stakeholders will now be clear in terms of segregation between online skill games and gambling business,” Roland Landers, CEO, All India Gaming Federation (AIGF) told BrandWagon Online.
The verdict came from a division bench comprising Chief Justice Ritu Raj Awasthi and Justice Krishna S Dixit who declared certain provisions of the Karnataka Act number 28/2021, pertaining to regulate online gaming activities, to be ultra vires to the Constitution of India. Interestingly, the bench did not omit the entire act but made it clear that the judgment will not stand in the way of the legislature bringing in new law in consonance with the Constitution against gambling. “The consequences of striking down the provisions shall follow. However, nothing in this judgment shall be construed to prevent an appropriate legislation be brought about concerning the subject of betting and gambling, in accordance with the provisions of the constitution. A writ of mandamus is issued restraining the respondents from interfering with online gaming business and allied activities of the petitioners,” the bench said.
For Sameer Barde, CEO, EGF, this is another landmark judgment, and this will set the tone for a dialogue to begin on setting up a strong regulation in Karnataka that leads to a win-win for players, the industry, and the government. “The perception of the online gaming industry has been muddled by ambiguity. Due to a lack of information, there is also a lot of misunderstanding about online skill games and gambling. However, Karnataka High Court’s decision will serve as a catalyst for bringing clarity to the sunrise sector, promoting investments, technological advancements, and generating employment,” he added.
Card-based online games such as Rummy, Poker, among others are played predominantly in South India and the area accounts for a big market share for the sector. As per industry estimates, 30-40% of the total revenue of skill-based games comes from South India. Of this, Karnataka accounts for seven percent to 10% of the total transactional online skill gaming (TOSG) segment in India. “Karnataka is a really vast market for TOSG. A significant number of real money gamers belong to this region. Needless to say, the overturning of the ban by the state comes as a sign of relief for the whole skill-based online gaming ecosystem,” Varun Mahna, founder and CEO, Dangal Games, highlighted.
Introduced last year September, the Karnataka Police (Amendment) Bill imposed a blanket ban on 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. To give perspective, Assam, Orissa and Telangana were the first states to ban online games and following the footsteps, Andhra Pradesh, Tamil Nadu and Karnataka passed a blanket ban on online “betting” games last year. However, on August 3, Madras High Court quashed the Tamil Nadu Gaming and Police Laws (Amendment) Act of 2021 banning online gaming and called it “excessive and arbitrary”, followed by Kerala HC in September.
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