Governor approves Karnataka online skill games and gambling ban legislation [download Enactment]

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Governor Thawar Chand Gehlot, yesterday approved the Karnataka Police (Amendment) Act, 2021 that bans all forms of gaming for stakes in the state, including online gaming. The enactment passed by the legislature last month imposes maximum imprisonment of three years and a penalty up to Rs 1 lakh for those indulging in online gaming or betting in the state. The law comes into force on date of publication in the official gazette i.e., 5 October 2021.

The law is identical to Tamil Nadu Gaming and Police Laws (Amendment) Act, 2021 that was struck down by Madras High Court in August as being ultra vires. Bengaluru, India’ silicon valley is home to several gaming start-ups and this law is expected to dent Bengaluru’s image as start-up hub.

Courts have allowed skill games and we have accepted it. But no court has allowed betting. So our law also allows online skill games but not betting or wagering on them,” the home minister said last week, adding that the government is well-prepared to defend it if a legal challenge surfaces.

Gaming companies to challenge the law

Amid the frenzy triggered by the law, reports have emerged that a cluster of technology companies are preparing to challenge the Karnataka government’s move. With the amendment, Karnataka joins the neighboring states Telangana, Andhra, and Tamil Nadu that brought laws to ban online games involving prize money or stakes. Another neighbor Kerala issued a notification under Kerala Gaming Act, 1960 to ban online rummy that was struck down recently by the Kerala High Court.

The law was enacted in the backdrop of a division bench of the Karnataka High Court comprising of the then Chief Justice Abhay Oka and Justice Ashok G. Nijagannavar coming down heavily on the state government for its failure to spell out a proper policy for regulating or banning online gaming and gambling, in a public interest litigation filed by social activist Sharada DR seeking a ban or regulation of online gaming, including skill-based games such as rummy, fantasy sports, poker etc.

While the legislation is well-intentioned, regulating online gaming platforms can be a challenge. As many as 600 gaming startups across the country have sprung up over the last two years according to reports. Shivani Jha, Director of eSports Players Welfare Association (EPWA) and lawyer also took to Twitter to express her concerns regarding the bill when it was introduced in the assembly.

She then posted, “The bill as it is currently drafted includes risking money for a game of chance or skill in the ambit of wagering, and registration fee payable at times for certain games must not be construed as a risk. At the same time, there are comments from [legislative] assembly members that their intent is not to ban skill games, the wording of the bill has led to this lack of clarity. This will heavily impact the sports tech industry which includes gamers, developers, and publishers. India has around 600 gaming start-ups per annum and the industry India is worth Rs 10,000 crore as per government data.”

Recently CEO of Nazara Technologies that owns NODWIN (an Esports gaming company) Manish Agarwal, in an interview given to ET NOW stressed that after these drastic moves by the southern states, the difference between a game of chance and a game of skill will emerge, ultimately leading to clarity in the policy enabling framework.