Karnataka tables bill to ban online gaming; debate in legislative assembly next week

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The Karnataka Police (Amendment) Bill, 2021 was, on Friday, tabled in the Legislative Assembly to ban online gaming or betting by amending the Karnataka Police Act of 1963, prescribing maximum imprisonment of three years and a penalty of up to Rs 1 lakh.

Home Minister Araga Jnanendra introduced the Bill, which 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’.

However, it is interesting to note that there is no ban on lottery, or betting on horse races on any racecourse within or outside Karnataka.

The main aim of the Bill is to make effective enforcement of provisions of the Police Act by making provisions as cognizable offenses and non-bailable, except Section 87 (gaming in public streets), which is made cognizable and bailable.

Gaming includes the use of cyberspace, including computer resources or any communication device as defined in the Information Technology Act, 2000 in the process of gaming, to curb the menace of gaming through the internet and mobile apps.

The punishment was increased from one year and penalty of Rs 1,000 to three years and penalty of Rs 3 lakh for the orderly conduct of citizens and to discourage citizens from the addiction of gambling.

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The first punishment would incur six months of imprisonment and a fine of Rs 10,000. For the second offense, the punishment would be one year of imprisonment and a fine of Rs 15,000. For the third offense, punishment would be 18 months of imprisonment and a fine of Rs 20,000. Persons aiding or abetting online gaming would also be punished.

Instruments of gaming include any article intended to be used as a means of gaming, including computers, computer systems, mobile app, or internet or cyberspace, virtual platform, computer network, computer resource, any communication device, electronic applications, software, and accessory, or means of online gaming, any document, register or record or evidence of any gaming in electronic or digital form, the proceeds of any online gaming or any winning or prize in money or otherwise distributed or intended to be distributed in respect of any gaming.

The fate of the online gaming sector in Karnataka will be decided when the bill is debated next week in the Legislative Assembly. The High Court of Karnataka has asked the State government to take a decision to put an end to online gambling.

In the same week, the neighboring Tamil Nadu government moved the Supreme Court against the Madras High Court (MHC) order that quashed certain amendments introduced by the Tamil Nadu Gaming and Police Laws (Amendment) Act, 2021, as unconstitutional in the matter of Junglee Games India Pvt. Ltd. & Anr. v The State of Tamil Nadu & Ors

The MHC noted that the challenged amendment was capricious, irrational, excessive, and disproportionate. In an order dated 3rd August 2021, the first bench of Chief Justice Sanjib Banerjee and Justice Senthilkumar Ramamoorthy observed that the doctrine of severability is also not applicable since the amended definition of gaming runs throughout the Act, concluding that the amending Act is disproportionate to the object and ultra vires the Constitution.

Ever since the order, opposition parties have been demanding the government to enact another law or file an appeal. AIADMK leader and Former Law Minister C Ve Shanmugam had urged the DMK Government to approach the Supreme Court and obtain an interim stay. Mr. Shanmugam was the law minister when the amendment was enacted.

With states like Tamil Nadu bent on banning online gaming, Kerala prohibiting online rummy, and now the Karnataka Police (Amendment) Bill being tabled, Southern states seem to be turning more and more hostile towards the online gaming space.

G2G News has been closely tracking the online gaming space in India; particularly at the intersection of business and law. Recently OpenPlay Technologies founder Sreeram Reddy Vanga had weighed in on the banning approach, saying “I think all the bans that we’ve been seeing, starting from 2017 have been extremely strong knee-jerk reactions. ‘This is something new. It’s going big. We don’t understand it. We can’t comprehend it right now. So let’s just go ahead and ban it. So I think that has been the strong approach.”

State govt to enact laws to regulate online gaming, centre tells Delhi High Court

From litigations to regulations to outright bans, the online gaming sphere has been circling in the eye of a storm for quite some time now. On the one hand, there are numerous million-dollar deals being inked every day in the real money space signifying its tremendous growth potential. On the other, numerous attempts are continually made to ban the segment altogether.

AIGF CEO Roland Landers recently informed that the entire gaming industry could be valued at around Rs 9000 crore as of today and the subscription-led (Real Money Gaming) or transactional led online skill gaming could be close to Rs 7000 crore while the remaining 2000 crores are made up by the in-app purchase market.