Background

Reconsider Karnataka Police Act (Amendment) Bill, tabled in the State Legislative Assembly on September 17 2021 to ban online gaming or betting by amending the Karnataka Police Act of 1963.

The bill states that “games mean and include online games, involving all forms of wagering or betting, including in the form of tokens valued in terms of the money paid before or after the issue of it, or electronic means and virtual currency, electronic transfer of funds in connection with any game of chance.” The bill to amend Karnataka Police Act of 1963 does not include lottery, wagering, betting on horse races on any race course inside or outside the state.

The newly passed bill in the Karnataka Assembly includes using cyberspace (computer resources or any other communication device) as defined in the Information Technology Act, 2000 in the process of gaming to curb online gaming and gambling through internet and mobile apps.

IAMAI’s View

Internet and Mobile Association of India (IAMAI) said the bill has been drafted without considering the various legal and constitutional positions by including a wide definition of “gaming” in amendments against various Supreme Court and High Court judgements.

“Game of Skill” and “Game of Chance”

The Bill does not distinguish between “game of skill” and “game of chance”. The Bill to ostensibly ban online gambling or betting also makes all online games of skill, which charge a small entry or registration fee, illegal.

However, by including games of skill in the ambit of the bill, it has not only gone against established jurisprudence by the Honourable Supreme Court and Karnataka High Court but threatens the thriving Indian gaming startup sector.

Punishment

The Bill also provides for enhancing punishment extending to three years of punishment and fine up to Rs 1 lakh.

As per this bill, punishment for the first offence will be 6 months’ imprisonment and fine of Rs 10,000 and one year of imprisonment and fine of Rs 15,000 for the second one. In case of the third offence, punishment will be 18 months’ imprisonment and fine of Rs 20,000. Those found aiding such online gambling will also be punished

Impact on the Industry

Karnataka government’s push against online gaming and gambling can impact indigenously developed online gaming platforms such Dream 11, Mobile Premium League, Games 24x7 and several others. Confederation of All India Traders (CAIT) secretary general Praveen Khandelwal has urged the Karnataka Chief Minister Basavaraj Bommai to reconsider this decision as it can prove to be a “setback to Indian startups”.

The bill, will hurt the Indian startups sector, the Indian gaming and animation industry and millions of Indian gamers and esports players across the country. It will lead to massive job losses in Bengaluru where more than 90 small and bid Indian gaming companies are registered which employ over 4,000 people, and will also have an effect on various other developers and animation studios.