Finally, some relief to online gaming operators! The High Court of Karnataka on February 14th held some of the provisions of the Karnataka Police (Amendment) Act, 2021, as unconstitutional. These laws prohibit and criminalize the activities of offering and playing games of skill, including online games, by risking money or otherwise.
The Karnataka High Court on Monday struck down provisions of the Karnataka Police (Amendment) Act, 2021, which prohibit and criminalize online gambling and betting. In October 2021, the state government amended the police legislation, and notified the Karnataka Police (Amendment) Act, 2021, banning gaming through the internet and mobile apps.
This law was put into effect by the state government, who had had tabled and passed The Karnataka Police (Amendment) Bill, 2021, which, among other changes, had banned “any act of risking money, or otherwise on the unknown result of an event including on a game of skill.”
This raised questions as it proposed to include skill in what was earlier only on a game of chance. The All India Gaming Federation and other forums had fought fiercely to define the difference between “games of skill” and “games of luck”.
Concerns were also raised (and promptly dismissed by the Home Minister Araga Jnanendra) about the financial aspect of these laws, how laws restricting this form of gaming will damage the image of the technologically-forward city of Bangalore, as well as being the tech and startup capital of the country.
The Amendment Act was enacted on October 5, 2021, and it had banned wagering or betting, including in the form of tokens valued in terms of money paid before or after the issue of the same. It also placed a ban on virtual currency and electronic transfer of funds in connection with any game of chance. The maximum punishment for violations under the Amendment Act is imprisonment for three years and a penalty up to ₹1 lakh.
The main point of contention from the petitioners state that provisions in this new law ‘unlawfully’ prohibit the ‘lawful and legitimate’ business of online games of skill. Petitions challenging the Act claimed that games of skill, irrespective of whether they involve the risk of losing money, do not amount to wagering or betting and thus, cannot be outlawed.
While restraining the government from taking any action against the petitioners, the bench’s ruling gave liberty to the government to enact law on online gaming as per constitutional provisions of the country.
