Indian State Karnataka Tables Bill To Ban Online Gaming; Debate in Legislative Assembly Next Week

The Karnataka Police (Amendment) Bill, 2021, was introduced in the Legislative Assembly on Friday to prohibit online gaming or betting by modifying the Karnataka Police Act of 1963, imposing a maximum sentence of three years in prison and a fine of up to Rs 1 lakh.

The Bill, introduced by Home Minister Araga Jnanendra, intends to "prohibit online games including all types of wagering or betting, including tokens valued in terms of money paid before or after issue." It prohibited the use of electronic methods and virtual money, as well as the electronic transfer of cash in conjunction with any game of chance.'

It is worth noting; however, that there is no prohibition on playing the lottery or betting on horse races at any racetrack in or out of Karnataka.

The major goal of the Bill is to make the provisions of the Police Act more effective by making them cognizable offences and non-bailable, with the exception of Section 87 (gambling in public streets), which is made cognizable and bailable.

Gaming involves the use of cyberspace, including computer resources or any communication device as specified in the Information Technology Act of 2000, in the gaming process, in order to combat the threat of gaming via the internet and mobile applications.

For citizens' orderly behaviour and to prevent people from gambling addiction, the punishment was doubled from one year and a penalty of Rs 1,000 to three years and a penalty of Rs 3 lakh.

The First punishment would incur six months of imprisonment

The first offence will result in six months in jail and a Rs 10,000 fine. The sentence for the second violation will be one year in jail and a Rs 15,000 fine. The sentence for the third violation will be 18 months in jail and a Rs 20,000 fine. Individuals who help or abet internet gaming will also face penalties.

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 destiny of Karnataka's online gaming industry will be decided when the bill is considered in the Legislative Assembly next week. The Karnataka High Court has directed the state government to make a decision to ban online gambling.

In the same week, the government of neighbouring Tamil Nadu petitioned the Supreme Court to overturn a Madras High Court (MHC) order that declared certain amendments to the Tamil Nadu Gaming and Police Laws (Amendment) Act, 2021, unconstitutional in the case of Junglee Games India Pvt. Ltd. & Anr. v The State of Tamil Nadu & Ors.

The challenged amendment was disproportionate

The MHC found the challenged amendment to be arbitrary, illogical, excessive, and disproportionate. The first bench of Chief Justice Sanjib Banerjee and Justice Senthilkumar Ramamoorthy observed in an order dated 3rd August 2021 that the doctrine of severability is also not applicable because the amended definition of gaming runs throughout the Act, concluding that the amending Act is disproportionate to the object and ultra vires the Constitution.

Since the order, opposition parties have urged the government to adopt new legislation or pursue an appeal. Former Law Minister and AIADMK leader C Ve Shanmugam has urged the DMK government to seek an interim stay from the Supreme Court. When the amendment was passed, Mr. Shanmugam was the law minister.

With governments like Tamil Nadu set on outlawing online gaming, Kerala outlawing online rummy, and the Karnataka Police (Amendment) Bill currently on the table, the southern states appear to be becoming increasingly unfriendly to the online gaming industry.

For quite some time now, the online gaming industry has been orbiting in the eye of a storm, from lawsuits to regulations to outright prohibitions. On the one hand, multiple million-dollar agreements are being struck in the real money market every day, indicating its huge development potential. On the other hand, several attempts are made on a regular basis to outright prohibit the program.

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

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