The Karnataka High Court on 14th February 2022, struck down key amendments to the Karnataka Police Act, 1963, which were brought in last year to ban all forms of gambling in the state, including online gambling, in order to “curb the menace of gaming through the internet, mobile apps”.
Skill gaming industry body All India Gaming Federation (AIGF), self-regulatory fantasy sports industry body Federation of Indian Fantasy Sports (FIFS), real-money gaming firms Mobile Premier League (MPL), Games24x7, A23(Ace2Three), Junglee Games, Gameskraft, and Pacific Games were some of the petitioners that had sought a stay on the new provisions of the Act, which sought to place games of skill when played online in the category of games of chance. The State Government had told the High Court that it would not take any “precipitating action” under the new laws till the cases are decided.
Background and Prohibiting Laws of 2021
It was on September 21, 2021, that the state legislature passed legislation to amend the Karnataka Police Act, 1963 to impose a complete ban on gambling in the state. The Amendment Act came into force on October 5, 2021. Two days later, the state police filed an FIR against promoters of Dream 11 in Bengaluru before the High Court asked them not to take coercive action.
The state’s amendment came after a Public Interest Litigation was filed in the Karnataka High Court seeking a ban on online gambling. It removed the distinction between the game of skill and the game of chance, thereby bringing skill-based gaming startups under its purview.
After the amendments came into force, online gaming companies geo-locked the availability of their sites and apps in Karnataka to avoid police action.
Arguments
Petitioners:
One of the primary grounds on which the new gaming laws were challenged in Karnataka was that games of skill have been clubbed with games of chance in the definition of gaming in the new laws — if the games of skill are played for prizes or bets.
The gaming federation and companies argued that as per the law laid down by the Supreme Court in 1957, competitive games of skill are business activities protected under Article 19 (1) (g) of the Constitution.
It also stated in its petition that curbs on online gaming will affect a growing industry in the country. The federation has cited the online gaming industry as having seen the investment to the tune of Rs 3,000 crore, especially through start-ups in Karnataka.
Respondent:
Karnataka government cited for an amended law is an order by the Dharwad Bench of the High Court bench of December 2019, which ruled that the police cannot raid gambling dens without a formal written order from a Magistrate as a reason for this amendment since gambling is a non-cognizable and bailable offence.
Judgment
The Karnataka High Court struck down the contentious provisions of the Karnataka Police Act that dealt with online gambling as unconstitutional, providing a major relief to the skill-based gaming firms.
The division bench comprising Justice Krishna S Dixit and Chief Justice Ritu Raj Awasthi noted that the entire law is not being struck down but only the contentious provisions.
The bench also noted that the judgment does not prevent appropriate legislation from being brought concerning the subject (betting and gambling) in accordance with the provisions of the constitution.
Response to Judgement
Welcoming the judgment, AIGF CEO Roland Landers said “Coming in the succession of the positive judgments for online skill gaming by the Kerala and Madras HC in 2021, this is a step in the right direction to grow the burgeoning gaming industry in the state”
“AIGF and the skill games council of domain experts will be happy to assist various stakeholders in playing a consultative role in the formation of a regulatory framework for the industry,” he said.
