Bhoomika Singh
The Karnataka High Court strikes down the ban against online gaming. It knocks down the judgment on the amendments to the Karnataka Police Amendment Act in 2021, which restricted certain online activities like betting on skill online games.
A division bench including Chief Justice Ritu Raj Awasthi and Justice Krishna S Dixit declared that nothing in the judgment shall be construed to prevent appropriate legislation in accordance with the constitution.
The bench unleashed certain provisions of the Karnataka Act number 28/2021, to the extent the provisions pertaining to regulating online gaming activities, to be ultra vires to the Constitution of India.
“The consequences of striking down the provisions shall follow. However, nothing in this judgment shall be construed to prevent appropriate legislation from being brought about concerning the subject of betting and gambling, in accordance with the provisions of the constitution. A writ of mandamus is issued restraining the respondents from interfering with online gaming business and allied activities of the petitioners,” the bench stated.
Meanwhile, the stakeholders applaud the lifting of the ban.
Roland Landers, CEO of All India Gaming Federation (AIGF) says, “AIGF welcomes the judgment passed by the court that strikes down the Law banning Online Games. Coming in a 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,”
India is the fifth largest online gaming market globally and skill-based gaming, a sunrise sector, is giving birth to an increasing number of unicorns within the country, especially Karnataka.
The sector has been a strong financial contributor to the Indian economy even during an unprecedented period of slowdown and is further expected to generate revenues in excess of USD 3 billion by 2025.
Co-founder and COO of Baazi Games, Puneet Singh also lauds the step, “It’s a great day for the RMG industry. This segment is being recognised again and again especially from top judicial institutions of the country. Even the central government has been showing support to the gaming industry as seen in the recent budget presented by the Hon’ble FM.”
“I am sure all state governments will also support the industry to realize its true potential, both for employment opportunities and revenue generation which can also be a big contributor to the GDP. This will also boost the investor sentiment towards the segment,” Singh adds.
“This is the third High Court judgment, Tamil Nadu and Kerala verdicts, being the earlier ones, in the last seven months that has held a ban on skill gaming as Ultra Vires the constitution. We hope that these judgments can nudge state governments to frame progressive policy and regulatory structure for this sunrise sector,” said Dinker Vashisht, Vice President Corporate and Regulatory Affairs, Games24x7
While other stakeholders are waiting for the detailed judgement copy to analyse it minutely.
“We look forward to working with the government of Karnataka in line with the recent budget announcement and the Central Government’s vision to set up an AVGC task force to encourage Indian entrepreneurs in the Fantasy Sports sector. As FIFS, we will continue to ensure a safe experience for sports fans in Karnataka and India, and enable responsible growth of the industry,” said Bimal Julka, Chairman—FIFS.
Another online gaming company Zupee also released a statement on the development. “The judgment makes clear the intent of new India where, misgivings, misinformation or personal reservations should not get in the way of innovation, growth, and rule of law. At Zupee we strongly believe that this verdict by the Hon’ble High Court provides the gaming industry a much need secure environment to accelerate its growth and expansion in the southern states. As most gaming enterprises in India are start-ups, it will encourage entrepreneurial spirit and reassure investor confidence in the Indian market,” stated Zupee.
Prior to Karnataka, the Kerala and Madras High Courts also struck down the bans against online gaming, providing hope online gaming industry of the country to commit fully to helping India achieve the 1-trillion-dollar digital economy dream by 2025. This judgment also reasserts the Hon’ble Supreme Court’s view that online skill-based games are perfectly legal businesses and should be allowed to run, grow and expand as would any other legitimate business.
By amending the Karnataka Police Act of 1963, the state government prohibited and criminalised the playing of skill games, including online games, for money or otherwise. The petitioners, which included the All India Gaming Federation, claimed that games like poker, chess, rummy, and fantasy sports are all games of skill, and that various court orders have clearly distinguished between games of chance and games of skill.
The highest punishment for violations under the Amendment Act was imprisonment for three years and a penalty up to Rs. 1 lakh.
