Industry Protests Karnataka Online Gaming Ban

September 23, 2021
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Technology sector heavyweights have urged the Chief Minister of the Indian state of Karnataka state to exempt skill gaming from this week's sweeping new ban on online gaming with stakes.

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Technology sector heavyweights have urged the Chief Minister of the Indian state of Karnataka state to exempt skill gaming from this week's sweeping new ban on online gaming with stakes.

Trade groups the Confederation of All India Traders (CAIT), the All India Gaming Federation (AIGF) and IndiaTech have written to Karnataka Chief Minister Basavaraj Bommai after the state legislature on Tuesday amended the Karnataka Police Act 1963 to ban all online games with stakes.

The Karnataka Police (Amendment) Bill 2021, passed by the state Legislative Assembly on a voice vote, now makes the state one of the toughest jurisdictions in India for gaming offences.

The new legislation imposes largely non-bailable custodial sentences on operators, players and accessories to online gaming activity.

But the amendment was also passed in defiance of Supreme Court support for gaming with stakes when skill is the predominant element, suggesting industry legal action will follow if the law is not amended further.

Karnataka Chief Minister Bommai said on Tuesday that online games that are fundamentally skilled in nature will not be affected, but warned that chance gaming posing as skill gaming would not be tolerated. The law as amended does not name approved or prohibited games.

The amendments ban online gaming when “involving all forms of wagering or betting, including in the form of tokens valued in terms of money paid before or after issue of it, or electronic means and virtual currency [in the] electronic transfer of funds in connection with any game of chance”.

However, as announced ahead of passage of the amendments, lotteries and horseracing are exempt from the ban.

Banned platforms include computers, mobile apps, the internet, virtual networks, software and any other means of online gaming in “electronic or digital form”.

Jail terms and fines have also been substantially increased, with one-year jail terms lifted to a maximum of three years and the top fine raised to 100,000 rupees ($1,357).

The CAIT trade group warned Bommai ahead of the bill’s passage that the ban runs counter to established law and poses a danger to fantasy sports and the wider gaming industry, not merely operators associated with traditional forms of gambling.

“Unfortunately, the Karnataka Bill does not distinguish between a game of skill and a game of chance. Game of chance is pure gambling, and should be rightfully banned,” CAIT secretary-general Praveen Khandelwal said in a letter quoted by The Hindu daily on Tuesday.

“However, by including games of skill in the ambit of the Bill, the proposal has not only gone against established jurisprudence but threatens the thriving Indian gaming start-up sector,” he said.

Khandelwal asked the government to review the bill.

Roland Landers, CEO of the AIGF skill gaming lobby, called the amendments a blow to Karnataka’s “standing of being a tech hub and start-up capital”.

“India is the fifth-biggest online gaming market … and skill-based gaming, a dawn sector, is bringing forth an expanding number of unicorns inside the country, particularly Karnataka,” he said, referring to start-ups with valuations of more than $1bn.

AIGF players association president PK Misra, a former top national public servant, said the Karnataka High Court has itself upheld judgments in line with Supreme Court rulings on the legality of skill gaming.

Start-up industry body IndiaTech has also sent a letter to Bommai, requesting that the government demonstrate that the ban will not cover online skill gaming, including fantasy sports, The Hindu reported on Thursday.

Seen by some industry experts as a key battleground for online gaming and the law, Karnataka’s importance derives not only from hosting major tech investment and research and development, but also from its large population of 70m and possible vanguard role in expanding online gaming regulation beyond three small states in the northeast.

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