Ban On Online Gaming Unconstitutional, Says Karnataka High Court

The Karnataka High Court on Monday struck down provisions of the Karnataka Police (Amendment) Act, 2021, which prohibit and criminalise online gambling and betting.

In October last year, the state government amended the police legislation, and notified the Karnataka Police (Amendment) Act, 2021, banning gaming through internet and mobile apps. Specifically, the amendment criminalised:

• All forms of wagering or betting in connection with any game of ‘chance’.
• Wagering or betting while playing online games involving any game of ‘chance’ and where tokens are paid in the form of money, electronic means, virtual currency or electronic transfer of funds.
• An act of risking money or betting on the unknown result of an event including on a game of ‘skill’.

The provision was challenged by the All India Gaming Federation, Federation of Indian Fantasy Sports, Mobile Premier League, Games24x7, A23, Junglee Games, Gameskraft and Pacific Games, who questioned the validity of the amendment.

A move which was definitely applauded by other top online gambling operators in the globe such as these websites.

On Monday, a two-judge bench of Chief Justice Ritu Awasthi and Justice Krishna Dixit said, “The writ petitions succeed. The provisions are ultra vires of the Constitution and struck down.”

However, the bench also clarified that the judgment will not prevent the state legislature to bring in a new law against betting and gambling.

The Karnataka High Court has taken a different path as compared to the Madras High Court, Senior Advocate Sajan Poovayya told BloombergQuint. The latter, while dealing with a challenge to online gaming, said that there is not legislative competence for the state to draft a law, he said. Poovayya argued on behalf of several petitioners.

“The Karnataka High Court has said—’I am not saying that the state has no power to make a law but this law (Karnataka Police Amendment Act) is unconstitutional’. No one has read the order yet but looks like this what the court has said,” Poovayya said.

The detailed order of the high court is awaited.

Broadly, the petitioners had argued that there is a distinction between a game of chance and a game of skill. A game of chance alone can be regulated, to the extent of banning by state authorities. But the state has no jurisdiction to ban games of skill. Treating a game of skill under the same bracket is arbitrary and beyond the scope of law laid down by the Supreme Court, which time and again has permitted games of skill, the companies had said

On behalf of the government, Advocate General Prabhuling Navadgi had argued that the amendment was introduced owing to a large number of money-laundering cases in the guise of online gaming activities.

“There was a huge betting racket going on, where people were lured into, to place their bets whenever a cricket or football match happened.”

The amendment act is a social legislation. It intends to prohibit certain activities which are injurious to public health and order, Navadgi had said. And so, the legislation cannot be thrown out on the ground of legislative competence as it comes under public order, he had said.