Karnataka online gaming ban: Online rummy, poker, fantasy sports companies likely to challenge govt in court

Amid the frenzy triggered by the recently passed Karnataka Police (Amendment) Bill 2021 aimed at banning online games for stakes, reports have emerged that a cluster of technology companies are preparing to challenge the Karnataka government’s move.

With the amendment, Karnataka joins the neighboring states Telangana, Andhra, and Tamil Nadu that brought laws to ban online games involving prize money or stakes. The Tamil Nadu law was recently struck down by the Madras High Court and the government is now contemplating to appeal or bring in a new amendment.

A report in Hindustan Times, citing a lawyer who did not wish to be named, claims that online gaming companies are already readying petitions to take on the state. He also added that there is no guarantee that Karnataka High Court will go the Madras High Court way.

The broad and seemingly ambiguous nature of the bill can potentially cast a shadow on various booming segments of online gaming including fantasy sports and esports, with the stakeholders of which have echoed similar concerns.

“What the government of Karnataka should have done is that they should have considered that you have Rs 4000 crore rupees of investment here, thousands of people being employed and some of the biggest unicorns coming from Bengaluru in this sector, you should have called a meeting of the stakeholders and asked them how to prevent betting,” Priyank Kharge, a Congress legislator and the former IT/BT minister of Karnataka told HT.

In a series of tweets, he had also called out the indefinite and erroneous nature of the bill and how this could affect some rather innocuous games of skill like chess and sudoku.

“People pay registration fees to play or participate in online chess or sudoku. Is this also called wagering? There is no clarity in the bill. See Sec 78 sub-clauses 1 (a) (vi) (vii) which includes “game of skills,” he posted.

Bengaluru is home to several homegrown gaming entities including Sequoia Capital-funded Mobile Premier League. The online gaming sector has been a major financial contributor to the Indian economy and is projected to generate revenues in excess of $3 billion by 2025. India currently has houses than 400 online gaming startups and, as of 2020, had around 360 million gamers, according to an EY-All India Gaming Federation report.

As many as 92 gaming companies are registered in Bengaluru which employ around 4000 people and attracted 3000 crores of investment in the last three years alone according to the Mobile Association of India (IAMAI).

In another interesting development for the online gaming sector, a single-judge bench of the Kerala High Court on Monday struck down an amendment to a notification issued by the Kerala government under Section 14A of the Kerala Gaming Act, 1960 banning online rummy.

The judgment noted that the notification was arbitrary and violative of the right to trade and commerce guaranteed under Article 19(1)(g) of the Constitution and the right to equality guaranteed under Article 14 of the Constitution.

Justice TR Ravi of the Kerala High Court pronounced the judgment today, almost two months after all arguments in the matter were concluded and the writ petitions filed by four online rummy companies were reserved for judgment.