Industry, trade bodies urge Karnataka to relook online gaming ban in Bill

IAMAI says Bill seems to ignore legal and constitutional positions by including a wide definition of "gaming" in amendments against various SC and High Court judgments

The Internet and Mobile Association of India (IAMAI) and Confederation of All India Traders (CAIT) have called for a relook of the Karnataka Police Act (Amendment) Bill, tabled in the State Legislative Assembly, which calls for a ban on online gaming.

The Karnataka Police (Amendment) Bill, 2021, was tabled in the State Legislative Assembly on September 17 to ban online gaming or betting by amending the Karnataka Police Act of 1963, with a maximum prison term of three years and penalty up to Rs 1 lakh.

IAMAI said the Bill introduced in the assembly appears to have been drafted without considering the various legal and constitutional positions by including a wide definition of "gaming" in amendments against various Supreme Court and High Court judgments.

The CAIT on Sunday wrote to Chief Minister Basavaraj Bommai urging him to reconsider the Bill.

National Secretary General of CAIt, Praveen Khandelwal said the Bill does not distinguish between "game of skills" and "game of chance".

“A game of chance is pure gambling, which is addictive and should be dealt with adequate legal procedures. On the other hand, a game of skill enables gamers to monetize their gaming talents and finesse. Once the bill bans online skill games, the law-abiding Indian companies will exit the market and the users will turn to harmful offshore and betting apps, which are harmful and dangerous,” he said.

The Bill has been introduced in the backdrop of a PIL filed in Karnataka High Court to ban online gambling.  After the Cabinet approval of the bill, the State law minister, JC Madhuswamy, informed the media that the Bill is to ban online gambling and games of chance in the state.

IAMAI is of the view that the bill may hurt Karnataka’s position as the country's startup hub and lead to the loss of jobs and revenue for the state. There are 92 gaming companies registered in Bengaluru which employ over 4,000 people. In the past three years, international investors have invested around Rs 3,000 crore in gaming and animation startups in the state.  

Apart from this, there is a large ecosystem dependent on gaming, including marketers, developers, animators and broadcasters who would be adversely affected as well, CAIT added in its submission.

Khandelwal added, “The Bill to ostensibly ban online gambling or betting also makes all online games of skill, which charge a small entry or registration fee, illegal. The Bill only affects the Indian companies, which mostly charge a small registration fee to play their games, and will not affect other foreign games, where children spend thousands of rupees on in-app purchases. The bill will also prohibit Indian games like Chess, Carrom, Archery, Hockey and digital versions of traditional sports.”

IAMAI said it is hopeful that the State government will continue to take a progressive stand and relook at the bill to bring it in line with the Supreme Court and various High Court's judgments.

Legislative actions such as this, may create a cloud of confusion and create regulatory uncertainty, which may unintentionally result in investors recalibrating their investments in the state and many existing companies may consider shifting base from the state, IAMAI said. It urged the Government of Karnataka to take a progressive view and ensure that legitimate online gaming companies which are protected under Article 19(1)(g) and Article 14 of the Constitution of India continue to operate in the State.