After Kerala and Tamilnadu high court strikes Karnataka on ban on gambling
What is the news:
The Karnataka High Court, on February 14, has struck down the contentious provisions of the Karnataka Police Act that deals with online gambling as unconstitutional, providing a major relief to the skill-based gaming firms that had shut down operations in the state.
The petitions challenged the constitutional validity of amendments made to the Karnataka Police (Amendment) Act that had banned all forms of online gaming where transfer of money is involved.
About The Judgment:
This judgement will likely pave the way for fantasy sports and gaming fifirms such as Dream11, Mobile Premier League, Games24x7 (RummyCircle, My11Circle), and Ace2Three make a comeback in the state. They had suspended operations in October last year.
While pronouncing the judgement, the division bench comprising Justice Krishna S Dixit and Chief Justice Ritu Raj Awasthi noted that the entire law is not being struck down but only the contentious provisions.
The bench also noted that the judgement does not prevent an appropriate legislation being brought concerning the subject (betting and gambling) in accordance with the provisions of the constitution.
The KarnatakaHigh Court had on December 22 reserved its judgement after concluding the hearings from a series of petitioners that included industry associations, gaming companies and individuals who had challenged the constitutional validity of the state’s new online gambling law that came into effect on October 5.
About Petitioners:
Skill gaming industry body All India Gaming Federation (AIGF), self-regulatory fantasy sports industry body Federation of Indian Fantasy Sports (FIFS), real-money gaming firms Mobile Premier League (MPL), Games24x7, A23(Ace2Three), Junglee Games, Gameskraft and Pacific Games, are among the dozen petitioners who had moved the high court against the law.
These petitions had challenged the constitutional validity of amendments made to the Karnataka Police (Amendment) Act that had banned all forms of online gamingwhere transfer of money is involved.
Welcoming the judgement, AIGF CEO Roland Landers said “Coming in 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 in the state”
“AIGF and the skill games council of domain experts will be happy to assist various stakeholders in playing a consultative role in the formation of a regulatory framework for the industry” he said.
Karnataka’s online gambling saga
The case was initially heardby a single-judge bench of Justice Krishna S Dixit and was later transferred to a division bench comprising Dixit and Chief Justice Ritu Raj Awasthi. On December 22, the bench told the parties they can file written submissions for any further arguments.
The petition was initially listed for interim relief but was later heard for final arguments following a consensus among counsel appearing for the petitioners as well as the state’s Advocate General appearing for the respondents, since the arguments had advanced at length.
The state’s amendment came after a public interest litigation was filed in the high court seeking a ban on online gambling. It removed the distinction between the game of skill and game of chance, thereby bringing skill-based gaming startups under its purview.
With growing internet penetration and a young population, gaming is growing popular in India. The country had around 80 million real-money gamers in 2020, a number expected to grow to 150 million by 2023, according to an EY-All India Gaming Federation report.
The industry will be worth $2 billion by 2023 in terms of rake fees earned, the report said.
However, several states like Andhra Pradesh, Telangana, Tamil Nadu and Kerala have banned or tried to ban real-money games over the past year.
The Madras High Court had struck down the suspension order in August while the Kerala High Court recently overturned a similar order by the state government. Tamil Nadu has now approached the Supreme Court to restore the ban. Meanwhile, the apex court had upheld fantasy sports as a game of skill in July this year.
About the act:
The Karnataka Police (Amendment) Bill, 2021 was passed by the legislature despite a similar law — the Tamil Nadu Gambling and Police Laws (Amendment) Act, 2021 — passed in February in Tamil Nadu being struck down by the Madras High Court this August as being ultra vires.
The new Karnataka law aims to strengthen the Karnataka Police Act to make gambling a cognisable and non-bailable offence and “curb menace of gaming through the Internet, mobile apps”.
Why has the Karnataka government amended the Karnataka Police Act, 1963 to ban gambling?
Among the reasons cited by the Karnataka government for a new law to ban all forms of gambling are a Dharwad High Court Bench order of December 2019 which ruled that the police cannot raid gambling dens without a formal written order from a magistrate since gambling is a non-cognisable and bailable offence.
Recent public interest litigations seeking a ban on online gaming and betting – where the high court has sought the state government’s stand on imposing a ban on gambling – have also served as a catalyst for the introduction of the amendments to the Karnataka Police Act, 1963.
What are the punishments for gambling under the amended law?
The new law enhances maximum punishment for owners of gambling centres from one year to three years of imprisonment and fines from Rs 1000 to Rs 1 lakh.
The minimum punishment proposed is six months instead of the current one month and a fine of Rs 10,000 instead of Rs 500.
For aiding or abetting gambling, the punishment has been enhanced to six months imprisonment and a Rs 10,000 fine.
A first offence of managing a gaming house will attract the minimum sentence of six months in prison and a fine of Rs 10,000 while a second offence will entail imprisonment for a year and fine of Rs 15,000. A third offence will attract an imprisonment of 18 months and a fine of Rs 20,000