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Karnataka approaches Supreme Court to reinstate ban on online games with real money stakes: Report

Many states like Andhra Pradesh, Telangana, Tamil Nadu, and Kerala have tried to ban real-money gaming in recent years.

The Karnataka government has approached the Supreme Court to overturn the Karnataka High Court order quashing its ban on online gaming with real money stakes, according to a report in Economic Times. The High Court had struck down certain amendments in the Karnataka Police Act, 1963, which imposed a blanket ban on online gaming with money, in February this year.

The state government, in its special leave petition (SLP), said that it needs the law to protect people from falling for online games and losing money, the report revealed. Karnataka Home Minister Araga Jnanendra told ET that the government drafted amendments as there were reports of large numbers of youth and their families in ruin after they used the money for betting on online games.

“But the court struck down the amendments. We still think our response was right as many families have said the online betting menace has destroyed them financially. That is why we decided to move the Supreme Court,” Home Minister Jnanendra was quoted as saying.

The move intensifies uncertainty looming large over the online gaming industry which has been trying to navigate different state laws for years now. It also underscores the need for a uniform policy on games with real money stakes

Why has Karnataka approached the Supreme Court?

The SC appeal by the state government seems to be necessitated by the Karnataka High Court’s (HC) order striking down the Karnataka Police (Amendment) Act 2021 which banned online gaming (with stakes) and betting in the state.

The division bench, comprising Chief Justice Ritu Raj Awasthi and Justice Krishna S Dixit, termed the amendments as unconstitutional in its judgement but clarified that the court was not striking down the entire Act, adding that it will not interfere if the government brings in a new law that is congruent with the Indian constitution.

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The state government’s arguments in favour of the ban

The government had argued then that its new law on online gaming did not ban online “games of chance or skill” but steered people away from gambling money on an uncertain events.

The state government did not believe there was no difference between a game of chance or skill as the consequences of betting money are the same in both which is why the government did not treat them differently.

The government affirmed that Karnataka’s law is not bogged down by the “crassness of clauses that afflicted” the Tamil Nadu law struck down by the Madras High Court recently,

The state of Karnataka offered the following reasons to justify its case:

  • Gaming platforms fuel addiction among the youth which can result in suicide at times.
  • The aforementioned addiction is similar to alcohol or drug abuse
  • Online portals do not disclose the way they distribute prize money to their customers causing them to spend money to attract returns that are not there.

It is likely that the state government, given the Home Minister’s comments to ET, that the state will stick to its arguments in the Supreme Court as well.

Who were the petitioners?

The petition against the constitutional validity of state’s amendments was filed by All India Gaming Federation (AIGF), self-regulatory fantasy sports industry body Federation of Indian Fantasy Sports (FIFS), Mobile Premier League (MPL), Games24x7, A23 (Ace2Three), Junglee Games, Gameskraft, and Pacific Games, among others, according to Moneycontrol.

The ban took effect on October 5 last year much to the dismay of the gaming industry.

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Gaming provisions struck down in other states

Many states like Andhra Pradesh, Telangana, Tamil Nadu, and Kerala have tried to ban real-money games in recent years.

Madras High Court: The bench struck down Tamil Nadu’s ban on gambling on constitutional grounds in August last year. The Tamil Nadu Gaming and Police Laws (Amendment) Act, 2021, and an ordinance, made it illegal to participate in any form of gambling that involved stakes and provided for a punishment of up to two years or a fine of up to Rs 10,000. Tamil Nadu has now approached the Supreme Court to restore the ban.

Kerala High Court: The HC quashed a notification by the Kerala state government that banned the card game rummy in September last year. The ban, issued by the Kerala government under Section 14A of the Kerala Gaming Act, 1960 in February, came in the form of a notification. The court ruled that the notification was “arbitrary” and violated the right to do business guaranteed under Article 19(1)(g) of the Constitution of India.

Telangana was the first to introduce a ban in 2017 on online gambling and betting. Andhra Pradesh amended its gaming act to prohibit online betting and “online games for money or other stakes”. The ban is being challenged at the Andhra Pradesh High Court.

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I cover several beats such as Crypto, Telecom, and OTT at MediaNama. I can be found loitering at my local theatre when I am off work consuming movies by the dozen.

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