IN A boost for the online gaming industry in India, a division bench of the Karnataka High Court Monday struck down key amendments to the Karnataka Police Act, 1963, which were brought in last year to ban all forms of gambling in the state, including online gambling, in order to “curb menace of gaming through the Internet, mobile apps”.
“The provisions are declared to be ultra vires under the Constitution and struck down,” Justice Krishna S Dixit said while pronouncing the order.
“However, nothing in the judgment shall be construed to prevent an appropriate legislation from being brought about concerning the subject that is betting and gambling in accordance with the provisions of the Constitution,” Justice Dixit said.
The ruling comes nearly two months after the division bench, comprising Chief Justice Ritu Raj Awasthi and Justice Dixit, had reserved their judgment on December 22, 2021, in petitions filed by the All India Gaming Federation and gaming companies opposing the ban that bracketed online games like rummy with gambling.
“We have discussed various arguments, doctrines, principles, everything, and then we have come to this conclusion. In the above circumstances, the writ petitions succeed,” the High Court said on Monday.
“A writ of mandamus is issued restraining the respondents (Karnataka Police) from interfering with the online gaming business and allied activities of the petitioners,” the division bench said.
The full details of the order are awaited.
The gaming federation and others had sought a stay on the new provisions of the Act, which sought to place games of skill when played online in the category of games of chance. The state government had told the High Court that it would not take any “precipitating action” under the new laws till the cases are decided.
It was on September 21, 2021, that the state legislature passed a legislation to amend the Karnataka Police Act to impose a complete ban on gambling in the state. The Amendment Act came into force on October 5. Two days later, the state police filed an FIR against promoters of Dream 11 in Bengaluru before the High Court asked them not to take coercive action.
After the amendments came into force, online gaming companies geo-locked the availability of their sites and apps in Karnataka to avoid police action.
The new law was passed despite similar laws introduced in neighbouring Tamil Nadu and Kerala, for broadening the scope of gambling beyond what has been defined by law, not passing legal muster.
On August 3, 2021, the Madras High Court struck down the Tamil Nadu Gambling and Police Laws (Amendment) Act, 2021 as being “ultra vires”. On September 27, the Kerala High Court, relying on the Madras High Court order, struck down an amendment to the Kerala Gaming Act, 1960, which imposed a ban on online rummy.
One of the primary grounds on which the new gaming laws was challenged in Karnataka was that games of skill have been clubbed with games of chance in the definition of gaming in the new laws — if the games of skill are played for prizes or bets.
The gaming federation and companies argued that as per the law laid down by the Supreme Court in 1957, competitive games of skill are business activities protected under Article 19 (1) (g) of the Constitution.
Rummy and horse racing have been classified as games of skill that do not come under the purview of gaming laws, going by the yardstick of whether skills or chance is predominant in the outcome, it was argued. It was also argued that states do not have “legislative competence” to prohibit games of skill and that only games of chance can be regulated for gambling and betting.
Among the reasons cited by the Karnataka government for an amended law is an order by the Dharwad bench of the High Court bench 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.
The gaming federation had also stated in its petition that curbs on online gaming will affect a growing industry in the country. The federation has cited the online gaming industry as having seen investment to the tune of Rs 3,000 crore, especially through start-ups in Karnataka.