A division bench of the Karnataka High Court, comprising Chief Justice Ritu Raj Awasthi and Justice Krishna S Dixit, on February 14 held certain provisions of the Karnataka Police (Amendment) Act 2021 ultra vires the Constitution and struck them down1. The court also issued a writ of mandamus restraining the state from interfering with the online gaming business and allied activities of the petitioners1.
The Act, which came into force on October 5, provided for maximum imprisonment of three years and a penalty of up to Rs. 1 lakh for violations1. It covered all forms of wagering or betting, including tokens valued in money paid before or after issue, and banned electronic means, virtual currency and electronic transfer of funds in connection with any game of chance1. Lotteries and betting on horse races at any racecourse within or outside Karnataka were not banned1.
"In the above circumstances these writ petitions succeed. The Karnataka Police (Amendment) Act 2021 to the extent provisions we have said, not the entire act is struck down is declared to be ultra vires to the constitution and struck down."
The court added that nothing in the judgment should be construed to prevent appropriate legislation on betting and gambling in accordance with the Constitution1. The detailed judgment had not been uploaded at the time of the ruling1. The case was All India Gaming Federation v. State of Karnataka, WP 18703/20211.
The hearing of the petitions began on November 12, 2021, and the court reserved its order on December 22, 20211. Petitioners argued that state governments have no jurisdiction to ban games of skill, relying on Supreme Court judgments including R.M.D. Chamarbaugwalla v. The Union of India and Dr. K.R. Lakshmanan v. State of Tamil Nadu1. The state government opposed the pleas, arguing the amendment was social legislation aimed at prohibiting activity injurious to public health and order, and that it had the legislative competence to enact it1.
Similar laws banning online gaming in Kerala and Tamil Nadu had previously been struck down by the Kerala and Madras High Courts respectively1. The Kerala High Court struck down a state law banning online rummy, and the Madras High Court struck down a law banning all kinds of online games, including skill-based games like poker and rummy played for stakes1.
The online skill gaming sector employs 40,000 people, and in the last five years received around $1,700 million in venture capital and private equity, according to The Hindu2. The Central government announced in the Union Budget that an Animation, Visual Effect, Gaming and Comics promotion task force will be set up2. The Madras and Kerala High Courts have held that games of skill do not metamorphise into games of chance if played online2. The Supreme Court and various High Courts have held several games including rummy, fantasy sports, bridge, chess and horse racing to be games of skill2. Matters remain sub judice in Telangana and Andhra Pradesh2.
What it means for players
For players in Karnataka, the provisions that criminalized offering and playing online games for stakes have been struck down, and the state has been restrained from interfering with online gaming businesses1. The ruling covers games of skill, which courts have held include rummy, fantasy sports, bridge, chess and horse racing2. Lotteries and horse race betting were never covered by the ban1. The practical position in Karnataka now mirrors that in Tamil Nadu and Kerala, where similar bans were struck down1. Players in Telangana and Andhra Pradesh face a different situation, as those matters remain before the courts2. For a state-by-state picture, see Where Gambling Is Allowed in India, State by State, and for the skill versus chance distinction that underpins the ruling, see Games of Skill vs Games of Chance in Asian Gambling Law. Fantasy sports players can read Fantasy Sports in India After the Ban, and those interested in the wider legal background can see What India's Online Gaming Ban Means for Players.
What happens next
The detailed copy of the judgment had not been uploaded at the time of the ruling1. The court stated that nothing in the judgment prevents appropriate legislation on betting and gambling in accordance with the Constitution1. The matters in Telangana and Andhra Pradesh remain sub judice2.
