Karnataka High Court on Online Gaming

The Karnataka High Court on Monday struck down certain provisions of the Karnataka Police (Amendment) Act 2021, under which the state government has banned online games with monetary stakes.

• The state governments amendment to the law banned wagering or betting and virtual currency and electronic transfer of funds in connection with any game of chance.
• The maximum punishment for violations under the Amendment Act was imprisonment for up to three years and a penalty of up to Rs 100,000.

Details

The bench, comprising Chief Justice Ritu Raj Awasthi and Justice Krishna S Dixit, reportedly declared the provisions in question to be ultra vires to the constitution, that is, enacted without any authority to do so.

A division bench while pronouncing the judgment, called the provisions unconstitutional.

• “The provisions are ultra vires of the Constitution and struck down,” the bench observed, while stating that the entire Act is not struck down but only the offending provisions.
• It also clarified that the judgment will not stand in the way of legislature bringing in new law in consonance with the Constitution against gambling.

The court also held that the State government provided no evidence or data on whether a sweeping ban was justified and neither constituted a committee of experts to study the issue.

The court also held that playing online games could help in building the character of an individual and enjoying online gaming could also fall within the contours of freedom of expression and right to liberty and privacy guaranteed under the constitution.

The court also opined that regulation of online games may be a better and proportionate solution rather than an outright ban, and left it open for the State government to come up with a new legislation dealing with betting and gambling in accordance with the provisions of the constitution.

The Kerala High Court had struck down a law banning online rummy last year. Earlier, the Madras High Court had overturned a law passed by the Tamil Nadu assembly banning all kinds of online games, including skill-based games like poker and rummy, played for stakes.

According to Indian laws, betting on games of chance is illegal whereas betting on games of skill is legal. It can be tricky to determine whether a game falls under a chance or skill categories.

A ruling by Supreme Court holds that rummy cannot be classified as a game of chance like three-card games such as flush and brag, because rummy needs players to have a certain level of skill when it comes to memorisation.

• Several state governments including Andhra Pradesh, Telangana ,Tamil Nadu and Punjab governments have imposed bans on online gambling apps stating ‘legislative ambiguity’.

What Is Online Gambling?

Online gambling generally means the use of internet to place bets and earn money. It is similar to playing in a casino but the difference is that it is held in a virtual environment.

This includes playing of poker, sport games, casino games, etc. Users can place bets through online payment modes such as credit, debit card, internet banking or UPI (most preferred). After placing a bet, wins or losses are paid or collected accordingly.