Karnataka bans online gambling

Karnataka bans online gambling

The Karnataka Legislative Assembly has passed the Karnataka Police (Amendment) Bill, 2021, to ban online gambling and betting involving all forms of wagering, including in the form of tokens valued in terms of money paid before or after their issue.

The act seeks to ban all gambling using electronic means and virtual currency, and electronic transfer of funds in connection with any game of chance.

The act seeks to amend the Karnataka Police Act, 1963, to make online gambling punishable with imprisonment of three years and a penalty of up to INR100,000 (USD1,330).

The law will be a setback for India’s fledgling online gaming industry, which had received a shot in the arm from several high court judgments and a recent Supreme Court judgment that all drew a distinction between games of skill and games of chance.

In the most recent judgment, the Supreme Court upheld Dream11’s fantasy sports format as a “game of skill”. The Supreme Court dismissed a special leave petition that alleged that the online format offered by Dream11 amounted to gambling, wagering and betting, and was not a game of skill.

The law strengthens the provisions of the extant police act by making gambling a cognisable and non-bailable offence. As per the act, it includes “the use of cyberspace, including computer resources or any communication device as defined in the Information Technology Act, 2000, in the process of gaming to curb the menace of gaming through the internet [and] mobile apps”.

According to the law, “the word ‘gaming’ does not include a lottery, but includes all forms of wagering or betting in connection with any game of chance, except wagering or betting on a horse race run on any racecourse within or outside the state”.

It also bans, “any act of risking money or otherwise on the unknown result of an event, including on a game of skill, and any action specified above carried out directly or indirectly by the players playing any game, or by any third parties”.

The Business Law Digest is written and researched by Mithun Varkey.