Karnataka HC strikes down ‘unconstitutional’ law prohibiting online gaming

The Karnataka High Court on Monday struck down the State’s amendments to the Karnataka Police Act, 2021, which had barred and criminalised betting on playing games of chance and skill which involved money. The bench comprising Chief Justice Ritu Raj Awasthi and Justice Krishna Dixit also declared the law notified by the State government on October 5, 2021, as unconstitutional. While the court declared the provisions as ‘ultra vires of the constitution’, it clarified that the entire act is not struck down, but only the specific amended provisions.

Several industry associations, including the All India Gaming Federation, the Federation of Indian Fantasy Sports, Mobile Premier League, Dream11, Gameskraft, Junglee Games and several others, had moved the court against the law and the the amendments made to the KPA. Some of the petitioners were forced to suspend operations in Karnataka following the State government’s move and others had even stopped allowing users who had bank accounts in the State from participating in contests on their sites. The petitioners contended that courts had repeatedly ruled that games of skill – involving money or otherwise – do not amount to betting or wagering and therefore, protected under Article 19 of the Constitution.

Representatives of the online gaming industry welcomed the verdict. Bimal Julka, Chairman, FIFS, said: “The verdict is a welcome news for all the sports fans in India, the biggest market for fantasy sports globally, with 13 crore+ users playing across 200+ platforms. This judgment follows other positive judgments by Hon’ble High Courts of Punjab & Haryana, Rajasthan and Bombay that recognised fantasy sports as games of skill and a legitimate business activity protected under Article 19(1)(g) of the Constitution. The view was further upheld by the Hon'ble Supreme Court multiple times.”

In August 2021, the Madras High Court, too, struck down a similar law passed by the Tamil Nadu government banning online gaming, followed by the Kerala High Court striking down a similar law in the State.

Roland Landers, CEO of All India Gaming Federation, stated that India is the fifth largest online gaming market globally and skill-based gaming, a sunrise sector, is giving rise to an increasing number of unicorns in the country, especially Karnataka. “The sector has been a strong financial contributor to the Indian economy even during an unprecedented period of slowdown and is further expected to generate revenues in excess of $3 billion by 2025 ... this is a step in the right direction to grow the burgeoning gaming industry.”

The verdict is yet another validation of what the online skill gaming industry has always maintained, that we are a legitimate business activity, claimed Dinker Vashisht, Vice President Corporate and Regulatory Affairs, Games24x7. He also hoped that these judgments would nudge State governments to frame progressive policy and regulatory structure for this sector.

Ankur Singh, CEO & Founder of Witzeal Technologies Pvt. Ltd, said, “We are excited to hear the judgment ... the move will provide immense opportunity for employment of youth by building internal capabilities to cater to the domestic and international demands.”

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