Karnataka High Court reserves order on online gaming ban

Karnataka High Court reserves order on online gaming ban

Holds ruling on a batch of petitions challenging the constitutional validity of the Police Amendment Act

The Karnataka High Court has reserved its order on a batch of petitions challenging the constitutional validity of the Karnataka Police (Amendment) Act, 2021. As per the Act, the state government has banned online gaming and betting. The Act provides maximum imprisonment of three years and a penalty of up to Rs.1 lakh for violation of the provisions.

A division bench of Chief Justice Ritu Raj Awasthi and Justice Krishna S Dixit permitted the petitioners to file their written submissions.

Appearing for one of the petitioners, Dr Abhishek Manu Singhvi argued that there was a distinction between a game of chance and a game of skill. "The game of chance alone can be regulated to the point of banning by state authorities. But the state governments have no jurisdiction to ban the games of skill. This distinction has been in existence for years," he said.

Appearing for another petitioner, senior advocate Mukul Rohatgi, debated that the object of the Act was to stop the game of chance and gambling. However, in that process, treating a game of skill under the same head was arbitrary and the legislature was in the overreach of the (earlier) judgments of the Supreme Court, which had allowed the games of skill.

He further said, "If I take this Act as it stands today and I am playing a game of chess online and we say the winner will take away an amount, it will amount to an offence. The Act takes into its compass acts, which are not gambling."

Appearing for the All India Gaming Federation, senior advocate C Aryama Sundaram contended, "All my members do not offer third party viewership. These online games are only available to the actual players. He (player) is not wagering on somebody else's skill. I (player) have to personally participate in a game, which is a game of skill and then wagering thereon. The question is whether this will amount to gambling and fall under the Constitution of India."

Relying on the judgments of the Supreme Court, the Madras High Court and the Kerala High Court, which had struck down similar laws, he argued, "The status quo, which has been in force for 40 years and has not been altered in respect to the game of skills, especially when the games are regulated by the Federation itself, should continue."

He maintained, "Prima facie, the case of balance of convenience is made out and in the absence of the stay, all these people (companies) are going to go out of business. It is not that we are in an irreversible condition, (but) if the court holds that the Act is valid, then let the ban take effect from that day."

Another petitioner's senior counsel D L N Rao also attacked the Act on the grounds of legislative competence and it being in violation of the Constitution. He said that the whole amendment was without the authority of the law.

Senior advocate Sajan Poovayya appearing for three petitioners submitted that when the legislative competence was challenged, the presumption of constitutionality would not come in the way.

The state government had opposed the petitions. Advocate General Prabhuling K Navadgi, appearing for the government, had said that the Act was social legislation, with the purpose of prohibiting the activity that was injurious to public health and order.

Urging the court to bifurcate between the game of skill and chance, it was contended that skill games were not banned. The government had the legislative competence to enact the law. "This is not a disproportionate legislation," Navadgi maintained.

Citing the number of criminal cases registered across the state, he said, "This legislation cannot be thrown out on the ground of legislative competence. Because it comes under the public order."

He further submitted, "Ultimately what we are regulating is betting or organized betting and to say that if I bet on a game of skill is not gambling; has no foundation." He added, "We treat this (online gambling) much more pernicious than alcohol."

Referring to the Act, Navadgi said, "Wagering or betting, to put it in simple words, is a collection or soliciting bet from someone. Risking money by soliciting or betting on an unknown result of an event, either in money or otherwise, amounts to wagering and betting. The unknown result can be a game of chance or game of skill." With regard to the fantasy games, it was contended that those games meant betting.

The Amendment Act, which came into force in October, included all forms of wagering or betting, including in the form of tokens valued in terms of money paid before or after the issue of it. It banned electronic means and virtual currency, electronic transfer of funds in connection with any game of 'chance'.

It further mentioned, "Use of cyberspace, including computer resources or any communication device as defined in the Information Technology Act, 2000 in the process of gaming. This was to curb the menace of gaming through the Internet and mobile apps. It entailed punishment for gaming to wean the citizens away from the vice of gambling.

However, there was no ban on lottery or betting on horse races on any racecourse within or outside Karnataka.