Karnataka HC: Ban on Online Gaming Unconstitutional

On February 14, 2022, Karnataka High Court struck down provisions of Karnataka Police (Amendment) Act, 2021, that had banned online games.

Key Facts

  • The division bench was headed by Chief Justice Ritu Raj Awasthi and Justice Krishna S. Dixit.
  • According to the bench, ‘Karnataka Act number 28/2021 to the extent the provisions ultra vires the constitution, however not the entire Act.
  • This judgment was interpreted for preventing an appropriate legislation concerning the subject like betting and gambling in line with the provisions of constitution.
  • A writ of mandamus was issued to restrain the respondents from interfering with online gaming business and allied activities of the petitioners.

Karnataka Police (Amendment) Bill, 2021

  • The law includes all forms of betting or wagering in connection with any game of chance, except horse racing. However, this law was opposed by online gaming companies, stating that this policy would affect the prospectus of Karnataka, which is emerging as online gaming companies’ hub.
  • The Act banned all formats of online games including wagering, betting and gambling of all nature in the state.
  • Under it, online gaming was considered a non-bailable offence. It provides for a fine of Rs 1 lakh and imprisonment of up to three years.
  • Apart from banning games of skills, government categorised online games using electronic means, virtual currency and electronic transfer of funds associated with any game as gambling.

Mobile Premier League (MPL)

MPL was one of the first companies to hold back its operations in Karnataka. Paytm First Games was also locked.

Challenge in the court

Online gaming companies moved to the court to question the new legislation. Similar law was challenged in Tamil Nadu.

What were the concerns?

According to Internet and Mobile Association of India (IAMAI), new legislation by the government will dent Karnataka’s image as a start-up hub. State exchequer will witness a huge revenue deficit. With new legislation, offshore gamblers will flourish.

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