Karnataka Government passes controversial Bill to ban Online Gaming

A brief breakdown on how Karnataka has gone about the new regulations with certain reasonable restrictions and specifications

Karnataka has become the latest state to ban certain modes of online gaming in a recent move by the government. The Karnataka Police (Amendment) Bill 2021 has come into effect to ban forms of 'wagering, betting, and other modes of recognised monetary transactions/funds involving gaming. The Bill extends to banning the usage of apps and computers to undertake transactions directed towards online gaming.

While there is not much clarity on the matters as yet, Karnataka may possibly become the 7th state to ban fantasy sport apps such as Dream 11 etc. from operating. The confusion lies in how the government and courts will interpret fantasy sport apps such as Dream 11 that have previously been termed as 'Games of Skill' by other courts such as the Punjab and Haryana High Court.

Controversy

There has been a lot of controversy created already as several industry heads and professionals have commented on the issues that this will cause. The major confusion seems to be between the lack of differentiation in the Bill between the 'Game of Skill' and 'Game of Chance'. This debate has been the focal point of all esports and online gaming for several years now in India and this spark has been lit once again with the passing of the bill.

Another issue is regarding the industry impact. Bengaluru and Karnataka in general is known for its IT development and is also often referred to as the startup hub of India. This bill has the possibility to dent the hopes of tech and gaming start ups that may be looking to make inroads in India and specifically from Bengaluru. It remains to be seen whether this impacts the outlook of the country towards Bangalore being a startup and tech friendly city.

Karnataka bill to ban online gaming will be setback to Indian startup's . We @CAITIndia endorse ban on foreign apps but also ban Indian games skills will kill gaming industry @BSBommai pls reconsider @JPNadda @BJP4India @PMOIndia @PiyushGoyal pic.twitter.com/dEWFqgyQAg
— Praveen Khandelwal (@praveendel) September 20, 2021

The Bill has explicitly stated that "games mean and include online games, involving all forms of wagering or betting, including in the form of tokens valued in terms of the money paid before or after the issue of it, or electronic means and virtual currency, electronic transfer of funds in connection with any game of chance." It seems as though the government has taken the precedent set by the Madras High Court to regulate gaming in the state. Home Minister Araga Jnanendra has stated that more clarity will be provided once the Governor of the state provides the necessary ascension to the Bill.

Punishment

The punishment mandated for violation of the law has also been given-

1^st Offence- 6 months in prison and Rs.10,000 fine.

2^nd Offence- 1 year in prison and Rs. 15,000 fine.

3^rd offence-18 months in prison and Rs.20,000 fine.

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