Karnataka High Court Quashes Ban on Online Games of Skill

In 2021, the Karnataka Government introduced amendments to the Karnataka Police Act, 1963, which has been subject to constant criticism and scrutiny. The amendment prohibited and penalized betting, gambling and playing of online games (without differentiating between games of chance and games of skill).

Interestingly, Section 176 of the original Karnataka Police Act, 1963 (which provided for an exception to ‘games of skill’) read as – “For the removal of doubts it is hereby declared that the provisions of sections 79 and 80 shall not be applicable to the playing of any pure game of skill and to wagering by persons taking part in such game of skill.” It seemed surprising that the amendment sought to omit the phrase “and to wagering by persons taking part in such game of skill”, thereby partially doing away with the exception granted to games of skill.

The Petitioner (All India Gaming Federation) filed a writ petition[1] challenging the constitutional validity of the provisions introduced through the amendment. The primary grounds relied upon by the Petitioner were as follows:

1. The Karnataka government lacks legislative competence to introduce such an amendment since it does not fit into Entry 34, List II, Schedule VII of the Constitution of India;

2. Violation of the ‘right to life and liberty’ under Article 21 of the Indian Constitution which includes the right to play games and sports;

3. Violation of the fundamental right to freedom of speech and expression under Article 19(1)(a) since playing game of skill is a facet of speech and expression;

4. Violation of fundamental right to ‘practice any profession, or to carry on any occupation, trade or business’ under Article 19(1)(g) of the Indian Constitution;

5. Failure to recognize the difference between a ‘game of skill’ and a ‘game of chance’ which has been settled by numerous Indian judicial bodies (including the Supreme Court of India).

On the other hand, the Respondent asserted that owing the proliferation of online gaming platforms which allegedly engage in ‘betting and wagering’ has proved detrimental to the public interest and public order. The Respondent further mentioned that if persons merely play a game of chance or a game of skill without risking cash or kind, they would not be subject to the penal provisions of the statute. However, it was not disputed by the counsel for the Respondent that online games of skill when played with monetary stakes would be prohibited under the amended statute.

The Karnataka High Court (vide its judgment dated February 14, 2022) issued a writ of mandamus restraining the Government of Karnataka from ‘interfering with the online gaming business and allied activities of the petitioners’ and further quashed various provisions introduced through the amendment. The Court concluded that “the Amendment does not critically adjust the boundaries of existing category of protected activities i.e. games of skill with the unprotected acts of gambling. Instead, State has created a wholly new category of medium-based-regulation when change of medium per se does not alter the true nature & content of the games.” Accordingly, the Court recognized that the parallel ban on online gaming and the exclusion of games of skill through the amendment to the statute was unreasonable and unjustified.

The Court further clarified that “nothing in this judgment shall be construed to prevent an appropriate legislation from being brought about, concerning the subject of 'Betting and Gambling in accordance with the provisions of the Constitution.” In light of this, it’ll be interesting to see if the Karnataka Government brings about a specific legislation for regulating the online gaming industry.

This judgment is in consonance with the recent judicial pronouncements by the Madras High Court as well as the Kerala High Court which have struck down the provisions of the respective state legislations which intended to bring about a ban against online gaming (without carving out a specific exception for ‘games of skill’). This judgment provides a major relief to the booming online gaming industry in India since it serves as an indication that the intent of the law is not to impose a ban on online game of skill.

[1] All India Gaming Federation v State of Karnataka, WP 18703/2021