The Karnataka High Court on Monday ordered to overturn an amendment to the Karnataka Police Act, 1963, which has banned participation and operation of online games with stakes to be ultra vires to the Constitution. The act prohibit and criminalise betting and playing games of skills.
The bench of Chief Justice Ritu Raj Awasthi and Justice Krishna S Dixit called the act unconstitutional.
“The writ petitions succeed. The provisions are ultra vires of the Constitution and struck down. However, the court won’t interfere if the state brings in a new law that is in consonance with the constitution.”
The Karnataka state government had notified the Karnataka Police (Amendment) Act, 2021, which made all forms of gaming linked to virtual or real-world stakes, including online and ‘skill games’, a non-bailable offence.
According to the law, skilled games are the games which requires human knowledge or understanding unlike the games which are purely based on luck and chance.
“Games of skill and chance are different, which has also been ruled previously by the Supreme Court. Once something is categorised as a game of skill, it does not fall under the ambit of gambling and skill games enjoy constitutional protection of trade and commerce under Article 19(1)(g) of the Constitution” said Jay Satya, a gaming lawyer.
A batch of petitions had challenged the Karnataka Police (Amendment) Act 2021. The hearing of the petitions began on November 12, 2021.
Senior Advocate Mukul Rohatgi, appearing for a petitioner stated that treating a game of skill like the game of luck is arbitrary.
“The object of the amendment act was to stop game of chance and gambling. However, in that process, treating a game of skill under the same head is arbitrary and the legislature is in overreach of the judgements of the Supreme Court, which have allowed games of skill. If I take this Amendment Act as it stands today, if I’m playing a game of chess online and we say that the winner will take away an amount, it will amount to an offence. The Act takes into its compass acts which are not gambling.”
On the other hand State government opposed the arguments of the petitioners, Advocate General Prabhuling K Navadgi, appearing for the state government said that the main objective of the amendment act is to stop the activities of gambling which affects public health and order.
“This is not a disproportionate legislation. This legislation cannot be thrown out on the ground of legislative competence because it comes under public order. Ultimately what we are regulating is betting or organised betting and to say that if I bet on a game of skill is not betting, has no foundation. We treat this (online gambling) much more pernicious than alcohol.”
Navadgi also argued that, “wagering or betting, to put it in simple words, is collection or soliciting bet from someone or I receive or distribute the prices either in money or otherwise, then wagering and betting is done. If anybody risks their money by soliciting or betting on an unknown result of an event, either in money or otherwise amounts to wagering and betting. Unknown result can be a game of chance or game of skill. Fantasy games are nothing but betting.”
The Karnataka Police (Amendment) Act came into existence on October 5, 2021. The act banned all forms of betting via electronic means and virtual currency, electronic transfer of funds etc. However, no such ban was imposed on betting, lottery, horse races etc within the boundaries or outside the boundaries of Karnataka.
Members of E-Gaming Federation along with other E-gaming industries had filed petitions in the court. Games24x7, All India Gaming Federation (AIGF) were among the petitioners against the Karnataka State Government.