Karnataka High Court To Hear Next Week Challenge To Online Gambling Ban

Justice Krishna S Dixit while hearing the petition filed by the ALL INDIA GAMING FEDERATION, orally directed the state government to instruct the police to not take any action.

Senior Advocate Arvind Datar appearing for the petitioner made a preliminary submission that "The Supreme Court has held that once there is some element of skill involved then it is not a wagering, then it goes into the realm of contract. Only if we go purely by chance then it comes in the realm of gambling and betting."

He also pointed out to the court that recently the Madras High Court has struck down an amendment made in the Tamil Nadu Gaming and Police Laws (Amendment) Act, 2021.

Senior advocate Sajan Poovayya will be representing other petitioner's namely-Junglee Games India Private Limited, Head Digital Works Private Limited (www.a23.com), Play games 24x7 private limited, Saroj Kumar Panigrahi (Sr Vice President of play games 24x7 Private limited, which maintains website www.RummyCircle.com & www.My11circle.com) and mobile applications.

The petitions claim that due to the impugned amendment respondents have imposed a blanket ban on all forms of game of skill involving wagering and betting and also enlarged the scope of the criminalization of online games involving virtual currency and electronic transfer of funds. It has affected the fundamental right of freedom of the petitioners to practise any profession or to carry on any occupation, trade or business.

The petitions state that the state government does not have the legislative competence to promulgate the impugned Act under Entry 34 of the State List (List II) as provided for in the Seventh schedule of the Constitution. Entry 34 under the state list only provides for regulations of 'betting and gambling'. In such circumstances the promulgation of the impugned act is against the test of pith and substance.

Further, it is said the impugned Act has the effect of treating 'online games of skill' including chess and bridge games, also as illegal gambling. It seeks to club together activities that were treated as different and severable from gambling. Therefore, the impugned Act deserves to be struck down in toto as it subjects permitted commercial activities to the same restrictions as illegal gambling activities.

It is also said that the act does not make a difference between 'games of skill' and 'games of chance'. The plea says "The net effect of the impugned act is a disproportionate infringement of the petitioner's constitutional rights under Article 14 and 19 (1) g of the Constitution of India."

The Amendment Act came into force on October 5, it includes 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 has banned electronic means and virtual currency, electronic transfer of funds in connection with any game of 'chance'. However, there is no ban on lottery, or betting on horse races on any racecourse within or outside Karnataka.

The statement of objects and reasons states: "It is considered necessary further to amend the Karnataka Police Act, 1961 Karnataka Act 4 of 1964, to provide for effective enforcement of the provisions of this Act by making offences under Chapter VII and under section 90, 98, 108, 113,114 and 123, as cognizable offence and non-bailable except section 87, which is made cognizable and bailable."

Further, "Include the use of cyberspace including computer resources or any communication device as defined in the Information Technology Act, 2000 in the process of gaming, to curb the menace of gaming through internet, mobile app, to enhance the punishment for gaming for the orderly conduct of citizens and to wean them away from the vice of gambling."

Background:

The state government had in February informed the Karnataka High Court that it proposes to have legislation for regulating online gambling and betting in the state. The submission was made while hearing a petition filed by Sharada D R which seeks a complete ban on online gambling and betting. It states that because there is a complete regulatory vacuum as far as online betting and gambling are concerned. There is no regulatory body or governmental structure to regulate and monitor online gambling and betting. As a result, the vulnerable sections of society, particularly the youth, adolescents and even children are prone to hazardous and predatory situations amidst this pandemic.

Case Title: All India Gaming Federation V. State Of Karnataka

Case No: WP 18703/2021