Karnataka introduces bill to ban virtual gaming and curb online gambling

The Karnataka Assembly has passed the Karnataka Police (Amendment) Bill, 2021 to ban virtual gaming and curb gambling. The bill says that games mean and include online games, involving all forms of wagering or betting, including in the form of tokens values 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.

This latest ban, which comes weeks after the Tamil Nadu HC had struck down a decision of the state government to ban online gaming, in Karnataka is a body-blow to the gaming industry which is still in its infancy in India.

The newly passed bill includes using cyberspace (computer resources or any other communication device) as defined in the Information Technology Act, 2000 in the process of gaming to curb online gaming and gambling through internet and mobile apps. Various state governments have raised concerns about the promotion of gambling.

The Internet and Mobile Association of India (IAMAI) told ToI that the bill to ban gaming had been drafted without considering the various legal and constitutional positions. The Federation of Indian Fantasy Sports (FIFS) said the move appears to be misguided. Dinker Vashisht, corporate affairs head at Games 24×7, told ToI it is all the more distressing that this decision has been taken by Karnataka, which hitherto was the startup and tech capital of India.

Confederation of All India Traders (CAIT) secretary general Praveen Khandelwal tweeted that the bill to ban online gaming will be setback to Indian startups. “We @CAITIndia endorse ban on foreign apps but also ban Indian games skills will kill gaming industry.” Moreover, in a letter addressed to Karnataka Chief Minister Basavaraj Bommai, Khandelwal highlighted that unfortunately, the Karnataka Bill does not distinguish between a game of skill and a game of chance. “Game of chance is pure gambling, and should be rightfully banned. However, by including games of skill in the ambit of the Bill, the proposal has not only gone against established jurisprudence but threatens the thriving Indian gaming startup sector.”

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CAIT said the Bill will end up encouraging illegal offshore gambling and betting apps who operate in the grey market. Thousands of common Indians have lost their lifesavings to these illegal casion apps. As such, the trade body recommended a strong and stable regulatory mechanism for online skill games. CAIT requested the Karnataka government to review the bill keeping in mind the interests of Indian companies and developers.