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The Karnataka Gambling Ban and Its Purposes
The Karnataka online gaming prohibition and the broader police powers seem unlikely to succeed in protecting the public, but the new law will probably hurt the business in the state affecting many jobs.
Police Powers had to be Broadened and the Public Protected, Says Karnataka Government
On October 5, the 2021 Amendment Bill to the Karnataka Police Act of 1963 was notified and came into force immediately. The Bill made gambling a cognizable and non-bailable crime and increased financial and custodial punishments for offenders, raising them to a maximum of ₹1 lakh and 3 years respectively. The Amendment also expanded the definition of ‘gaming’ to include games in cyberspace involving electronic transfers of money or money equivalents.
The law expressly included games of skill for money in its purview, but also excluded betting on horse races and lotteries. Karnataka abolished its government-run lottery in 2007, but buying an online lottery ticket from Indian or global digital draws was not outlawed.
Among the main reasons given by the state government to have necessitated the adoption of the Bill is the need to broaden police powers by making gambling offences cognisable and non-bailable (with the exception of gambling in public streets and spaces which are cognisable and bailable).
After the amendment, officers are able to raid gambling dens without a magistrate order, while before it, the “SHO of the police station has no authority of law unless the jurisdictional magistrate permits the police officer for investigation of the non-cognizable offence,” as per an order by Justice P. G. M. Patil.
Another major reason behind the Karnataka Police (Amendment) Bill, as worded in its Statement of Objects and Reasons, was “to curb the menace of gaming through internet,” as well as “to wean (citizens) away from the vice of gambling.”
Prohibition Does Not Equal Public Protection
Just as the American prohibition on alcoholic beverages of the 1920s was notoriously unable to protect people from the vice of liquor, but instead resulted in a spiking of gang and blackmarket activity, a blanket ban on roulette online and other games for money in cyberspace might not bring the desired effect on public safety.
Taking a look at more contemporary examples from abroad, the majority of mature markets have abandoned prohibition practices and have moved on to regulation on gambling and online gaming with the focus shifting “from data protection to gambler protection”.
Modern regulation frameworks are designed to address and mitigate problem gambling as a major form of player protection. Responsible gaming measures are made mandatory for all platforms, including self-exclusion procedures, obligations for operators to exchange information on problem gamers, black lists, links to support and help centers, player behaviour monitoring tools, etc.
On the other side, a lack of regulation and a blanket prohibition exposes players to various risks connected with unlicensed platforms that take up the niche like fraudulent operations, rigged games, money withdrawal problems, fake bonus offers, data phishing and even real life match fixing.
Pay to Play in Karnataka a Cognisable and Non-Bailable Offence?
According to Karnataka’s Minister of Law and Parliamentary Affairs J. C. Madhuswamy, paying a registration fee to join an online game does not constitute a crime and online games as a whole are not prohibited.
Nevertheless, the Police Amendment Bill defines that “gaming means and includes online games, involving all forms of wagering or betting, including in the form of tokens valued in terms of money paid before or after issue of it, or electronic means and virtual currency, electronic transfer of funds in connection with any game of chance...”
Thus, in practice, the Amendment outlaws all online games that require a transfer of money and, fearing prosecution, many operators and platforms including HalaPlay, Ace2Three, Games24x7 and others have blocked access to their games that have entry fees and prizes to Karnataka residents.
An early warning about an effective “pay to play” ban is contained in a letter dated September 19 from Praveen Khandelwal, National Secretary General of the Confederation of All India Traders (CAIT) to Karnataka’s Chief Minister Basavaraj Bommai, urging the authorities to reconsider the Amendment Bill.
In the letter, Khandelwal writes, “The Bill to ostensibly ban online gambling or betting also makes all online games of skill, which charge a small entry or registration fee, illegal. The Bill only affects the Indian companies, which mostly charge a small registration fee to play their games, and will not affect other foreign games, where children spend thousands of rupees on in-app purchases. The bill will also prohibit Indian games like Chess, Carrom, Archery, Hockey and digital versions of traditional sports.”
According to a statement by the Internet and Mobile Association of India (IAMAI) dated September 21, the Bill threatens Karnataka’s status as the nation's startup hub and will result in the loss of jobs and revenues for the state coffers. "There are 92 gaming companies registered in Bengaluru which employ over 4,000 people. In the past three years, international investors have invested around Rs 3,000 crores in gaming and animation startups in the state" the statement said.
The letter by CAIT reminds that besides the gaming startups themselves, around them has evolved a substantial ecosystem of developers, animators, broadcasters, marketers and many others that will be hurt.
