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Gaming Report: Karnataka Govt. Withdraws Permission to Bangalore Turf Club For Online Betting & More

Gaming Report - Bangalore Turf Club & NITI Aayog
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  • Namita Ghosh December 12, 2020
  • 3 Minutes Read

In this feature, we have two major updates from the gaming sector. After Andhra Pradesh and Tamil Nadu banned all forms of real money online gaming, the Karnataka government has been reportedly working on a similar ban. The government has now withdrawn the permission it gave to the Bangalore Turf Club (BTC) to conduct online betting on horse races. The government’s orders come a week after the Karnataka High Court, while hearing its response to the PIL against the permit submitted by C. Gopal, found the government’s justification “strange” and “contradictory.”

On the other hand, the fantasy gaming sector has found support from the NITI Aayog or the Policy Commission that, in a draft report, advocates recognition of and uniform and countrywide regulation of Online Fantasy Sports Platforms (OFSP).


Karnataka Govt Withdraws Permission to Bangalore Turf Club for Online Betting

In a significant setback for the struggling horseracing sector, the Karnataka government on Friday withdrew the permission it gave to the Bangalore Turf Club (BTC) for online betting on horse racing.

In the communique addressed to the BTC, under-secretary to the State Finance department, K. Savithramma, stated – “I am directed to inform you that in-principle approval accorded by Government to conduct online betting vide letter cited under reference is hereby withdrawn with immediate effect.”

The government rescinded its permission in response to a PIL submitted by C. Gopal before the High Court against the move. The court had issued a notice to the government in November. A hearing of the PIL was held on December 4, where a divisional bench rejected the government’s justification for granting the permit and questioned the legal provisions under which it had given the permission.

On Thursday, the state government first announced that it was putting on hold the BTC’s permission until the PIL was disposed of by the High Court. Clearly, the state deemed it prudent not to attract public opposition by permitting online betting on horse races and issued the communique only a day later.


Court Rejects Govt Stand

On December 4, a divisional bench comprising Chief Justice Abhay Shreeniwas Oka and Justice S. Vishwajith Shetty heard out the state government’s response to the allegations made by C. Gopal in the PIL.

In its response, the state government argued that while no provision in law empowered it to grant the permission, the BTC did not need permission from the government to start online betting. The state also submitted that there was nothing illegal in allowing online betting. It would encourage a cashless digital economy, improve BTC and the government’s revenue, and discourage unlawful betting.

Calling the state government’s stand “contradictory,” the bench questioned how the government could grant permission if it had no legal power to do so and why did BTC seek permission if it didn’t need to.

The court clarified it was not commenting on the legality of online betting in horse racing but only asking the government to clearly assert the legal provisos under which it granted BTC permission for the activity.

The counsel appearing for BTC contended that they had approached the state government under the conditions imposed in the license granted to BTC that fall under the purview of the Karnataka Racecourses Licensing Act, 1952.


BTC – Hit Hard

The Bangalore Turf Club is among the country’s few and scattered horse racing venues and suffered significant losses during the COVID-19 led lockdown. As an alternative to people visiting the club for betting on horse races, the BTC started exploring the option of going digital to accept bets. It was also reportedly developing a mobile app allowing bettors to place bets on races and receive dividends through a digital wallet.

Bangalore Turf Club


The BTC was granted the in-principle permission to BTC for online betting in May, and the consent was made official in June-end. The BTC eventually began online betting operations on November 21.

Following Gopal’s PIL, the High Court had issued a notice to the state government to explain the legal provisos under which it gave BTC the permit for online horse race betting. At the same time, online betting was picking up at BTC.

Reacting to the government’s withdrawal of permission, a BTC representative reportedly told Deccan Herald it was the “final nail in the coffin.” He added, “We had an encouraging start with online betting. Now punters will choose other websites and applications to bet. It has put us back into a depleted situation again.”


NITI Aayog Issues Guiding Principles For National Regulation of Fantasy Sports

The National Policy Commission, aka the NITI Aayog, has published a draft for discussion on the Indian fantasy sports industry, calling for uniform and countrywide regulation of Online Fantasy Sports Platforms (OFSP). In its report titled “Guiding Principles For The Uniform National-Level Regulation Of Online Fantasy Sports Platforms In India,” the Aayog has compiled a set of guiding principles for the sector.

Niti Aayog

This includes OFSP operators’ need to comply with applicable laws, keep the games skill-based, prohibit under-18 players, offer competitive and fair games, refrain from offering games of chance, etc.


The Highlights

  • Advocates implementation of a single national policy on fantasy sports and bring clarity to regulators, operators, and consumers alike.
  • Calls for setting up a single, self-regulatory organization for the online fantasy sports industry to be governed by an independent oversight board.
  • Suggests that all OFSPs that are members of the self-regulatory organization should enjoy the benefit of the safe-harbor exemption, subject to their adherence with the norms and procedures laid down.
  • Recommends that an OFSP operator should not offer pay-to-play formats of fantasy sports contests to users who are less than 18 years old.
  • Cites a KPMG India report that estimates the fantasy gaming sector can generate 1.5 Billion online transactions by 2023 and attract more than ₹10,000 Crores in FDI.
  • Points out that while specific fantasy sports formats have got judicial recognition from different High Courts and the Supreme Court, fantasy sports contests do not have independent legal recognition, and OFSP integrity and fairness may vary from state to state.
  • Underlines that there is a public interest in independent recognition of the industry that will enable the sector to innovate and achieve scale.
  • Highlights the need to secure the industry against dodgy operators “who lure users with games of questionable legality in the guise of fantasy sports.” Recommends a formal recognition of the fantasy sports industry.
  • Steps should be taken to grant immunity to platforms from criminal prosecution in context to fantasy sports contests compliant with the given guiding principles.
  • Underlines the need for fantasy sports advertisements to comply with the guidelines set by the Advertising Standards Council of India (ACSI).
  • Establish an independent grievance redressal mechanism to handle consumer/user complaints against OFSPs and other OFSP-related disputes.


Positive Move for Fantasy Sports

The proposal has found support from the sector. While Dream11 has reportedly welcomed the NITI Aayog report, Surbhi Kejriwal, a partner at Khaitan and Co., was quoted in an Inc42.com report as saying – “Thus, while some states have put a ban on real money online gaming, the constitutionality of these laws is sub judice and if it is proven that the underlying game is a game of skill, the ban may not be permitted. Thus, suggestions made in NITI Aayog’s document are legally feasible.”

Kejriwal also voiced her opinion on the Aayog’s suggestion of granting immunity to platforms. “This concept may be introduced for games of skill by specifically permitting a given game of skill under a state gambling statute/law. This provision may be like the current exemption to betting on horse racing under various state statutes. An example can also be given of the state laws of Sikkim and Nagaland where certain games are deemed games of skill.”

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