The Future of Real-Money Online Gaming in Karnataka to Become Clear in Six Weeks 

Karnataka might soon join the fast-growing list of states in the south to ban real-money online gaming. At the latest hearing of the petition demanding a statewide ban on online betting filed by Sharada D.R. at the Karnataka High Court on Tuesday, the state government informed a division bench of the court that it would be bringing in legislation to regulate online betting. The government has sought six weeks to respond to table a proposal for the proposed legislation before the state cabinet.

The division bench comprising Chief Justice Abhay Oka and Justice Sachin Shankar Magadum has granted the state government’s request. The bench observed: “AGA seeks time on the ground that a proposal to have a legislation is being placed before the cabinet. He seeks six weeks’ time. The state government shall place on record the decision taken by the cabinet while filing the statement of objections.”

This latest development is a cause of worry for India’s gaming sector. Online gaming for stakes is wholly banned in Telangana, Andhra Pradesh, and Tamil Nadu. In all of these states, the government chose to place stringent legal prohibitions on the activity instead of favoring a license fee-based regulatory regime. The Kerala government is also looking to amend the Kerala Gaming Act 1960 by removing the special exemption granted to online rummy, effectively making rummy and other online games illegal to play.

Given the spat of bans in other southern states, this development stirred “The Online Rummy Federation” (TORF) to file an application in the case to be impleaded as respondents. The court accepting the request directed TORF to file its statement of objections within six weeks.

A Ban Imminent?

There have been strong speculations over the past six months that Karnataka will also ban online gaming. Last July, the state government had permitted the Bangalore Turf Club (BTC) to accept online betting on horse races. It was rescinded in December after the move was challenged in the Karnataka High Court by C. Gopal.

In November, Karnataka Home Minister Basavaraj Bommai had commented that the state government may promulgate an ordinance to ban online games. Towards November-end, a PIL was filed by Sharada D.R at the Karnataka High Court, seeking online gaming regulation. Sharada D.R’s petition refers to decisions by the High Courts of Gujarat and Tamil Nadu directing the state to regulate the gambling regime. The petition was to get the Karnataka government to monitor and control online gaming activities, underlining how the pandemic had pushed vulnerable sections of society like the youth and teenagers towards gambling.

In their submission to the High Court, the TORF opposed the petition vehemently. It also mentioned that on November 23, 2020, it had made a representation to the Karnataka Chief Minister, demanding a license fee-based regulation instead of a blanket ban on online rummy.

The Federation estimates that bringing in a license-fee-based regulation would generate over ₹1,000 Crores in revenue for the government in the next five years, along with an additional ₹1,000 Crores in GST paid by TORF members. Operators can also contribute ₹100 Crores in this duration to help players in psychological distress. Moreover, a licensed approach will help weed out illegal and unscrupulous operators.

For now, the court has fixed the date for the next hearing to March 21, so the future of real-money online gaming in Karnataka should become more explicit in six weeks.