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Talks of Karnataka joiningTelangana, Andhra Pradesh, and Tamil Nadu in banning real-money online gaming have been doing the rounds since last year. After being chastised by the Karnataka High Court twice on the issue, the government finally made it stand clear – all forms of online betting and gaming will be criminalized and banned. On Saturday, the state cabinet granted approval for banning all forms of online betting except for lottery and horseracing – both within and outside the state.
To bring about the ban, the government will be making the necessary amendments to the Karnataka Police Act, 1963, for which a draft bill will be tabled before the state cabinet on September 13. Currently, the state police do not have the power to take action against online gambling, but this will change once the existing law is amended.
Talking on the sidelines of the meeting, the State Law and Parliamentary Affairs minister, J C Madhuswamy, told media persons, “We are amending the Karnataka Police Act, to put an end to online gambling, on the basis of the High Court directions. The cabinet has approved the amendments; it will be placed before the assembly.”
Madhuswamy added, “The draft Bill defines online games as, games involving all forms of wagering or betting including in the form of tokens valued in terms of the money paid before or after the issue of it or electronic means and virtual currency, also electronic transfer of currency in connection with any game of chance.”
He added that gaming instruments include any article used or intended to be used, including computers, computer systems, mobile apps, Internet or cyberspace, virtual platforms, software, and accessories.
Online Gaming Ban – in the Works For Long
Last November, Basavaraj Bommai, then Home Minister and now the Karnataka Chief Minister, publicly commented that the government would soon promulgate an ordinance to ban online games. The same month Sharada D.R. filed a PIL seeking regulation of online gaming. The Online Rummy Federation (TORF) opposed the petition. It even made a representation to the state Chief Minister demanding a license-based regime for regulating the games instead of banning them.
The horseracing sector got a huge tax breather in June after the Karnataka High Court struck down section 31A (3) of the Central GST Rules, 2017 and section 31A of the Karnataka GST Rules, 2017, that imposed GST liability on the entire bet amount received by the horse racing clubs.
The same month the Karnataka High Court asked the state government to explain its continued delay in clarifying its stance on online betting.
In response, Chief Secretary P Ravikumar filed an affidavit with a division bench of the Karnataka High Court in July, submitting that the government has prepared a draft bill on online gaming that is yet to be tabled before the cabinet after consultations with different experts and departments.
Blanket Ban on Online Gaming – Another Mistake?
Karnataka’s move to ban online gaming and betting will likely be legally opposed in the court, like in Tamil Nadu. On August 3, the first bench of the Madras High Court comprising Chief Justice Sanjib Banerjee and Justice Senthilkumar Ramamoorthy delivered a historic judgment. The court struck down the Tamil Nadu Gaming and Police Laws (Amendment) Act 2021 that banned and criminalized real-money online games in the state.
With such a precedent, the Karnataka government will undoubtedly be cautious in formulating the draft bill.
Home Minister Araga Jnanendra is reported to have told Indian Express that the government has a panel of experts and will take action against online gambling sites. “There is a need to bring strict rules and penalty clauses. Tamil Nadu suffered a setback after banning online gambling. After the order, some websites went to court, which ruled against the government. We will study the bills passed by other states on online gambling and come up with a better set of rules,” he said.
For now, all eyes are on the draft bill that will be tabled before the cabinet on September 13. This is a developing story and will be updated as we get more updates.