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Exclusive: What Karnataka’s gambling bill says about online gaming and financial risks

While the bill doesn’t specifically detail what’s prohibited or allowed, it does make room for betting on one sport.

Karnataka’s online gambling bill outlaws betting and gambling even when games of skill are concerned, a draft of the Karnataka Police (Amendment) Bill, 2021 obtained by MediaNama reveals. The draft hasn’t been made available publicly as of yet. The bill is being amended to “include the use of cyberspace including computer resources or any communication [device] as defined in Information Technology Act, 2000 in the process of gaming to curb the menace of gaming through internet [and] mobile app[s],” the bill’s statement of objects and reasons said.

The Karnataka High Court has been urging the state government to come up with a stand on online gambling, and this bill is the culmination of that process. However, it may be difficult for the state to stand behind it legally, due to its inclusion of all sorts of wagering, including games of skill, that courts have held can’t be prohibited outright. This also comes at a time when the union government told the Chief Minister of Andhra Pradesh that it is exploring a “uniform approach” to regulating online betting and gambling.

What the bill says

The bill does not contain any examples of prohibited or allowed games, except for a carve-out for horse-race betting.

  • Revised definition of gaming: The Police Act Amendment expands the definition of “gaming” to include online games. The bill says that “gaming means and includes online games, involving all forms of wagering, including […] electronic means and virtual currency, electronic transfer of funds in connection with any game of chance, but does not include a lottery or wagering or betting on horse-race run on any race course within or outside the State, when such wagering or betting takes place”.
  • All monetary risk included: The law’s ambit will now include “any act or risking money, or otherwise on the unknown result of an event including on a game of skill and any action specified above carried out directly or indirectly by the players playing any game or by any third parties.” (emphasis provided)
  • Instruments of gaming: Instruments of gaming now include a bevy of devices, including “computers, […] mobile app or internet or cyber space, virtual platform, computer network, computer resource, any communication device, electronic applications, software and accessory or means of online gaming, any document […] in electronic or digital form.” Cyber cafés are also included in the amendment.
  • Fines increased: The amendment increases the fines and prison time to people caught under gambling prohibitions. A maximum term of one year has been made three years, and a Rs 1,000 fine has been increased to Rs 1,00,000. Minimums for these penalties have also been changed from one month to six months and Rs 500 to Rs 10,000.

Gambling regulations in India

“Gambling and betting” is a state subject in India, meaning different states have different approaches to regulating the subject.

[T]he following States/Union Territories have passed their own State Laws adopting the [pre-independence] Public Gambling Act, 1867, which ceased to be the Central legislation: (i) Andaman [and] Nicobar [Islands], (ii) Arunachal Pradesh, (iii) Chandigarh, (iv) Dadra and Nagar Haveli, (v) Haryana, (vi) Himachal Pradesh, (vii) Lakshadweep, (viii) Punjab, (ix) Madhya Pradesh, (x) Chhattisgarh, (xi) Manipur, (xii) Mizoram, (xiii) Tripura, (xiv) Uttarakhand, (xv) Andhra Pradesh, (xvi) Delhi, (xvii) Gujarat and Maharashtra, (xviii) Jammu & Kashmir, (xix) Meghalaya, (xx) Goa. However, most of these State laws do not cover online games — the Union Ministry of Electronics & Information Technology said in an affidavit filed earlier this year in the Delhi High Court.

Some states did bring in changes to regulate online games, MEITY said, such as:

  • Sikkim‘s is “the first Indian legislation to expressly permit and regulate online gaming,” MEITY had said. “The State Government restricted the offering of ‘online games and sports games’ to the physical premises of ‘gaming parlours’ through intranet gaming terminals within the geographical boundaries of the State by enacting the Sikkim Online Gaming (Regulation) Amendment Act, 2015,” MEITY said.
  • Nagaland has passed the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2015. This legislation “seeks to have pan-India application by extending the applicability of the said Act to all those States where the games so being offered are legally permissible ‘games of skill,’” MEITY said.
  • Andhra Pradesh amended its gaming laws to prohibit online betting and “online games for money or other stakes”.
  • Tamil Nadu also amended its gaming and police acts to prohibit real money gaming. This ban was overturned by the Madras High Court in August.

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