Several gaming companies and the All India Gaming Federation<\/a> (AIGF) had moved the court challenging the law, which they said allowed games of skill, but banned the use of money in any form of games.
A division bench consisting of Chief Justice Ritu Raj Awasthi and Justice Krishna S Dixit held that sections of the amendments were ultra vires of the Constitution. The court, however, said it was not striking down the entire law, but only some contentious provisions. The detailed order was not immediately available.
The court also stopped the state from interfering with the online gaming business and related activities of the gaming firms. The petitioners had contended that Karnataka's law effectively curbed online games of skill too, which had been allowed by the Supreme Court.
The court, however, left it open to the legislature to consider a new law on betting and gambling in accordance with the Constitution.
While the gaming industry welcomed the court order and offered to work with the government to frame regulations for the sector, Karnataka home minister Araga Jnanendra said the government will study the judgement before taking a view. \"We will examine the court's suggestion that the government consider a new law concerning betting and gambling,\" he told ET.
The Karnataka government notified the law banning betting and wagering in online games on October 5, after the legislature passed the Bill the previous month.
The state government’s stand before the court was that its amendments did not ban online “games of chance” or “games of skill”, but only restrained people from risking money “on the happening of an uncertain event” and that “online platforms are prohibited from inducing gullible public with lure of unattainable prizes”.
The Bengaluru Police had booked Dream11 cofounders Harsh Jain and Bhavit Sheth for allegedly operating their games in Karnataka after the new law was notified.
Senior advocate Mukul Rohatgi appeared for the petitioners, while advocate general Prabhulinga Navadgi represented the state government.
Minister Jnanendra said the state government had been under pressure from sections of citizens seeking a ban on online gambling on grounds that it had ruined families financially. \"The law has not been fully set aside. We will take appropriate steps after studying the judgment,\" he added.
Tamil Nadu<\/a> had, last year, promulgated an ordinance amending its Gaming & Police Laws Act, 2021, which banned online gambling. The Madras High Court, however, struck down the amendments calling the law unconstitutional. Kerala too had last year prohibited online rummy games under the purview of the Kerala Gaming Act. It was set aside too.
This judgement may also have a persuasive value for similar disputes in other states and one hopes that certainty in this regard is achieved soon, said Manish Mishra, partner at law firm J Sagar Associates.
Industry seeks new framework
“Coming in succession of the positive judgments for online skill gaming by the Kerala and Madras HC in 2021, this is a step in the right direction,” AIGF chief executive Roland Landers said, adding that the sector is expected to generate more than $3 billion in revenue by 2025.
Finance minister Nirmala Sitharaman’s announcement of a task force for the AVGC (animation, visual effects, gaming and comics) industry, he said it will give a major boost to the game development sector. “AIGF and the skill games council of domain experts will be happy to assist various stakeholders in playing a consultative role in the formation of a regulatory framework for the industry,” he added.
This is the third judgement after Tamil Nadu and Kerala, said Dinker Vashisht, vice president, corporate and regulatory affairs at Games24x7. “We hope that these judgements can nudge state governments to frame progressive policy<\/a> and regulatory structure for this sunrise sector.”
Witzeal Technologies CEO Ankur Singh said the judgement will help the company resume business.
The E-Gaming Federation offered to work with Karnataka in developing a comprehensive regulation for the sector, CEO Sameer Barde said. He urged the government to set up a joint committee to explore the possibility of setting up a licensing regime to regulate the sector as a whole and the skill gaming sector.
The verdict is welcome news for all the sports fans in India, the biggest market for fantasy sports globally, with 130 million users playing across 200-plus platforms, said Bimal Julka, chairman of the Federation of Indian Fantasy Sports<\/a>.
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