Not all online games are gambling: the government of Karnataka is missing the point

Since Karnataka is the country’s IT hub and attracts many entrepreneurship and technology investors, such legislation may not be beneficial for investment in the state.

By Sandeep Chilana

The Karnataka Police (Amendment) Bill 2021 (“Bill”) has been tabled in the Karnataka Assembly during the current session targeting online gaming, particularly betting and gambling. silver. The bill criminalizes all activities of this online industry as well as players participating in such online betting and games and provides for a sentence of up to 3 years and a fine of up to 1 lakh rupee.

Over the past few days, the bill has created a lot of buzz due to apprehensions that the bill appears to include online games that primarily involve skill in the definition of betting.

Examination of the copy of the bill suggests that the bill intends to amend Section 2 (7) of the Karnataka Police Act 1963 (“law”) which defines the term “gambling”. ” as following :

“Gambling” means and includes online games, involving all forms of betting or betting, including the form of tokens valued in terms of money paid before or after their issue, or electronic means and virtual currency, the electronic transfer of funds in connection with any game of luck, but does not include a lottery or bet or bet or horse race at a racetrack in or out of the State, where such bets or bets take place “

In addition, the bill proposes to modify the explanation of Article 2 (7) of the law which defines betting, as follows:

“Bet or bet” includes the collection or solicitation of bets, the receipt or distribution of winnings or prizes, in money or otherwise, in respect of any act intended to aid or facilitate betting or betting or such collection, solicitation, reception or distribution. Any act or risk money or otherwise on the unknown outcome of an event
including on a game of skill and any action specified above carried out directly or indirectly by players playing any game or by any third party; “

The bill also proposes to amend section 78 of the law which criminalizes the opening of gambling establishments. The most relevant changes are reproduced below:

“Opening, etc., of certain forms of games.

Anyone, –

(a) be the owner or occupant or have the use of any building, room, tent, enclosure, vehicle, ship or place or in an internet cafe or online games involving betting or betting, including resources computer or a mobile or Internet application or any communication device as defined in the Information Technology Act 2000 (Central Law 21 of 2000), opens, keeps or uses the same for gaming purposes:

(vi) on any betting or betting transaction or program in which the receipt or distribution of any winnings or prizes in money or otherwise is dependent on the luck or skill of others; Where

(vii) on any act risking money or otherwise on the unknown outcome of an event, including a game of skill;

shall, upon conviction, be punished with imprisonment of up to three years, or a fine of up to one lakh, or both:

As can be seen from a simple reading of the bill, although it is introduced for the purpose of dealing with online betting and gambling, it is worded so ambiguously and vaguely, which is probably intentional, that all online games that have a preponderance of skill, including traditional games such as chess, billiards, etc. where money is involved in the form of subscription fees or entry fees may be at risk of becoming criminal activity under the amended police law, forcing various IT companies, developers and young people to use these platforms for recreational purposes. as well as for professional purposes, ONE CRIMINAL.

Not only the amendments proposed by the state, which is India’s Silicon Valley, a most regressive step, but also the same that is beyond the constitutional jurisdiction of the state. There is no doubt that entry 34 of the list of states in the Constitution of India gives states constitutional jurisdiction to legislate to regulate “betting and gambling”. However, in the exercise of its legislative powers, the state cannot artificially extend the definition of betting, gambling or betting to regulate, prohibit or criminalize, an activity which, in the generally accepted sense, is not. considered a bet. The Instant Bill attempts to achieve exactly the same definition, i.e. the statutory definition has been changed to artificially include games of skill which, according to the established legal position, are not considered to be games. ” Paris “. Therefore, in my humble opinion, the said amendments, in so far as they attempt to criminalize games of skill, are in themselves unconstitutional.

It also appears that the most progressive state of India has decided to unilaterally restrict the fundamental right to the choice of its citizens to engage in recreational activities in their private lives without any discussion or deliberation with stakeholders, on the basic government moral standards thus treat their citizens as children who must be controlled and saved from “vices”.

Previously, the courts have raised concerns about such drafting in the past. In the recent Junglee Games v. State of Tamil Nadu, where Part II of the Tamil Nadu Gaming and Police Law of 2021 (Amendment) had banned online gambling, the Madras High Court had pointed out how it was not intelligible legislation and committees Experts should be put in place to distinguish between competence and chance, emphasizing that when the outcome of an event is under control, such an event is not a bet.

In his decision in Shreya Singhal v. Union of India, the Supreme Court of India, while upholding the right to freedom of expression on the Internet, overturned Section 66A of the Information Technology Act 2000 on the grounds that this section has a deterrent effect. on the right to freedom of speech and expression on the Internet.

This landmark judgment also highlighted an important aspect of the drafting of the law, the Supreme Court then ruled that Article 66A of the Law on Information Technology, which was promulgated, sets out certain exceptions to the freedom of expression, including expression under Article 19 (2), such as public order. , defamation, incitement to crime, good morals and good morals.

The Court refused to admit that section 66 A had been promulgated in the interest of “public order”, since it covers within its scope both messages to individuals and messages massive. The Court also noted that the terms used in section 66A were vague, undefined and open-ended.

While the judiciary has repeatedly reiterated the importance of drafting a law to be in tune with the intent of the law and the powers given to an authority to legislate on given matters, it appears that time and time again there have been laws which go beyond the same which has led to judicial review.

Since Karnataka is the country’s IT hub and attracts many entrepreneurship and technology investors, such legislation may not be beneficial for investment in the state. Moreover, with gaming becoming a profession of choice, it also affects many industries such as developers, gamers, publishers, game hosting companies, etc. A progressive state like Karnataka which is home to many technology and sports companies would essentially lead to losing this golden opportunity. .

The author is a tax and litigation expert practicing in Delhi HC and Supreme C and a former partner of Shardul Amalchand Mangaldas

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