Why HC rejected Karnataka’s ban

New Delhi: Online games of skill involve “elements of expression”, can shape “thoughts that characterize all artistic expression”, and therefore enjoy “regulatory protection” under the Constitution which guarantees the right to freedom of speech and expression, the Karnataka High Court (HC) ruled on Monday in striking down an amendment to the Karnataka Police Act 1963.

The 2021 Amendment enacted for the regulation of police forces, the maintenance of public order and the prevention of gambling made operating and participating in online fantasy gambling with monetary stakes a recognizable and non-bailable offence.

The verdict was delivered on a batch of petitions filed by various members of the online gambling industry, challenging the amendment as arbitrary, unconstitutional and lacking in legislative jurisdiction.

The interactivity of online games does not cut “their expressive status, but enhances the expressive impact of a medium”, said Chief Justice Ritu Raj Awasthi and Justice Krishna S. Dixit. “Playing games creates a mood as abstract art, in addition to causing a subtle formation of thoughts that characterizes all artistic expression,” he added.

Therefore, online games of skill fall within the protective contours of Article 19(1)(a), which grants citizens the right to freedom of speech and expression, and Article 21 ( right to life and liberty). The predicate of Article 19(1)(a) is poised to include not only artistic expression having an outward effect on sociopolitical thought, but also inarticulate expression, having a primarily inward effect, explained the tribunal.

The bench further reiterated that online games with commercial characteristics are protected under Article 19(1)(g) which guarantees the freedom to practice any profession or engage in any occupation, trade or business, but subject to reasonable restrictions.

The court found that the amended law introduced a “general prohibition” on playing games of skill and did not distinguish between games of “skill” and “games of chance”.

An absolute embargo “seems to be too excessive a restriction”, which is not in line with the doctrine of proportionality, he said.

Considering previous Supreme Court judgments, including a six-decade-old verdictalong with several HC rulings, the bench found that criminal law cannot be permitted to “consume games of skill online”.

According to the bench, the state had created an entirely new category of “medium-based regulation” where the change of medium in itself does not alter the true nature and content of the games.


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Arguments and cons

The applicants in the case all associated with online versions of games such as rummy, carrom, chess, billiards, bridge, crosswords, Scrabble and fantasy sports including cricket had moved the HC last year, questioning the validity of the Amendment Act which made substantial and sweeping changes to the Karnataka Police Act 1963. The amended law entered into force on October 5, 2021.

The cumulative effect of Amending law was that it criminalized playing or facilitating games online. In addition to making misdemeanors recognizable and non-dischargeable, the changes made penalties stiffer.

The amendment introduced an expanded definition of ‘gambling’ under section 2(7) of the Police Act by including all online games which involve all forms of betting or wagering. Further, the definition of “bet or wager” itself was expanded to encompass even a game of skill involving money or the like, but excluded horse racing under certain conditions, the petitioners argued.

The net effect of the amendment was that owners of online gambling houses, providers of online gambling facilities and players of online gambling, were all labeled as offenders liable to imprisonment and fines in terms of criminal provisions, they added.

The petitioners challenged the amendment on various grounds, including violation of several constitutional rights such as sections 21, 19(1)(a) and 19(1)(g).

It was not just arbitrary legislation, but the result of “excessive paternalism and populism,” as the amendments led to imposing the notion of state morality, they argued.

The state sought to defend the decision by claiming that the amending law had been implemented pursuant to an assurance it had given to the HC while the latter was hearing a public interest litigation (PIL) requesting the prohibition of all forms of online gambling and betting that he would look into the matter.

To justify the new law, the state argued that the “threatens” cyber games had reached epic proportions in the previous two decades, and many people had died by suicide and millions of families had been ruined due to the proliferation of online gaming platforms.

These arguments were independent of the state’s position that it was not devoid of legislative jurisdiction to introduce the law. It also wondered about the locus standi of the companies as applicants. He said the court could not consider a motion filed in anticipation of likely police action.

“State action suffers from the vice of paternalism”

Upholding the claimants’ case on all counts, the court held this online gambling activities played with stakes, if they primarily involve skill, judgment or knowledge, participate in the character of commercial activities, are entitled to constitutional protection by virtue of their recognition as businesses.

Such activities, the court said, are subject to reasonable restrictions, but not similar to that imposed by the state government. And even if the state wants to impose excessive restrictions such as a total ban, it should be able to justify such an extreme measure, he said.

In this case, the court said the state could record no evidence that by adopting such extreme measures it had considered the possibility of regulating betting on games of skill.

“If the objective is to stem the threat of gambling, the State should prohibit activities that are considered gambling as such and not games of skill which are distinct, in terms of content and product. State action suffers from the vice of paternalism since there is an excessive restriction on the contractual freedom of citizens,” the court ruled.

Mere likelihood or propensity for misuse of online gambling platforms, nothing more, does not constitute a legal justification for banning commercial activities, the court said, testing the ban on the touchstone of the doctrine of proportionality.

“Games involve the psychology of relationships”

To the state’s vehement assertion that several individuals and families had been ruined because of online gambling, the court said that may be “arguably true”, but that argument would not fit within the parameters of the case. Public order, one of the reasons often cited by a State for restricting constitutional rights which are subject to reasonable restrictions.

The phrase “public order” implies activity that affects the public as a whole and therefore individual cases that do not generate public disorder may not amount to the same, the court noted.

According to the judges, the games involve “the psychology of relationships and varying patterns of behavior that reveal individuals’ hidden feelings and emotions and their underlying motivations.”

Games, whether offline or online, have artistic and recreational value and are designed to entertain as well as inform, the Court said, while explaining the contours of Article 19(1)(a) ), and the constitutional protection granted to artistic expressions.

“In any organized society, knowledge, wisdom, talent and skills are invaluable tools for the creation of wealth. These are the unsuspected ingredients of economic rights such as the rights to occupation, to property,” the court added.

State’s ‘fear argument’ is not supported by data

It was agreed that with the exponential growth of the Internet and online games, people’s participation has increased, especially that of young people.

But the court did not accept the state’s “fear argument” about its deleterious effect without any empirical data to support such a claim. The regulation of online games based on studies and research will have to evolve to better understand the impact of this mode of access, based on experience and the incidence of addictions and behavioral disorders, It said.

“It should be a data-driven exercise to be undertaken on empirical evidence. Theoretical models for betting, gambling and problem gambling have been developed based on traditional games, largely disregarding the recent emergence of internet modes,” the court said, adding that it is necessary to structure a more comprehensive and scientific understanding of how people develop gambling problems.

(Edited by Gitanjali Das)


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