Regulation, not prohibition – on online skill gaming industry

News: The Karnataka High Court has delivered a judgment striking down major portions of the Karnataka Police (Amendment) Act, 2021. This law was introduced to ban online gambling and skill-based gaming platforms like rummy, poker, and fantasy sports that involved risking money on an uncertain event.

Apart from Karnataka, Madras and Kerala High Court also struck down the law on online gaming.

Why the States are banning Online Gaming in India?

What is the court’s view of online gaming?

In the Chamarbaugwala case in the 1950s, SC held that in any game, if the element of skill is dominant over the element of chance, then it is a game of skill and cannot be construed as gambling. Several states argued that the case is outdated now, as technology has progressed significantly and most games are played online. But Karnataka High Court judgment negates the view that the judgment needs a relook, as it has been reaffirmed by a series of Supreme Court and High Court decisions since then.

The court held that games, where substantial effort, knowledge, and skills are required, are different from games of mere luck or chance.

What should be the way forward?

Gaming is the sunrise sector that has immense investment and revenue-generating potential. The sector currently employs 40,000 people. It also received massive foreign investment. In the last five years, the online gaming sector has received around $1,700 million in venture capital and private equity.

So, instead of banning the games, State governments should introduce a reform-oriented policy structure based on checks and balances.

Source: This post is based on the article “Regulation, not prohibition – on online skill gaming industry” published in The Hindu on 23rd February 2022.