The consistent developments in technology have widened the scope of online gaming in India and around the world. There are various games that involve the use of money and in some games, even gambling.
The Judiciary and Legislature of states like Karnataka and Tamil Nadu are in a constant tussle regarding the legality of online gaming. For instance, the Karnataka Government passed the Karnataka Police (Amendment) Act, 2021 which got struck down by the Karnataka High Court for being unconstitutional. The case set a strong precedent for government’s interference in online gaming business and gave a breather to fantasy sports players in the market.
Petitions were filed before the Karnataka High Court challenging the validity of the Karnataka Act No. 28 of 2021 (hereinafter, referred to as “the Act”) which amended the Karnataka Police Act and called for criminalization of playing or facilitating online games.
Petitioners argued that the Act was ultra vires the powers of the State Government, vis-à-vis Entry 34, List II, Schedule VII of the Constitution of India. The Act violated Articles 19(1)(a) and 21 as playing games and sports constituted free speech and expression and formed part of ‘right to life and liberty’. Further, the Act also violated Article 19(1)(g) read with Article 301 of the Constitution.
Respondents contended on the grounds that the Act provided for banning of all types of online gambling and betting which have proven to be disastrous to the public interest in general and public order and public health in particular. Further, the Act made the punishment more stringent to suit the gravity of the offence.
The Karnataka High Court struck down the provisions of the Act that criminalized the activities of offering and playing online games, by risking money or otherwise and declared them as unconstitutional. The provisions of Sections 2, 3, 6, 8 & 9 of the Act were declared ultra vires of the Constitution. The provisions were struck down on three grounds:
- Difference between games of skill and chance – The Court established a clear distinction between a game of chance and game of skill. Only the game of skill is protected under the right to carry on trade and occupation. Court also considered other High Courts’ opinion in assessing a game as a game of skill.
- No report on impact of online gambling in the State – The State Government has argued that gambling has caused menace in the state but failed to provide significant evidence to establish their argument. The Court observed that the government’s stand cannot be taken into consideration without necessary material.
- Improper distinction between online and offline games – The Karnataka Government apprised the Court that the Act would focus only on the online games and not offline. This distinction was drawn as per the Supreme Court rulings which have upheld the differentiation between online media and offline media as valid. The Court disregarded this contention on the grounds that the differentiation between online and offline media was related to media and not such games. Moreover, the State Government should work on curbing the menace caused by gambling in all forms.
This order of the Karnataka High Court has led to quashing of the proceedings against Bhavit Sheth and Harsh Jain, the Founders and Directors of Sporta Technologies Private Limited, which promotes the Dream11 gaming app.
Karnataka High Court’s judgement in favour of Dream11 acts as an addition to the queue of judgements passed by different High Courts and also the Supreme Court. By upholding the decision of Rajasthan High Court, the apex court held that Dream11 involves skill and is not gambling. Even the Madras High Court had struck down the Tamil Nadu Government’s law banning online betting games such as poker and rummy in the state as being ultra vires of the Constitution. However, states like Assam, Sikkim, Nagaland, Odisha, Telangana and Andhra Pradesh have banned Dream11 for it being a game of skill involving money.
The judgement dated 14th February, 2022 can be accessed here.
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