Acting on the Need to Protect the Public.

Driven by the need to protect the public from crime and the dangers associated with gambling online, the Karnataka Government chose as its line of action to file a Special Leaves Petition in the Supreme Court in an attempt to restore the blanket ban on online gaming in the state, following a similar scenario that had unfolded last year in Tamil Nadu.

On October 5, 2021, the state government notified an amendment to the Karnataka Police Act, 1963 that contained a ban on all online games involving transfers of money of any sort, specifically including games of skill, but excluding lottery and horse race betting.

“We had amended the law as reports showed the use of money for betting in online games had ruined large numbers of youth and their families. We decided to place some restrictions to eliminate the use of money and responded with a law,” Araga Jnanendra, Home Minister of Karnataka, explained the reasons behind the ban. 

Immediately following the amendment notification, a number of skill gaming operators geo-blocked their platforms for Karnataka residents, and an array of petitions by gaming companies and industry bodies challenging the constitutionality of the blanket ban flooded the High Court of Karnataka.

As expected, the police law amendment and the outright prohibition on gaming it contained didn’t survive High Court scrutiny. On February 14, 2022, a HC division bench declared the gaming ban contradictory to the Union Constitution and struck it down. 

The bench found a number of sections of the new act to be ultra vires of the Constitution for failing to differentiate between skill- and chance-based gaming and for violating the principle of proportionality. The High Court specifically pointed out that its judgment should not be interpreted to mean that the state government should not implement appropriate legislation on betting and gambling in resonance with the constitutional provisions.

Nevertheless, the Karnataka government chose not to pursue “appropriate legislation” as directed by the High Court, and instead selected to appeal the HC ruling at the country’s Apex Court. The government justified its line of action by finding a direct relation between easy money and crime and linked problematic incidents to the psychological effects of gambling and betting in online games.

“But the court struck down the amendments. We still think our response was right as many families have said the online betting menace has destroyed them financially. That is why we decided to move the Supreme Court,” Home Minister Jnanendra continued his explanation.

Leaving the Gambling and Betting Market Unregulated is the Real Danger

Channeling betting on cricket and other sports towards regulated and licensed platforms can take out substantial financial resources from the black market and redirect them to the legitimate and taxable economy. At the same time, regulation and licensing is capable of bringing real customer protection to Indian gamers from the risks associated with gambling and betting. Leaving the sector unregulated, however, places desi bettors at the mercy of the black market which offers no traceability and protection.

Industry figures on the size of the country’s sports betting market place its value anywhere between ₹3 and ₹10 lakh crore per year, or roughly between $40 and $150 billion. A single One Day International (ODI) match of the Indian National Cricket Team sees more than ₹1,550 crore or $200 million change hands in the dark in the form of sporting bets.

While the number of regular individual bettors is estimated at 14 crore, a multitude of 37 crore Indians place bets when there is a big sports event around.

Most of this activity is happening in cash and offline, with illegal bookies, over encrypted chats, hawala schemes and back alleys and would not be affected by a blanket ban on gaming in any way. The results include money laundering, match fixing and funding of other criminal activities.

On the level of the individual participant, there is no protection from fraud or personal data breaches, no access to mental health support and responsible gaming tools, no way to set a spending limit, nothing to prevent gaming addictions and sinking in large debt.

Instead of playing ball with pushing doomed bans on gaming, state governments in India should back up comprehensible regulatory changes that would actually shield the citizens from the various dangers which may come from gambling and betting. Ensuring a safe gaming environment in the country would also bite away chunks from the black market and bring much needed tax revenues.

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