Will Legal Developments in Karnataka Shape The Future Of Indian Online Gaming?
Legal Ambiguities Related to Gaming Make Court System Busy
The Victorian era Public Gaming Act of 1867 prohibits gambling and physical gaming houses, but its Section 12 exempts “games of mere skill” from its ambit, distinguishing them from games of chance. The distinction may sound logical and clear, but the ambiguity over which games exactly are games of skill and which are games of chance continues to this day, even though numerous decisions of the Supreme Court and various High Courts have sought to bring clarity on the issue.
In 1957, India’s Apex Court held that in games of skill “success depends principally upon the superior knowledge, training, attention, experience and adroitness of the player.” Although a certain element of chance can be present in any game, the preponderance of skill for the determination of the result or win of a game sets it aside from games of chance and gambling, and places it under the protection of Article 19 (1) (g) of the Union Constitution which guarantees the fundamental right to practise any trade or profession.
This ruling was not sufficient to bring clarity as in 1968 the Supreme Court observed that the amount of expertise needed to play rummy constitutes it as a game of skill and held that it is legal to collect a small margin when providing games of skill. A further ruling of the Apex Court of 1996 placed betting on horse races in the skill gaming category.
States’ High Courts have also been busy categorizing games along the skill vs chance axis, with perhaps the most curious case being the one of poker. Based on reasoning by the Apex Court, the High Courts of Kolkata and Karnataka ruled the famous card game to be one of skill, while the High Court of Gujarat separately held that poker is a game of chance.
Despite Ambiguity, Clubbing Games of Skill Together with Games of Chance Contradicts the Constitution
The High Court of Karnataka struck down on February 14 several sections of the recently adopted Karnataka Police (Amendment) Act of 2021 which banned online skill gaming when played for prizes and declared it ultra vires of the Constitution. The main reason behind the court’s decision was that the amendment bill was clubbing games of skill together with games of chance which was beyond the powers of the state Legislative Assembly to do.
The short lived provisions were notified on October 5, 2021 and extended the definition of gaming in the state’s Police Act to include “any act or risking money, or otherwise on the unknown result of an event including on a game of skill.” The aim of the bill was to “to curb the menace of gaming through internet, mobile app,” but the chosen approach to disregard the distinction, even if ambiguous, between skill- and chance-based games did not satisfy court scrutiny.
Besides generalizing all game types into one heading, the Karnataka Police Act amendment expressly named horse race betting and lottery exempt from the imposed prohibition. The state is home to some of the country’s major turf clubs, but has not been among the 13 states that have their own government lottery in India since 2007 when the Karnataka State Lottery was abolished.
Will Karnataka Show the Way or a National Game Categorisation Authority will Solve Ambiguity?
In a statement following the High Court verdict, Karnataka’s Home Minister Araga Jnanendra announced that the state government is planning to table a new amendment that will correct the struck down provisions. Possibly, Karnataka will find a suitable solution that will achieve the aims to lower the social costs of gaming and satisfy the Constitution, showing the way for other states to follow. Still possibly, the numerous calls for the setting up of national-level gaming regulation including a game categorisation authority will be answered and skill vs chance ambiguity will be universally cleared.
According to HM Jnanendra, the Karnataka government would not appeal the High Court verdict, but would rather focus efforts to revise the provisions of the bill that were found contradictory to the constitution. “We would prefer to rectify these shortcomings, and work on an alternative draft that would stand in a court of law,” he said.
A different development at the Union-level legislative framework can also take place as discussions in the Rajya Sabha have acknowledged the need to set up a National Game Categorisation authority. Such a body could classify each game according to the skill vs chance criteria and age-based suitability. This measure, combined with a comprehensive national gaming regulation, can ensure the implementation of contemporary gamer protection and responsible gaming mechanisms in the whole of India, effectively lowering societal costs and raising taxation revenues.
