Indian tech startups and industry associations have expressed concerns and sought clarity over the Karnataka government’s bill to ban online gambling.
Rameesh Kailasam, CEO of IndiaTech.org, an industry body that represents founders of Indian startups and investors, told Moneycontrol that they have recommended to the Government of Karnataka to immediately issue necessary public statements to remove confusion in the startup ecosystem of which Karnataka is a major hub.
They have also sought clarifications around specific sections of the bill stating that they run the risk of being erroneously interpreted to apply to all legitimate online gaming businesses, he said.
Indiatech.org, which counts Ola, MakeMyTrip, and Steadview Capital as founding members, has also recommended that the government should issue necessary rules that would clearly demarcate and exempt games of skill from the amendments introduced to the Karnataka Police (Amendment) Bill, 2021. There are multiple high court judgements and a Supreme Court judgement that can help state governments in reaching clarity while issuing the rules, he said.
The association has also submitted basic guiding principles that would enable the government to clearly distinguish by defining “Online Skill-Based Games and Sports” that have predominance of skill over chance and are clearly not gambling and betting, he said.
Karnataka’s legislative assembly passed a bill to amend the Karnataka Police (Amendment) Act, 2021 yesterday, after tabling it in the assembly on September 17. It seeks to outlaw all forms of online gaming where transfer of money is involved.
The amendment comes against the backdrop of a public interest litigation filed in Karnataka High Court to prohibit online gambling. However, it removed the distinction between game of skill and game of chance, thereby bringing skill-based gaming startups under its purview. The bill proposes a prison term of up to three years and penalty of up to Rs 1 lakh for offenders.
“The proposed law does not prohibit online games that strictly comply with games of skill features. The government, however, will deal with operators and abettors who run games of chance camouflaged as games of skill. Skill games that involve risks of the player losing money would also invite action” Karnataka chief minister Basavaraj Bommai told The Times of India.
Former Karnataka IT minister and Congress MLA Priyank Kharge however said that the government needs to be more specific and identify games that encourage betting instead of a blanket ban for all online games. “Govt should form a committee with industry stakeholders and come out with a law that curbs online betting instead of a bill that won’t stand the test of law,” he said on Twitter.
Ranjana Adhikari, Partner – Media, Entertainment & Gaming, TMT Practice group of IndusLaw, said the approach of imposing a ban on the real money skill gaming industry is disproportionate to the menace that the state alleges and it is unfortunate that the state chose to adopt a regressive step towards the skill gaming industry.
In August, the Madras High Court had struck down a similar ordinance by Tamil Nadu that had banned online gambling in November last year. Last week, Telangana Principal Secretary for IT, electronics and communications Jayesh Ranjan had also said that blanket banning is not a solution and one needs to have a distinction between games of skill and games of chance.
“The sector has been a strong financial contributor to the Indian economy even during an unprecedented period of slowdown and is further expected to generate revenues in excess of $3 billion by 2025. The move by the Karnataka government is a setback to the state’s reputation of being a tech-hub and startup capital” said Roland Landers, CEO, All India Gaming Federation.