Karnataka High Court strikes down law banning online gambling with stakes

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The Karnataka High Court on Monday ruled on certain provisions of the Karnataka Police (Amendment) Act 2021, by which the state government banned online gambling with stakes ultra vires the Constitution and invalidated them . The law provides for a maximum jail term of three years and a penalty of up to Rs. 1 lakh for violating the provisions.

A dividing bench of Chief Justice Ritu Raj Awasthi and Justice Krishna S Dixit said: “Under the above circumstances, these petitions in brief are successful. The Karnataka Police (Amendment) Act 2021 insofar as the provisions we have said, the entire Act is not invalidated is declared ultra vires the constitution and invalidated.”

“A mandamus order is issued restraining the Respondents from interfering with the online gambling activity and related activities of the Motions,” the Court added.

He added “The consequences of the setting aside of the provisions shall follow. However, nothing in this judgment shall be construed to prevent the passing of appropriate legislation relating to the subject of betting and gambling in accordance with the provisions of the Constitution.”

A detailed copy of the judgment has not yet been uploaded.

Similar laws prohibiting online gambling in Kerala and Tamil Nadu have been struck down by the High Courts of Kerala and Madras respectively. The Kerala High Court has struck down a state law banning online rummy. Earlier, the Madras High Court struck down a law passed by the Tamil Nadu Assembly banning all sorts of online games, including games of skill like poker and rummy, played for stakes.

On December 22, 2021, the Karnataka High Court had reserved its order on a batch of petitions challenging the constitutional validity of the Karnataka Police (Amendment) Act 2021, by which the state government banned gambling and online betting. The law provides for a maximum jail term of three years and a penalty of up to Rs. 1 lakh for violating the provisions.

The hearing of the motions before the Division Bench began on November 12, 2021. Initially, the case was heard for the granting of an interim measure, but with the consent of all counsel, the case was finally heard by the court.

Dr Abhishek Manu Singhvi appearing for one of the applicants had argued that there is a distinction between gambling and gambling of skill. “Only games of chance can be regulated to the point of prohibition by state authorities. Conversely, state governments have no jurisdiction to prohibit games of skill. This distinction has existed for centuries. years,” he said.

It relied on Supreme Court judgments in RMD Chamarbaugwalla v Union of India, Dr KR Lakshmanan v State of Tamil Nadu and Anr and others.

Senior Lawyer Mukul Rohatgi, representing another petitioner, argued that the purpose of the Amendment Act was to stop gambling. However, in this process, treating a game of skill under the same head is arbitrary and the legislator overrides Supreme Court rulings that have authorized games of skill.

He also claimed that “if I take this amending law as it stands today, if I play a game of chess online and we say that the winner will withdraw an amount, it will be an offense The law takes into its compass acts that are not gambling.”

Senior Advocate C Aryama Sundaram appearing for the All India Gaming Federation claimed that “All of my members do not offer third party spectators. These online games are only available for real players. He (player) is not betting on someone’s skills. ‘other. I (player) must personally participate in a game which is a game of skill and then bet on it. The question is whether this will amount to a game and fall under entry 34 of list 2 of the Constitution .

Relying on judgments of the Supreme Court and those of the High Court of Madras and the High Court of Kerala which struck down similar laws, he argued: “The status quo which has been in force for 40 years and n ‘has not been changed with respect to the game of skill, particularly where the games are regulated by the Federation itself should continue.’ Further, “the prima facie convenience equilibrium case is established and in the absence of stay, all of these people (companies) are going to do business. It is not that we are in an irreversible condition, if the court holds that the act is valid, that the prohibition takes effect from that day.”

Lead Attorney DLN Rao, representing another petitioner, also challenged the Amendment Law on grounds of legislative competence and violation of Article 19(1)(g) of the Constitution. He said: “The prima facie case is established and the entire amendment is without authority of law.”

Lead attorney Sajan Poovayya, representing three petitioners, had argued that where legislative jurisdiction is challenged, the presumption of constitutionality will not apply.

The state government opposed the petitions:

Advocate General Prabhuling K Navadgi appearing for the state government had opposed arguments that the Amendment Act is social legislation the purpose of which is to prohibit activities prejudicial to public health and order.

Urging the court to branch off between a game of skill and a game of chance, it was said that games of skill are not prohibited. Navadgi argued that the state government has legislative jurisdiction to enact the law. “It’s not disproportionate legislation,” he said. Citing the number of criminal cases filed across the state, it said, “This legislation cannot be dismissed on the grounds of legislative jurisdiction. Because it is a matter of public order.”

Navadgi also argued that “at the end of the day, what we regulate is betting or organized betting and to say that if I bet on a game of skill is not a game, has no basis “. He had added that “we treat this (online game) much more pernicious than alcohol”.

Navadgi also referred to Section 78 of the Act and stated that “betting or betting, to put it in simple terms, is a collection or solicitation of a bet from anyone or I receive or distribute the prizes in money or otherwise, then betting and betting are unknown can be a game of chance or a game of skill.

With regard to fantasy games, it has been argued that “fantasy games are nothing more than bets”.

Background of the case:

The amendment law came into force on October 5, it includes all forms of betting or wagering, including in the form of chips valued in terms of money paid before or after the issue thereof. It banned electronic means and virtual currency, the electronic transfer of funds in connection with any game of “chance”. However, there is no ban on lottery or horse racing betting at any racetrack inside or outside Karnataka.

The Statement of Objects and Reasons states: “It is deemed necessary to further amend the Karnataka Police Act 1961, Karnataka Act 4 of 1964, to ensure the effective enforcement of the provisions of this Act by erecting offenses under Chapter VII and Sections 90, 98, 108, 113, 114 and 123, as an offense punishable and non-dischargeable except Section 87, which is made punishable and dischargeable.”

Further, “Include the use of cyberspace, including computing resources or any communications device as defined in the Information Technology Act 2000, in the course of gambling, to reduce the threat of gambling via Internet, mobile applications, to strengthen the punishment of gambling for the orderly conduct of citizens and to wean them from the vice of gambling.”

Case Title: All India Gaming Federation v. state of karnataka

Case No: WP 18703/2021

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