Karnataka High Court strikes down law banning online games

Published
24th Feb, 2022

Context

Decision of Karnataka High Court to strike down certain provisions of Karnataka Police (Amendment) Act, 2021, that banned online games with monetary stakes.

Background

The Karnataka government implemented the Karnataka Police (Amendment) Act, 2021 in October last year.
This abovementioned Act had banned all forms of betting and wagering, including online gaming.
This Amendment had also banned any find of fund transfer associated with any game of chance.
The Karnataka High Court struck down certain provision of this Amendment.

Analysis

What did Karnataka Police (Amendment) Act, 2021 deal with?

The Karnataka Police (Amendment) Act, 2021 aimed at banning online betting associated with game of ‘chance’.

In India, regulating gambling is in the domain of states as the subject is listed in the List II of the 7^th Schedule of the Constitution.

The Amendment though kept did not apply to lotteries, betting on horse races conducted on race courses.
This Act provided for maximum punishment of imprisonment of three years and penalty up to Rs. 1 lakh for violation of its provisions.

What arguments were presented by the petitioners against the ban imposed by the Act?

Online games are based on skill and not chance, hence state government has no jurisdiction to ban them.
Those betting on a game are themselves participants, the bets therefore are not wedged on the performance of any third party. Relying of individual skills hence cannot be categorized as gambling.
Banning online gaming in which mere chance is not involved, would create a situation that will lead to closure of gaming companies and unemployment of people working with them.
The Amendment is in contravention to Article 19(1)(g) of the Constitution of India.

Article 19(1)(g) of the Indian Constitution gives an Indian Citizen to practice any profession, or to carry out any occupation, trade or business.

Judicial Position of other High Courts:

Kerala High Court had declared the decision of Kerala Legislative Assembly, which had banned online rummy, to be bad in law.
The decision of Tamil Nadu Assembly banning all kinds was online games was stuck down by the Madras High Court.

Opinion of Supreme Court:

In M. D. Chamarbaugwalla vs Union of India, the Supreme Court had held that a competition which requires a certain degree of skill of the participant to be applied, cannot be considered to be gambling.

What was the decision of Karnataka High Court?

Division Bench of Karnataka High Court, comprising of Chief Justices Ritu Raj Awasti and Justice Krishna Dixit, brought down provisions of Karnataka Police (Amendment) Act, 2021 that banned online gaming with monetary stakes.
The Karnataka High Court issued a Writ of Mandamus to the state government restraining it from interfering with online gaming business and allied activities.

Mandumus- It is a judicial writ or order issued as a command to an inferior court or a person (including government) to perform a public or statutory duty.

High Court of Karnataka applied to Doctrine of Severability and struck down only those provisions of Karnataka Police (Amendment) Act, 2021 that banned online games with monetary stakes.

Doctrine of Severability: It is also known as doctrine of separability. It means that when some particular provision of a statute offends or is against a constitutional limitation, but that provision is severable (separable) from the rest of the statute, only that offending provision will be declared void by the Court and not the entire statute