In a boost to the online gaming industry, the Karnataka High Court struck down key amendments to the Karnataka Police Act, 1963, which were brought in last year to ban all forms of gambling in the state, including online gambling.
The division bench of Chief Justice Ritu Raj Awasthi and Justice Krishna S Dixit passed this order while hearing a petition filed by the All India Gaming Federation. All the petitioners are associated with online gaming in one way or the other. These games are rummy, carom, chess, pool, bridge, crossword, scrabble and fantasy sports, such as cricket.
The petitions were filed following a PIL seeking a direction for legislatively banning all forms of online gambling and online betting. This was followed by a Court order on March 31, 2021, which directed the state to take a stand on the matter. Accordingly, the chief secretary of Karnataka filed an affidavit saying the state would come out with a legislation. The Amendment Act came into being following the assurance given to the Court.
In the past two decades or so, because of the digital revolution, there has been a proliferation of online gaming platforms which engage in “betting and wagering”. Unlike traditional betting, this was unbounded territory and proved to be disastrous to public order and public health. The menace of cyber games having reached epic proportions, the police in the past three years or so registered some 28,000 cases all over the state. Several persons committed suicide and many families were ruined.
Therefore, the Amendment Act criminalises wagering, betting or risking money, be it a game of chance or a game of skill. Persons owning these premises or online platforms where such games are played are also liable to be punished.
The Amendment Act apart from making the offences cognizable and non-bailable, makes punishment more stringent commensurate with the gravity of the offence. However, if persons merely play a game of chance or of skill without risking cash or kind, they do not fall within the net of penal provisions.
The Karnataka Police Act, 1963, was enacted by the state legislature for the regulation of the police force, the maintenance of public order and prevention of gambling. It received the assent of the president on January 18, 1964, and came into force from April 2, 1965. The Act has been amended a dozen times between 1965 and 2021. The Karnataka Act of 2021 which brought about a substantial change to the principal act received the assent of the governor on October 4, 2021. It came into force on October 5, 2021.
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The Amendment Act introduces an expansive definition of gaming under Section 2(7) by including all online games which involve wagering or betting. The definition of the term wagering or betting itself is widened to encompass even a game of skill involving money or otherwise. However, it excludes horse racing subject to certain conditions. It encompasses within its fold games of skill too, offered to users through online platforms/portals/applications played with monetary stakes.
The net effect of the Amendment Act is—owners of online gaming houses, providers of online gaming facilities and players of online games all become offenders liable to be jailed and fined in terms of penal provisions. The amended Section 128A makes these offences both cognizable and non-bailable.
The definition of “pure game of skill” under the principal act has undergone a substantial change in the amendment. The amended section retains “pure games of skill” while omitting the exclusion that benefited players of games of skill with financial stakes.
The Punjab & Haryana High Court in Varun Gumber had held that fantasy games predominantly involve skill and therefore, do not fall within gambling activities and are protected under Article 19(1)(g) of the Constitution. The matter went to the apex court and was dismissed on September 15, 2017.
A bench of the Bombay High Court in Gurdeep Singh Sachar vs Union Of India was also considering whether playing of fantasy games by virtual teams amounted to gambling. The Court in Chamarbaugwala and KR Lakshmanan answered the question in the negative, specifically recording a finding that the success in Dream 11 fantasy sports depends on users’ exercise of skill based on superior knowledge, judgment and attention, and that the result of the game was not dependent on winning or losing of the particular team in the real world game on any particular day.
The Court said: “It is undoubtedly a game of skill and not a game of chance.” The matter was carried upward to the apex court which dismissed it on December 13, 2019.
The petitioners argue that playing games of skill is a form of speech and expression guaranteed under Article 19(1) (a) and that it is one of the facets of personal liberty protected under Article 21 and therefore, there cannot be unreasonable restriction on the same. They submitted that any legislative restriction for being valid has to pass the muster of Article 19(2) of the Constitution which enumerates specific grounds and that there is a heavier onus on the shoulders of the State to justify restriction which constitutes absolute embargo.
The advocate general, however, mentioned the likely ill-effects of online gaming in general and their addiction potential with the younger generation. He submitted that under the constitutional scheme, no rights of individuals are accorded in absolute terms and their interest has to yield to the larger societal interest. According to him, the Amendment Act having been enacted keeping this in mind cannot be faltered in judicial review. He also submitted that in matters like this, the judicial organ of the State should show due deference to the decisions of the coordinate organ, namely the legislature.
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The Court said:
“True it is: the Constitution is intended to endure for ages to come and consequently, to be adapted to the various crises of human affairs. It is unwise to insist that what the provisions of the Constitution meant to the vision of its makers must mean to the vision of our time. They should be interpreted to meet and cover changing conditions of social and economic life. A Constitution states not rules for the passing hour but the principles for an expanding future. At the same time, the meaning of the Constitution does not change with every ebb and flow of economic events. A Constitution is not a storehouse of fossilized principles. It is a living law of the people and accordingly its provisions need to be construed by all the organs of the State.”
The Court held that the petitioners are justified in complaining that the Amendment Act is violative of Article 14 inasmuch as it does not recognise the long standing jurisprudential difference between a game of skill and a game of chance which animates the scheme of the principal act, even post-amendment. Consequently, in the eyes of the Amendment Act, persons who play games of chance and those who play games of skill (in terms of predominance test) unjustifiably are made to constitute one homogenous class. “The provisions of Sections 2, 3, 6, 8 & 9 of the Karnataka Police (Amendment) Act 2021 are declared to be ultra vires of the Constitution of India in their entirety and accordingly are struck down,” the Court said.
“A writ of mandamus is issued restraining the respondents (Karnataka Police) from interfering with the online gaming business and allied activities of the petitioners,” the bench said.
—By Adarsh Kumar and India Legal Bureau