Last week, the Karnataka proposed a ban on online games involving betting and wagering, emphasising on “any act or risking money, or otherwise on the unknown result of an event including a game of skill”. The state government said the bill will help keep youth from rural areas from being idle in cities and towns as they tend to become habitual gamblers .
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Karnataka's move to ban games involving skills could prove detrimental to the revenues of large gaming platforms such as Dream11. This is in contrast to existing gambling laws in India, such as the ones in Telangana and Andhra Pradesh, that are dependent on chance, Puneet Bhasin, a Mumbai-based lawyer, told The Hindu.
India categorises games into two main parts — games of skill and games of chance . While games of skill require players to possess analytical and decision-making capabilities, games of chance are based purely on luck.
Games like Dream11 and Mobile Premier League (MPL) offer skill-based games, where players use relevant data like career statistics, career form, strengths and weaknesses to choose sportspersons to include in their ‘fantasy team’, according to Tanmay Singh, litigation counsel at Internet Freedom Foundation (IFF).
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Shivani Jha, Director of eSports Players Welfare Association, added that players are not risking money to win an uncertain event while playing skill-based games. "They are paying registration fees for an event with a controlled outcome because skill in involved. This must not be confused with wagering," Jha added.
Market size
India is the fourth largest online gaming market in the world, and gamers in India are expected to grow from 360 million in 2020 to 510 million in 2022, according to data by consultation firm EY and All India Gaming Federation. The move is likely to cause a setback in the $1 billion gaming industry, several experts say.
Karnataka is home to 91 gaming firms that collectively employ about 4,000 people, according to data from Startup Business Academy.
“The move to pass the Karnataka Police (Amendment) Compliance Act, 2021 act a setback to the online skill gaming sunrise industry as well as to the state's reputation of being a tech-hub and start-up capital," Roland Landers, CEO of All India Gaming Federation said.
"There is the clear distinction that needs to be drawn between games of skill such as bridge, eSports and games of chance."
According to Landers, expanding the ban to the legitimate industry that has created many unicorns and is going to be a significant contributor to the Indian economy is not justified.
Singh noted the move represents an “impermissible expansion of the law” that encroaches upon fundamental freedoms and violates the constitutional rights of the residents of the state.
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Moreover, the state’s decision could prompt gaming companies headquartered in Karnataka to move their base elsewhere, and even provide disclaimers for its users in the state, Bhasin noted.
Major gaming platforms Dream11, MPL, Loco and Fantasy Akhada declined to comment on queries sent by The Hindu.
Legal challenges
The state also risks the possibility of legal challenges, with affected companies approaching writ courts. “A ban on online gaming violates several constitutional rights, including the right to freedom of expression and the right to practice any trade. The law is also manifestly arbitrary for multiple reasons, including that there is no clear legitimate objective sought to be achieved by the law,” IFF’s Singh added.
Bhasin added that Karnataka could be the frontrunner in banning such games, prompting other states to follow suit.
