No Precipitative Action Against Online Gaming Companies For Now; Advocate General Assures Karnataka High Court

The oral statement was made before a single bench of Justice Krishna S Dixit, which is hearing a batch of petitions challenging the constitutional validity of the Karnataka Police (Amendment) Act 2021, by which the state government has banned all online gambling and betting, and provide maximum imprisonment of three years and penalty upto Rs 1 lakh for violation of the provisions.

Senior Advocate Abhishek Manu Singhvi appearing for a petitioner continued his submissions today. Relying on the Supreme Court judgement in the case of RMD Chamarbaugwalla he said "Can the legislation of Karnataka change the conditions underlined in Chambarbugwalla. If skill is excluded from state competence, how is a state act going to change that basis ever, by a state act, it is not possible."

Further, he said, "Paternalism is narrowly tailored, it is not a good thing. Wherever required it is narrowly tailored. It is proportional. The footprint is limited. It is very rarely banned and it is highly regulated."

He added, "Even prostitution is not banned only the activities around it are banned. Even classified drugs are not banned. But here the games of skill are banned because at the end of the game you have to exchange money on the result."

He reiterated that "Skills and chance are two sides of a watershed. You cannot stop games of skill and Skill does not fall under competence of Entry 34 of List 2. Skill does not mean 100 percent skill, predominance is enough. However, the State of Karnataka overturns this and includes a game of skills. If Entry 34 says game of skill is not included then why the state of Karnataka includes games of skill which is contrary to SC judgements.

Seeking for interim relief by way of staying the impugned amendment act, Singhvi submitted "How many cases your lordship has seen which has 70 years of jurisprudence and 5 Supreme court and two high court judgements. If that is not a prima facie case then what is prima facie case. All the issues are covered by these judgement if that is not prima facie then what is prima facie."

Further, he said "Why should the court not allow rummy online with all its safeguards. The Online Rummy Federation (TORF) is a global organisation. They have various strict technical standards. The restrictions involved are such that you cannot game the system. Today therefore prima facie case is made out and balance of convenience is drawn."

After which the court raised a query saying, "If I grant an interim order and thousands of people play and tomorrow I dismiss your petition then will the player be subjected to criminal liability?

Singhvi said, "There is a pre-existing stay situation prior to the Act when everyone was playing. Your lordship is only keeping it in abeyance, it is continuing the status quo which was already there before the act. Secondly, lordship is not creating anything, it is only allowing the continuation of games online as per established secular laws and charter and rules and regulations."

Senior Advocate Sajan Poovayya appearing for some of the petitioners contended that, "The state does not have the legislative competence to enact such a law. Further under Entry 26, the state can only regulate and not impose a complete ban on online games."

He even pointed to the order granted by another bench which restrained the police from taking any coercive steps against Bhavit Sheth and Harsh Jain, the Founders and Directors of Sporta Technologies Private Limited, which promotes the 'Dream 11' gaming app. He argued that, "Some companies which are not before this court, challenging the law are still continuing their activities. While the petitioners have geo-fenced their apps." To which the court said "Oral assurance has been given by the Advocate General that no precipitating action will be taken."

The matters will be next heard post Diwali vacation.

Case Title: All India Gaming Federation v.  State Of Karnataka

Case No: WP 18703/2021