Online gaming

Karnataka’s take on online gaming could prick the hand beyond the fabric

The advent of technology has opened many doors to close a large number of windows. The adoption of the virtual future by a conventional past has always been a difficult journey. The game, a major chapter in both the commerce screen and a desktop computer, may have to meet more obstacles than the already existing moral obstacles.

Karnataka’s assembly passed a bill last week to ban online skill games involving entry fees. This step follows the request of the High Court of Karnataka to develop a law on online gambling.

The bill passed the amended Karnataka Police Act 1963 to prohibit all forms of gambling in the state, including online gambling and “any act or risking money, or otherwise on the unknown outcome of an event involving a game of skill “with the exception of horse races and lotteries. The state government said that “the bill will help prevent young people from rural areas from being inactive in cities as they tend to become habitual gamblers.”

This decision has already sparked a lot of questions and criticism. But beyond players with recreational concerns, this step could cause economic damage and also face legal hurdles.

Employment in the State

Above all else, the first yard with fallen fences will be that of employment. Karnataka itself encompasses over 91 companies and game developers, directly employing over 10,000 people and several others indirectly. The ban would result in job losses, lower incomes, and push back tech companies considering Karnataka for future investment.

Online games have grown the fastest in the M&E space this year, gaining an important place in India’s economy. Sector promises around two lakh of new jobs and a $ 4 billion market opportunity in India by now 2025.

An organization focusing on startups and entrepreneurs, Startup Business Academy, conducted a investigation involving more than 650 respondents from a pool of founders and employees of startups. About 70 percent of those polled believed that the online gaming ban would have a negative impact on other segments of the IT industry and on startups. In addition, nearly 80% of them strongly agreed that if gaming start-ups moved to other startup destinations in India due to lack of political support, there would be a massive negative impact on the business. image of Bangalore and Karnataka as a start-up. destination.

Neeraj Kapoor, CEO and Founder of Start-up Business Academy, said: “Karnataka, led by the city of Bengaluru, has been India’s flagship as a global hub for IT development and IT development. start-ups run by energetic young entrepreneurs. Recent developments threaten its pole position compared to other Indian states in terms of user friendliness and willingness to drive the next level of growth in IT and related services.

Gaming market in general

According to data from consulting firm EY and the All India Gaming Federation, India is the Fourth Largest online gaming market in the world, posting a 43% CAGR, with gamers in India expected to grow from 360 million in 2020 to 510 million in 2022.

“The movement to pass

The Karnataka Police (Amendment) Compliance Act, 2021 will act as a setback for the online skill gaming industry as well as for the state’s reputation as a technology hub and startup capital ”, Roland Landers, CEO of All India Gaming told the Federation.

“There is a clear distinction that must be made between games of skill such as bridge, eSports and gambling.”

In India, games are generally classified into two rooms; games of skill and games of chance. While games of skill require players to possess analytical and decision-making skills, games of chance, as the name suggests, are based purely on luck.

“Games like Dream11 and Mobile Premier League (MPL) offer skill-based games, where players use relevant data such as career stats, career form, strengths and weaknesses to choose which athletes to include. in their “fantastic team,” “said Tanmay Singh, legal counsel at Internet Freedom Foundation (IFF).

Shivani Jha, director of the eSports Players Welfare Association, added that players don’t risk money to win an uncertain event while playing games of skill. “They pay a registration fee for an event whose outcome is controlled because the skills are involved. This should not be confused with a bet, ”Jha added.

Gaming industries charging fees for skill games should not be dragged under the umbrella of the law, according to Landers. He added that the unicorn delivery industry is legitimate and will significantly contribute to the Indian economy in the future.

Singh called the decision an “inadmissible extension of the law that infringes on fundamental freedoms and violates the constitutional rights of state residents.”

Local startups and youth innovations are at their peak right now. Throughout the various meetings that Prime Minister Narendra Modi had on his recent trip to the United States, ideas of technological advancements, 5G, vRAN, digitization and further investments in these areas have not ceased to arise. At such a ripe for digital commerce, such general amendments might not be healthy. This can send the wrong signals not only to Indian investors, but to investors around the world.

Attached to achieve $ 3.8 billion by 2025 with over 600 million players and many looking to turn pro, the move will hamper the path for India to become a global technology leader.

Legal issue

The new Karnataka law aims to strengthen the Karnataka Police Law to make gambling a knowable and non-surety offense and “stem the threat of gambling via Internet, mobile applications”.

The law was also introduced to “include the use of cyberspace, including computer resources or any other communication device as defined in the Information Technology Act 2000 in the gaming process in order to reduce the threat of gambling via the Internet, a mobile application ”.

The law reinforces as much as possible Punishment for owners of gaming centers one to three years imprisonment and fines of Rs 1000 to Rs 1 lakh. The proposed minimum sentence is six months instead of one month currently and a fine of Rs 10,000 instead of Rs 500. For aid or encouragement of gambling, the penalty has been increased to six months. imprisonment and Rs 10,000 fine.

A first offense of running a gambling house will result in the minimum penalty of six months in prison and a fine of Rs 10,000 while a second offense will result in one year of imprisonment and a fine of Rs 15,000. A third offense will result in a prison sentence of 18 months and a fine of Rs 20,000.

However, experts say that the Karnataka Police (Amendment) Bill, 2021 may face legal hurdles, because “it lacks clarity, especially on how authorities identify an activity, website or app as ” problem ” “.

A similar law, the Tamil Nadu Gambling and Police Laws (Amendment) Act, 2021 adopted in February in Tamil Nadu was eventually struck down by the Madras High Court in August as being ultra vires.

The Court found that the comprehensive bans on online skill games for cash under the Amending Law were unreasonable, excessive and manifestly arbitrary, thus infringing Article 19 (1) (g) of the Constitution.

The distinction between games of skill and games of chance is not very clear. It is difficult to categorize games, especially those in the Online Fantasy Sports genre, as they draw characteristics from both baskets.

In 2017, the High Court of Punjab and Haryana became the first Indian court to rule that a fantasy sports game is primarily a skill-based game.

The SC observed that playing fantasy sports games required the same level of skill, judgment and discretion as in horse racing.

“While deciding the issue of ‘jurisdiction over chance’, Indian courts have adopted the test followed by American courts known as the ‘dominant factor test’, or ‘predominance test’. This test requires a court to decide whether luck or skill is the dominant factor in determining the outcome of the game, ”said Prasanth. Sugathan, Senior Partner, Right MCA.

According to various Indian court rulings, only games of chance which are in the nature of gambling can be banned, so the recent Karnataka Amendment would likely not go through the tunnel.

With absolute recognition that online gambling with monetary implication often raises serious issues, allowing many people unfamiliar with the format of these games to lose considerable sums of money, the outright ban of a segment as important the economy could come to an end. until doing more harm than good. The law needs extensive research, analyzing the differences between game formats, followed by judicial changes, so that the bill is in a place to impress its two neighbors.

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