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Exempt Indian Startups From Online Gaming Ban In Karnataka: Traders’ Body CAIT

Exempt Indian Startups From Online Gaming Ban In Karnataka: Traders’ Body CAIT

The Karnataka Police (Amendment) Bill, 2021 proposes to ban online gaming or betting by, with a maximum imprisonment of three years and a penalty up to INR 1 Lakh

The CAIT says the bill fails to differentiate between game of skill and game of chance

India’s booming online gaming market and enterprising opportunities likely to be hit with heavy loss of employment, as per the traders’ body

The online gaming market in India is expected to grow further in times to come, with several indigenous platforms coming up. According to a KPMG report, titled “Beyond the Tipping Point: A Primer on Online Casual Gaming in India”, the total Indian gaming market is expected to grow 113% from INR 136 Bn ($1.83 Bn) this fiscal year to INR 290 Bn ($3.91 Bn) in 2025.

Over the same stretch, the number of players is projected to grow 52% from 433 Mn currently to 657 Mn.

Amid the gaming boom in the country, the Confederation of All India Traders (CAIT) has now sought the exemption of Indian online gaming platforms from the proposed law in Karnataka to ban online gaming and betting.

In a letter written to the Karnataka Chief Minister Basavaraj S Bommai, the National Secretary of CAIT, Praveen Khandelwal, said that the bill aimed at prohibiting online gambling and betting also makes all online games of skill illegal.

Observing that the bill will impact the sunrise sector of gaming startups, the traders’ body said that it will lead to massive job losses in Bengaluru where more than 90 small and big Indian gaming startups are registered, which employ over 4,000 people, and will also have an effect on various other developers and animation studios.

“The bill only affects the Indian companies, which mostly charge a small registration fee to pay their games, and will have no effect on Chinese and other foreign games, where children spend thousands of rupees on in-app purchases and which lead to addiction,” the letter said.

Game On Over Proposed Bill

Observing that the gaming startup sector is a pride of India and many of the homegrown startups have launched operations in internationally, the CAIT Secretary-General said: “Bills such as these will end up stifling innovation and enterprise shown by these startups and discourage Indian developers and help Chinese and other foreign companies garner profit at India’s expense.”

The traders’ organisation noted that the bill does not distinguish between a gamer of skill and a game of chance.

As per the CAIT, a game of chance is pure gambling and should be rightfully banned, however, bringing games of skills under the ambit of the bill, the government has gone against the established jurisprudence of the Supreme Court and Karnataka High Court along with threatening the Indian gaming startup sector.

Last week, Karnataka Home Minister Araga Jnanendra tabled the Karnataka Police (Amendment) Bill, 2021, in the Legislative Assembly to ban online gaming or betting by amending the Karnataka Police Act of 1963, with maximum imprisonment of three years and a penalty up to INR 1 lakh.

The bill aims to “ban online games, involving all forms of wagering or betting, including in the form of tokens valued in terms of money paid before or after issue of it. It banned electronic means and virtual currency, electronic transfer of funds in connection with any game of chance”.

Among several online games, fantasy sports has seen a great surge in interest in the past few years and have also raised concerns about whether they are games of skill or games of chance. Dream11, an online fantasy sport platform is a case in point where petitions were filed against the platform in several High Courts, but were dismissed. The Supreme Court too has dismissed a similar petition.

Tamil Nadu Also Joins The Debate

In a similar debate, Tamil Nadu had promulgated an ordinance to prohibit even games of mere skill (if played for stakes) as wagering or betting in cyberspace which led to online gaming companies scramble to obtain a stay on the ordinance.

The Madras High Court has struck down the Tamil Nadu amendments as overbearing, arbitrary and pernicious and according to experts, the time is ripe and the soil fertile, for evolving a framework that is viable for all stakeholders.

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