All India Gaming Federation v. State of Karnataka [Case No: WP 18703/2021]

OVERVIEW

The Hon’ble Karnataka High Court on February 14, 2022 held certain provisions of the Karnataka Police (Amendment) Act 2021 (the “Amendment Act”) to be un-constitutional. Sections 2, 3, 6, 8 and 9 of the Amendment Act, which prohibited offering games of skill with stakes (including online games of skill with stakes) in Karnataka, were declared ultra vires and were accordingly struck down.

FACTS OF THE CASE

In October, 2021, vide the Amendment Act, the state government had amended the Karnataka Police Act, 1963. The Amendment Act prohibited and criminalised playing and offering games of skill for stakes including online games of skill for stakes in the state. The petitioners, comprising of various gaming companies and the All India Gaming Federation, claimed that games such as poker, chess, rummy, fantasy sports are all games of skill and various court orders have categorically differentiated games of chance and games of skill. However, the Amendment Act criminalised all forms of staking in connection with any ‘games of skill’ and an act of risking money or betting on the unknown result of an event but kept ‘betting on horse racing’ as an exception to the Amendment Act.

The Petitioners contented that the state government lacks legislative competence to prohibit ‘staking on games of skill’ since the same does not fall under the state subjects of ‘betting’ and ‘gambling’. Further, the petitioners argued that Amendment Act violates fundamental rights as envisaged in Article 14 (equality before law), Article 21 (right to life and liberty), Article 19(1)(a) (freedom of speech and expression), Article 19 (1)(g) (right to practice any profession, or to carry on any occupation, trade or business). The Petitioners further argued, vide the Amendment, that the state is imposing its own notion of morality on citizens by imposing a blanket ban on playing and offering games of skill with stakes in the state.

The state in response to petitioners argued that the Amendment Act is a result of directions received by the Karnataka High Court in a separate petition, directing the state government to form a stand on governing or banning all forms of online gambling and betting in the state. Further, the state contended that due to digital revolution, there has been a proliferation of online gaming platforms engaged in ‘betting and wagering’ which is against ‘public health’ and ‘public order’. Several citizens have committed suicide and families have been ruined. Therefore, the Amendment Act has criminalised wagering, betting or risking money on any uncertain event, be it a game of chance or skill. However, the state clarified that games of chance or skill when played without stakes are outside the purview of this Amendment Act. The state also argued that the petitioners, comprising of various registered companies, being juristic persons, could not avail the benefits of fundamental rights guaranteed under Article 19(1) of the Constitution.

The Amendment Act provided a maximum imprisonment of three years and a penalty of up to INR 1 lakh for violation of the provisions. After hearing the petitioners and the respondents, the Hon’ble High Court of Karnataka pronounced its judgement on February 14, 2022.

DECISION OF THE COURT

Upon examining and analysing the various contentions put forth by the Petitioners and Respondents as well as the principles laid down by the Hon’ble Supreme Court in Dr. K.R. Lakshmanan vs. State of Tamil Nadu1, State of Andhra Pradesh v. K. Satyanarayana2 and R.M.D Chamarbaugwala v. Union of India3 , the Karnataka High Court declared provisions of Sections 2, 3, 6, 8 and 9 of the Amendment Act to be ultra vires of the Constitution in their entirety and accordingly struck them down. The Court held –

• Amendment Act cannot be justified under umbrella of ‘public order’ as individual instances of disorder or misuse of online gambling (howsoever liberally one may construe them) cannot be utilised to enact the provisions of Amendment Act.
• Amendment Act fails to justify its intention to protect public health. The respondent had contended that the World Health Organisation (WHO) had included addiction to online games as a public health hazard. However, the court observed that the state had not set up a committee to conduct its own empirical research on the harms of online gaming and consequent addiction and therefore the argument of falling under the state subject of ‘public health’ is far-fetched.
• The arguments of the petitioners in relation to Article 19(1)(a) of the Constitution (right to freedom of speech and expression) are upheld. The court compared gaming to other modes of expressions and concluded that gaming involves psychological components as well as other skills. Court agreed that gaming is a mode of expression and one’s individual skill is on display when gaming.
• Offering games of skill have been judicially held to be legitimate business activities and are protected under Article 19(1)(g) of the Constitution (to practise any profession, or to carry on any occupation, trade or business).
• Amendment Act is violative of Article 14 of the Constitution (equality before law) since it was unjustifiably selective and clamped an absolute embargo on all games of skill defying the principle of proportionality.
• It is egregious that the state has drawn no distinction between a ‘game of skill’ and a ‘game of chance’ in the Amendment Act.
  • 1 AIR 1996 SC 1153.
  • 2 1967 AIR 825.
  • 3 [1957] 1 SCR 930.

For further queries, please reach out to our team:

Mathew Chacko and Vishal Singh.