As Karnataka inches towards banning online gambling and betting, industry groups representing gaming start-ups are optimistic that the State Bill will make the distinction between the game of skills and game of chance, going by the definition of the online game shared by Law and Parliamentary Affairs Minister, JC Madhuswamy.

The Karnataka Draft Bill is said to have defined online games as “involving all forms of wagering or betting including in the form of tokens valued in terms of money paid before or after the issue of it, or electronic means and virtual currency, electronic transfer of funds in connection with any game of chance.”

While Karnataka’s Draft Bill is yet to released, in the past, States like Telangana, Andhra Pradesh, Assam, Odisha, Nagaland and Sikkim have put a ban on online rummy. However, a similar ban did not pass in Tamil Nadu where the high court has held that online rummy involves high dominance of skills and thus cannot be considered as gambling.

Following various State regulations, online games operating in formats like online fantasy sports (OFS) and online rummy have had to prove skill predominance in their respective formats. While there are court precedents that have recognised OFS and online rummy as games of skill, the skill dominance in the game of Ludo is still being considered by the Bombay high court.

“One will have to wait and watch for the exact verbiage of Karnataka’s law, but going by past precedent of AP and Telangana, it appears that ludo may be impacted as well,” said Surbhi Kejriwal, Partner, Khaitan & Co.

Industry’s take

Commenting on Karnataka Cabinet’s decision, Roland Landers, CEO, All India Gaming Federation said, “The Indian regulatory framework has clearly differentiated between games of skill and games of chance in India. Just because games of skill sometimes involve an entry fee for participation, they cannot be categorised with gambling; hence, legitimate skill gaming businesses should not be caught up under a gambling ban. A regulation that bans gambling but allows online skill gaming is the right approach and something that the AIGF and the industry are expecting and looking forward to.”

Further, Rameesh Kailasm, CEO of Indiatech, an industry group representing start-ups like Dream11, MPL, Zupee etc, said, “cognisance of the fact that games of skill are different from games of chance is a start and the ultimate decision to understand and create the distinction and create relevant regulations will be with individual States.”

He added that same is the case with many other sectors in the emerging online start-up space, a national level prescriptive guideline like the ones brought out by NITI Aayog and industry bodies like Indiatech.org for online fantasy sports, online skill-based casual games and sports and various court rulings can be a guiding point for States to understand and evolve regulations for this new sunrise sector.

Talking about the impact of multiple State regulations on the gaming sector, Kazim Rizvi, Founder of public policy think-tank, The Dialogue, said that in order to attract more investments in this sector and to support the growth of digital gaming start-ups, generate employment opportunities and contribute revenue to the public exchequer, India needs a regulatory ecosystem.

“The lack of policy experience within this field and its dynamic nature calls for at least an overarching model guidelines to provide for basic principles that state legislatures can adopt,” Rizvi added.