Image depicting online betting. For representational purposes.
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Karnataka is making a renewed attempt to regulate the murky world of online gaming with a fresh law that seeks to ban all forms of online betting, gambling, and wagering involving ‘games of chance’.
This is the state’s second try, after a similar attempt by the previous BJP government was struck down by the High Court for failing to distinguish between games of skill and games of chance. At the heart of the issue
lies the outdated Lotteries (Regulation) Act, 1998, which fails to adequately define the line separating the two kinds of games.
The difference is crucial: Games of chance, such as lotteries, rely on luck, while games of skill depend on a player’s knowledge, experience, and decision-making. The former can be conducted only by the government, while the latter are considered legitimate commercial ventures.
But in the digital age, these lines are increasingly blurred. What is packaged as a game of skill often becomes a betting arena, leading to rampant addiction and financial ruin.
The dark underbelly of online gaming is now a public health issue, hooking youth into compulsive behaviour, pushing them into debt, and worse. The proposed legislation attempts to address this grey area. It includes a ban on all forms of online betting that involve chance, and introduces penalties of up to three years in prison or a fine of Rs 1 lakh.
It also proposes to set up a Karnataka Online Gaming and Betting Regulatory Authority, modelled on Tamil Nadu, to license and oversee skill-based platforms. The authority will rely on judicial pronouncements and industry standards to make its distinctions. The move to include strict KYC norms, time restrictions, age barriers, and addiction warnings is a welcome safeguard to promote responsible online gaming.
However, a larger structural issue remains. With each state passing its own legislation, a fragmented legal landscape is emerging. There is a pressing need for the Centre to amend the Lotteries (Regulation) Act and usher in a uniform national framework, in consultation with the states.
The elephant in the room is the larger betting industry, estimated at $100 billion, much of it illegal and unregulated. There have been suggestions that legalising and regulating it, as with horse racing, could allow the government to generate revenue while introducing transparency and oversight.
For example, in 2023, online gaming was brought under the GST regime. It is time to stop viewing betting through a purely moral lens.
Ultimately, a well-regulated and pragmatic national framework that is grounded in clarity, consumer protection, and taxation is crucial to preventing abuse and ensuring a safe gaming environment.