Online gaming ban: Karnataka mulls own law fearing revenue hit

Karnataka holds 30% of the online gaming market, IT/BT Minister Priyank Kharge said, adding that the state will lose 'a legal revenue stream' because of the federal ban on real-money games (RMG).

Bengaluru: Anticipating huge revenue losses due to the Centre’s ban on online money games, the Congress-ruled Karnataka is looking at having a state-specific legislation under which the sector will be regulated instead of being banned.

Karnataka holds 30 per cent of the online gaming market, IT/BT Minister Priyank Kharge said, adding that the state will lose “a legal revenue stream” because of the federal ban on real-money games (RMG).

The Promotion and Regulation of Online Gaming Bill received President Droupadi Murmu’s assent last week. This federal law prohibits all forms of online money games.

“The Supreme Court is still adjudicating on whether online gaming is a state or central subject. Yet, the Centre rushed with this Bill. A ban isn’t the solution. We’ll have this evaluated and discussed with the home department as well as the chief minister,” Priyank told DH when asked about the government’s plan to enact its own law.

Karnataka is ready with a draft law allowing ‘games of skill’ under a licensing regime that will require companies to have Know Your Customer (KYC) and anti-money laundering compliance. The state, however, is proposing a ban on ‘games of chance’.

Since 2017, Karnataka earned Rs 1,157.22 crore under the State Goods & Services Tax (SGST), according to data from the finance department headed by Chief Minister Siddaramaiah.

“We’ll lose a lot more than that. India totally earns Rs 20,000 crore annually through RMGs,” Priyank said.

According to data, SGST collection from online gaming companies went from Rs 52.62 lakh in 2017 to Rs 437 crore in 2024-25. The SGST collection dropped to Rs 34.6 crore in 2022-23, when the previous BJP government introduced a total ban on online games without differentiating between those played on the basis of skill and chance. This was struck down by the High Court.

‘Cascading effect’

The Centre’s “knee-jerk reaction” will have a “cascading effect” on the entire ecosystem, Priyank said.

“India has over 2,000 gaming companies creating two lakh direct and indirect jobs. The talent pool will get hit,” he said, adding that the gaming sector received Rs 23,000 crore in foreign direct investment (FDI) in the last few years. “A lot of global investors will pull back if there’s no local captive market despite having a huge digitally inclined demography.”

Priyank made it clear that he “doesn’t approve of any kind of gambling”.

“But leaving the sector unregulated means more money laundering, terror financing and immense data theft,” he said. “Games are being hosted on servers in Eastern Europe, South America and China, which makes it difficult for us to take action if there’s fraud,” the minister added.

Since 2023, the police in Karnataka have registered 1,193 cases in connection with online betting. At least 32 persons have died by suicide due to online gambling in this period.

Revenue worries K'taka govt ready with draft law allowing ‘games of skill’ Firms will be required to have KYC, anti-money laundering compliance The govt, however, is proposing a ban on ‘games of chance’  Since 2017, K'taka earned Rs 1,157.22 cr under SGST on online gaming

The Supreme Court is still adjudicating on whether online gaming is a state or central subject. Yet the Centre rushed with this Bill. A ban isn’t the solution. We’ll have this evaluated and discussed with the home department as well as the chief minister - Priyank Kharge IT/BT Minister