Head Digital Works, the owner of online rummy platform A23, has moved the Karnataka High Court against the Promotion and Regulation of Online Gaming Act. The matter is set to be heard on August 30 before the bench of Justice B M Shyam Prasad.
The petition before the high court calls for Section 2(1)(g) of the Act, which defines “online money games” irrespective of being a game of skill or chance; Sections 5 through 7, which effectively impose bans on activities related to operating these gaming platforms, and Section 9, which deals with the penalties for the same, to be declared as unconstitutional. It argues that these violate Articles 14, 19, 20, 21, and 301 of the Constitution while also contradicting several prior judgments of the Supreme Court and Karnataka High Court.
It also requests that the court may read safeguards with regard to the implementation of Sections 14 through 16, which deal with blocking of the platform to the public in case of violations, empowering officers to investigate offences, and the power of such officers to search and arrest without warrants in case of reasonable suspicion.
In the interim, it requests that the sections that it argues are unconstitutional be stayed with regard to online games of skill like rummy or poker.
The Act had obtained presidential assent on August 22. The Act has effectively imposed a complete ban on online gaming services that involve real money. Alongside a ban on the actual provision of such services per Section 5 of the Act, it also bars the provision of advertising and endorsement for these in Section 6, as well as Section 7’s bar on involvement in the provision of financial services and transactions with online gaming platforms where real money is involved.
The law also has stringent provisions in case it is violated; engaging in offering an online gaming service with money can attract a prison sentence of up to three years along with a fine of Rs 1 crore, with a similar penalty applying for those who violate the stipulations against supporting these platforms via financial transactions. Advertising these platforms can attract a fine of Rs 50 lakh and/or a sentence of up to two years.
The law does not discriminate between “games of skill” and “games of chance” when it comes to the bar on gaming services with real money. Courts have previously sided against blanket bans on online gaming where “games of skill” are concerned.
In 2022, a division bench of the Karnataka High Court consisting of Chief Justice Ritu Raj Awasthi and Justice Krishna Dixit had ruled that portions of the Karnataka Police (Amendment) Act, 2021 were unconstitutional as games of skill were also affected. It was observed at the time that they would fall into the ambit of games of skill and would therefore be under the trades envisioned under Article 19 (1)(g) of the Constitution.