Online Gaming: Its No Longer A Skill Vs Chance Debate, Karnataka Insists

The game of 'skill' vs 'chance' debate is now several decades old. Most anti-gambling laws exempt games which involves skill. Disputes around whether or not a game involves skill have also been well litigated by state governments and industry. Broadly, courts have concluded that games like rummy, poker, horse racing, online chess, etc. involve skill and hence, have given them constitutional protection, i.e. the fundamental right to carry on trade and occupation.

Just last year, the Supreme Court in Dream11's case concluded that fantasy sports, too, is a ‘game of skill'. Yet, just a month later, the company had to suspend its operations in Karnataka after the state government amended the police legislation. The government notified the Karnataka Police (Amendment) Act, 2021, banning gaming through internet and mobile apps.

In response to the most intuitive question — how can the government ban a game of skill which has got the blessing of the apex court, the Karnataka government's response is: 'If you ask wrong questions, you will only get wrong answers.'

If a person bets or risks money on a unknown event, then it is violative of the Amendment Act. The unknown result can be on a game of chance or skill.

Advocate General Prabhuling Navadgi for State Government

Advocate General of Karnataka Prabhuling Navadgi argued so while defending the amendment in the high court which recently reserved its order after two-month long hearings in the case.

The All India Gaming Federation, Federation of Indian Fantasy Sports, Mobile Premier League, Games24x7, A23, Junglee Games, Gameskraft and Pacific Games are among the petitioners who moved the high court questioning the validity of the recent amendment.

The division bench comprising Chief Justice Ritu Awasthi and Justice Krishna Dixit is likely to pronounce its judgment this month.

Also Read: Regulation Of Online Gaming: Unconstitutional Paternalism

State Cannot Ban Games Of 'Skill': Petitioners

The Karnataka Police (Amendment) Act, 2021 has banned all forms of wagering or betting, except for lottery and horse-racing.

Specifically, the amendment criminalises the following:

All forms of wagering or betting in connection with any game of 'chance'.
Wagering or betting while playing online games involving any game of 'chance' and where tokens are paid in the form of money, electronic means, virtual currency or electronic transfer of funds.
An act of risking money or betting on the unknown result of an event including on a game of 'skill'.

Violation of these provisions can result in a maximum imprisonment of three years and penalty up to Rs 1 lakh.

The petitioners mainly argued on three grounds:

State government cannot regulate games of skill.
Bringing a game of skill under the ambit of gambling is arbitrary.
In online games, players are not wagering against another person's skill.

State government cannot regulate games of skill

Appearing for Gameskraft Technologies Pvt., the parent company of 'RummyCulture', Senior Advocate Abhishek Singhvi said there is a distinction between a game of chance and a game of skill.

Game of chance alone can be regulated, to the extent of banning by state authorities. But, it has no jurisdiction to ban games of skill, argued Singhvi.

In any card game, there is an element of chance. However, it would be wrong to say this chance does not negate the fact that games like bridge or rummy are games of skill. Merely because there is an element of chance, does not make it a less skillful game.

Gameskraft's Counsel

The virtual format of a game happens to be more disciplined and transparent than its physical format, as certain noxious activities may creep in, as far as the latter is concerned, Singhvi added.

Treating a game of skill under the ambit of gambling is arbitrary

Senior Advocate Mukul Rohatgi, appearing for Federation of Indian Fantasy Sports, said the object of the Amendment Act is to curb games of chance and gambling. But, treating a game of skill under the same bracket is arbitrary and beyond the scope of law laid down by the Supreme Court, which time and again has permitted games of skill.

As per the amendment, even a game of online chess could come under its ambit, he added.

If I take this Amendment Act as it stands today, if I am playing a game of chess online and we say the winner will take away an amount, it will amount to an offence. The Act takes into its compass, activities which are not even gambling.

Counsel for Federation of Indian Fantasy Sports

In online games, players are not wagering against another person's skill.

Senior Advocate Aryama Sundaram, on behalf of All India Gaming Federation, contended that online games are only available to individuals who intend to play. The players are not wagering against another person's skill. The player will have to personally participate in the game.

The question is whether this will amount to gambling and fall under entry 34 of list 2 (betting and gambling) of the Constitution. Sundaram said it does not.

Further, a ban on online games and gambling will take place only on the day that the court says so, and not before.

Counsel for All India Gaming Federation

Gambling A Bigger Menace Than Alcohol: State Government

Defending the new law, Advocate General Prabhuling Navadgi argued on three aspects:

The amendment is a social legislation, seeking to prohibit certain activities which are injurious to public health and order.
The law does not want to ban games of skill, only gambling and betting.
Fantasy sports and online games wager on somebody else's skill.

Social legislation seeking to prohibit gambling, betting

Navadgi said that the amendment was introduced owing to a large number of money laundering cases in the guise of online gaming activities.

There was a huge betting racket going on, where people were lured into, to place their bets whenever a cricket or football match happened.

AG Navadgi

The amendment act is a social legislation. It intends to prohibit certain activities which are injurious to public health and order. And so, the legislation cannot be thrown out on the ground of legislative competence as it comes under public order, Navadgi argued.

Intent is to ban gambling and betting

According to Navadgi, betting on the outcome of a game, whether of chance or of skill, amounts to 'wagering' since the outcome is not known.

Wagering or betting, to put in simple words, is a collection of money or soliciting a bet from someone else. Risking money by soliciting or betting money on an unknown result of an event, either in money or otherwise, amounts to wagering or betting. This can be, with respect to a game of chance or skill.

AG Navadgi

Yet, the government's counsel emphasised that the intent is not to ban games of skill.

But, the moment a game of skill involves betting or gambling, then the provisions of the act are attracted. 'Ultimately what the state government intends to ban is betting or organised betting.'

To say that a game of skill is not gambling has no foundation… Online gambling is much more pernicious than alcohol.

AG Navadgi

The petitioners, he added, have asked whether the government can come up with a legislation preventing a game of skill, even if it involves money being placed.

This argument itself is misleading, said the state advocate general. There is no question of a game of chance or skill.

'This idea is built by petitioners that if I bet on a game of skill, it does not come under gambling. I do not see any foundation for that. The repository to tell what amounts to a pernicious activity should be left to the legislation.'

Fantasy sports wager on another's skill

Pointing to online fantasy games, Navadgi said that it is no game at all. When the real game is going on, a person picks up another team, so, it is not a game. 'According to us, it is just a platform for placing money. And this cannot be permitted under the Act.'

Picking out a fantasy team while the real match is going on, is not essentially skill-based, he added.