By Dr. Jaijit Bhattacharya
A fortnight ago, the Karnataka government banned online gambling in the state. The ban extended to all kinds of gambling, including “any act of risking money or otherwise on the unknown result of an event including on a game of skill”.
This demolishes the subtle difference between what used to be categorised as a “game of chance”, where the outcome is not based on anything that the players do, versus a “game of skill”, wherein, the outcome may be based on the skills of the players involved.
Karnataka is not the first government to ban online gambling. In fact, even before ban on online gambling, we had seen ban on even video games. On November 19, 1981, President Ferdinand Marcos of the Philippines, banned video games in the country through a presidential decree, making the Philippines the first nation to forbid video games.
Then again, in July 2016, the then president of the Philippines announced that he planned to stop the proliferation of online gambling in the country and revoke existing licences.
He specifically targeted Pagcor, a popular online gambling game. He blamed it for “proliferation of gambling activities all over the country.” He later changed his stance and went ahead with regulating the gaming industry. This earned him significant tax revenues.
However, a few years later, the move snowballed into a geopolitical issue with their not-so-friendly neighbour China breathing down fire on the Philippines for not banning these gambling apps as they made their way into China. President Duterte made it clear that banning of such online games would have considerable negative impact on the Philippines economy.
However, this again changed in April of this year. The Philippines banned online gambling not because they were harming the youth or the general population, but because the live streaming of the games was choking the internet.
Closer home, we saw a string of attempts to ban online gaming or gambling. The words gaming and gambling are being interchangeably used and essentially imply playing online games after betting on the outcome with real money. Starting with Andhra Pradesh and Telangana, Tamil Nadu, Odisha, Sikkim and Nagaland have also banned online games that involve any money.
The bans had different hues with some states banning all kinds of online games that involved betting. Others maintained the fine difference between game of chance and game of skill.
However, in all cases, they were driven by the need to protect ordinary citizens who were falling for the instantaneous, anywhere, anytime gambling access that were ruining lives and families leading to suicides. As a responsible government, one has to address the situation. It is not an easy issue to resolve, as the governments have been accused of interfering with the lives of people.
Businesses that provided such services and built up multi-billion-dollar valuations, have taken up cudgels against the state governments for banning online gambling. In fact, the ban of online gambling by the government of Tamil Nadu was appealed against in the Madras High Court.
Unlike the case of Telangana and Andhra Pradesh, the Tamil Nadu law did not put a blanket ban on offering online games. Online games involving skill continued to be exempted from the application of the restrictions under the Tamil Nadu Gaming Act. However, the honourable high court of Tamil Nadu struck down the Tamil Nadu Gaming Act terming it as “excessive and disproportionate” and being ultra vires.
We now see the gaming industry promptly approaching the Karnataka High Court to appeal against the recent Karnataka amendments to the Karnataka Police Act, 1963 that banned all forms of gambling in the state, including online gambling.
India’s online gaming industry is expected to reach $3 billion by 2022. In the last five years, the sector has attracted over $350 million in venture capital investments from many marquee investors such as Tiger Global, Sequoia, Raine, Tencent, Kalaari, Chryscapital and Matrix.
Naturally, the industry is not happy and those who were getting employment due to the gaming industry are also not happy. There have been many counter-arguments such as the need to restore the differentiation between the game of chance and game of skill, and to enable the game of skill to continue.
Arguments have been put forth that even trading in stock market is betting, and is akin to a game of chance. Also, online gaming is recreational and was a relief to many who were locked down in their homes during the Wuhan Covid pandemic.
So, should the state really ban online gaming in India? Should the government be telling adults what to do and what not to do when such people are not harming anyone else and minding their own business? Should governments interfere with people’s lives?
The questions do carry weight. Just like the Philippines came back to allow online gaming by providing a regulated environment, states in India are also considering regulations that can enable online gaming to operate with safeguards.
Telangana is now working on a policy to allow players to operate in the state with safeguards. However, it would not be easy to do such fine policy tight-walk in the matter, given the civil-society pressures that build up every time there is a suicide due to online gaming.
Here again is a challenge that is being posed by technology to the regulators, wherein regulatory frameworks are a step behind technology. Online gaming like many things borne out of technological developments can provide joy and also destroy people and families. It would be interesting to see how we evolve as a society to create a safe operating environment for online gaming.