Karnataka’s ban on online gaming will unintentionally hurt legitimate businesses: AIGF
All India Gaming Federation says Bill fails to make a clear distinction between games of skill and games of chance
The All India Gaming Federation (AIGF) has expressed its unhappiness with the Karnataka government’s proposed ban on online gambling on the ground that the Karnataka Police (Amendment) Compliance Act, 2021 does not make a clear distinction between games of skill and games of chance. It has sought a meeting with the Karnataka government to make a representation on behalf of the gaming industry.
Skill-based gaming cannot be compared with gambling, and banning is not a solution, argues AIGF CEO Roland Landers. It will have an adverse impact on the online gaming industry, which has been growing at a CAGR of over 25% in the last few years, and especially during the COVID-19 pandemic. “As people have been home-bound during COVID-19, online skill-based gaming has enabled them to stay connected with peers and friends. This has resulted in 1.5x growth for the sector year-on-year. Today, there are over 350 million online gamers in India, with sizable participation from Karnataka,” said Mr. Landers, adding that many are professional players who have built a career based on skill-based online gaming in the international arena.
AIGF hopes that the government of Karnataka will offer an opportunity to make a representation on behalf of the industry on matters concerning games of skill.
Start-ups in Karnataka
As per a recent All India Gaming Federation-EY report, titled ‘Online Gaming in India – The GST Conundrum’, most of the over 400 start-ups in the ecosystem are based in Karnataka.
“These start-ups need the support of the State administration. The Karnataka Police (Amendment) Compliance Act, 2021, has unintentionally prohibited these legitimate businesses. The amendment has failed to make a clear distinction between games of skill and games of chance, and this will have a severe and negative impact on this sunrise sector, which has registered over $1 billion in annual revenue and has been responsible for creation of many unicorns over the last two years,” he said.
AIGF is of the view that the regulatory framework sets a very poor precedent for other States. “Karnataka enjoys a very astute global reputation, known as a centre for future technologies and development, which has helped the Indian start-up ecosystem through a conducive policy environment. This reputation has taken a massive hit with this move towards a ban,” said Mr. Landers.
He pointed out that Nagaland, Meghalaya and some other States have formulated regulations for the gaming sector where a clear distinction has been made between games of skill and games of chance. “The Supreme Court has also supported the online skill-based gaming sector in past rulings under Article 19(1)(g) of the Indian Constitution,” he said.
Going forward, AIGF plans to bring clarity to this distinction (games of skill versus games of chance) in the interest of the expanding gaming industry.