Bhavit Sheth and Harsh Jain can breathe easily for the time being for no immediate arrest is pending on their heads for owning a business that the Supreme Court has ruled to be legitimate on several occasions. Karnataka residents, however, should be careful with their games.
Karnataka HC Extends Stay Order on Law Enforcement Action Against the Duo
The High Court of Karnataka has extended the relief provided to the creators of the online fantasy sports platform Dream11 Bhavit Sheth and Harsh Jain against arrest or other coercive action by the law enforcement authorities in the state, but investigation has been allowed to continue.
Allegedly, the duo has violated the recent amendment to the Karnataka Police Act of 1963 which was notified and came into force on October 5 this year, as per a complaint filed at the Annapoorneshwari Nagar police station on October 7. Various gaming platforms started geo-blocking access to Karnataka residents on October 6, but Dream11 and 10Cric Casino continued to accept players from the state until a few days later.
The Dream11 counsel pointed to previous rulings of the Supreme Court and argued that the Karnataka Police Act amendments are therefore not applicable to their platform. The HC single bench in the face of Justice Sreenivas Harish Kumar said the HC will rule on the applicability of the Apex Court judgment to the case after considering the matter and the arguments of the parties.
Lottery, the Most Popular Game of Chance, Remains Outside the Scope of the Prohibition
The Karnataka Police (Amendment) Bill, 2021 banned online gaming and gambling, including “any act or risking money, or otherwise on the unknown result of an event including on a game of skill” and increased custodial and financial penalties to a maximum imprisonment of three years and a maximum fine of ₹1 lakh.
Lottery is the most popular form of gambling in India and a pure game of chance by nature, but it was nevertheless expressly named as an exception to the prohibition on gaming imposed by the amended Police Act, which banned even games of skill involving transfer of money of any kind.
Lottery wagering remains outside the purview of the law together with betting on horse races, regardless if held on race courses within or outside state borders. While Karnataka is home to some of the biggest horse racing clubs in India, the state has not had its own lottery since the government-run Karnataka State Lottery was abolished back in 2007 leaving online lottery ticket purchase as the only legal option for Karnataka residents.
HC Division Bench Tasked to Rule on Bill Validity
A separate bench of the High Court of Karnataka is tasked with hearing a batch of petitions filed by numerous gaming companies, industry body All India Gaming Federation (AIGF), and gamers. challenging the constitutionality of the Amendment Bill and seeking interim stay on its effect until the petitions are resolved.
Hearings were initiated before the Diwali vacation before the single bench of Justice Justice Krishna S. Dixit. After the vacation, the case had to be taken up by a division bench led by Chief Justice Ritu Raj Awasthi as it challenged the vires of an legislature Act.
Senior Advocate Dr Abhishek Manu Singhvi opened the arguments for the petitioners saying that “There is a distinction between Game of chance and game of skill. Game of chance alone can be regulated to the point of banning by state authorities. Conversely to this, state governments have no jurisdiction to ban games of skill. This distinction has been in existence for years.”
In a further court session on November 18, Senior Advocate C. Aryama Sundaram appearing for the AIGF added that, “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 acts which are not gambling.”
Senior Advocate Sundaram also pointed out that the Karnataka Police Act originally “dealt only with gambling” and that these objects of the act have stayed valid even to this day. Nevertheless, various rulings of the Apex Court hold that if skill is involved, “it will not be gambling.” Therefore, wagering on a game of skill is not gambling, he continued.
Appearing for a petitioner who is an online gamer, Advocate S. Basavaraj pointed out that if his client downloads an application, registers themselves and plays as per their skill, they will be committing an offense under the amended sections 78 (2) and 80.