Recently Karnataka, a state in the southwestern region of India, has banned online gambling and related activities in the state. Although the state was a hub of online gamers and gaming startups, the ban may have only a slight impact on the online gaming market in India.
Different state governments in India have different perspectives towards online gambling and casinos. While states like Goa and Sikkim have legalized gambling within their jurisdictions, there are states such as Karnataka with a complete ban on online gambling and casinos. However, there has not been any significant impact on the casinos and gambling sites operating in other Indian states.
We spoke to experts from casinofox and learned that online skill-based games have been a key factor in the growth of the online gaming industry. In fact, during the pandemic, when most of the businesses were badly affected, the online gaming industry showed impressive growth.
Since then, the industry has been flourishing and generating a whopping amount of revenue. While many other countries are accepting and legalizing this high revenue-generating market, India still has some unclear laws and regulations.
Even though the country has vague laws, many skill-based gaming platforms are operating in India. The recent ban by the Karnataka government had put gaming companies into a dilemma and fear that the ban would affect them badly.
However, online casinos like betshah have shown impressive growth and are expected to show 3x growth in the upcoming years. Let us understand more about the gambling laws in Karnataka and why the ban has no impact on online casinos and the gambling industry.
Karnataka’s Ban on Online Gambling And Casinos
In September 2021, the Karnataka government passed a bill that says online games of chance will be banned in the state. This includes banning the shelters of gaming operations, managing such games and activities, and participating in online games of chance.
According to the bill, these activities are cognizable and non-bailable offenses. As per Karnataka Police Act 2021, anyone caught gambling will be subjected to imprisonment of up to 3 years and a fine of up to INR 1 lakh.
Now because of the ban, gaming companies like Dream11 were in a dilemma that their services and products come under the category of “games of skill,” not in “games of chance.” For our readers who don’t know, games of skill are based on some mental or physical expertise.
Games like Rummy, Horse racing, and chess come under the category of “games of skill.” On the other hand, games that are based on random factors or luck are considered “games of chance.” Card games and Rolling dice come under this category of games.
So, the major reason for debate was which games, according to the Karnataka government, come under the category of “games of chance” that they have banned in the state. As per the Karnataka Police Act 2021, any form of gaming that involves wagering or betting activities is banned in the state. It also prohibits the use of electronic means, virtual currency, and electronic transfer of funds related to the games of chance.
Similar to Karnataka’s move on banning online casino games, Andhra Pradesh has also declared that the state will never regulate the online casino and gambling industry within its jurisdiction.
Online Gaming Startups Stopped Offering Their Products in Karnataka
When the Karnataka government passed the bill, many gaming startups were afraid of their operation in the state. This is because Karnataka is a hub of online gaming startups, and many gaming companies have made Karnataka their headquarters.
Not just the state, there have been many incidents where common people have filed petitions against the celebrities who use their status to entice the public towards gambling and betting activities by endorsing gaming platforms such as MPL.
While gaming companies still defend their operations as they are skill-based and do not go against the law, some of the companies had to stop offering their products in the state of Karnataka. Contrary to what the Karnataka government says, the Supreme Court of India has dismissed the petitions that demand a ban on fantasy sports platforms like Dream11 as it comes under the category “games of skill.”
Keeping aside what the law and ban say, online gaming startups and companies are demanding a regulatory framework for the online gaming industry in the country. The reason behind every Indian state having different laws and regulations for online gambling is because there is no framework at the central level. Overall, the gaming industry in India wishes to be regulated at the central level rather than getting banned in different states.
No Impact of Karnataka Ban on Online Casinos in India
There is no doubt that the Indian online gambling industry can be a cash cow for the government. Despite getting banned in many states, the gambling market is still on the rise in India. The current worth of the Indian online gambling market is around $930 million and is expected to grow three times in 2021.
There are many reasons behind this impressive growth. One of the important factors is the indulgence of the youngest population of the country in online gambling activities.
The availability of the internet, smartphones, and different technological devices have made it easier for people to access online games. People from different regions in India can visit online casinos and gambling platforms and play their favorite games. The gaming sites offer many India-specific services and games to gambling enthusiasts in India.
As per the recent data and statistics, there are currently over 500 million internet users and over 750 million smartphone users in India. All of these factors combined together have resulted in the exponential growth of the online gambling market in the country.
Legal Status of Online Gambling And Casino Sites in India
The legal framework around online gambling and casinos is quite vague and complex in India. The legality of online gambling and casinos in India varies from one state to another. It is not clear whether the gambling industry is regulated at the state level or at the national level.
If we talk about the national-level laws and regulations, the story goes back to the British era. India has only one law that governs gambling-related activities at the national level.
In 1867, the government launched The Public Gambling Act, according to which all forms of gambling and betting-related activities are prohibited in India. However, the law was devised in a time when there was no such thing called “online gambling” or “online casinos.”
This is why many people believe that the law does not apply to online casinos and online gambling. Since then, the government has not thought of devising another law for online gambling-related activities, which has led the industry into a grey area.
Overall, India lacks an adequate regulatory framework to monitor the online gambling activities in the country. In the Indian states where gambling is an illegal activity, the government has not ever prosecuted someone for playing at an online casino or online gambling site.
There are only a few states in India that have a legit law governing gambling in their jurisdiction. For example, Sikkim has cut-and-clear laws and regulations for gambling-related activities. As per the Sikkim Online Gaming Act of 2008, residents can enjoy playing different casino games at online casinos and gambling sites.
It is quite known to all that despite India’s confusing laws and regulations around online gambling; the industry is still growing at a fast pace. However, the government can also benefit from it, like many other countries that have legalized online gambling. If India ever legalizes online gambling and casino sites, the economy will surely benefit from the huge revenues of the gambling industry.
Currently, the Indian economy has no profit from the gambling industry, and the revenues go to the offshore casino and gambling companies that are operating in India.
Aside from the revenue perspective, legalizing gambling and betting can actually safeguard the security and privacy of Indian gamblers. Talking about the safety of players, the main purpose of banning online casinos in Karnataka was to save residents from any crime or illegal activities related to gambling.
When the Karnataka government banned online casino games, many people thought the move would affect the overall industry. This is because a large number of casino and gambling startups are based in Karnataka. These companies not only provide gaming opportunities to players but also employ thousands of people.
Online gaming startups have also attracted many investors from different regions of the world. These companies were hence stressed due to the ban in the state that was their hub of operations. However, there has not been any significant effect of this ban on the industry. The online gambling and casino market in India is still expected to triple its growth in the upcoming year of 2022.
On a more positive note, similar to Goa and Sikkim, many other Indian states have realized the potential of the online gaming market and may regulate such activities in the future. And, if one state in India legalizes online casinos and gambling sites, many other states will also follow the example.
This could have a great impact on the industry and will surely contribute a whopping amount of revenue to the state’s economy. The only thing that states in India need to do is embrace the potential and future of the online gambling industry by leaving the past behind because online gambling and casino sites don't have the same repercussions as land-based casinos.
This article was written in cooperation with Betshah