The recent Karnataka High Court order setting aside the state law criminalising playing or facilitating online games was in consonance with similar judgments delivered by the Madras and Kerala High Courts last year, and with the Supreme Court’s jurisprudence on the matter, writes NIKHIL PARIKSHITH.
THE Karnataka High Court has recently in a comprehensive judgement dated February 14 struck down substantive provisions of the Karnataka Police (Amendment) Bill, 2021 (published on October 5 last year), whereby the Karnataka Police Act, 1963 had been amended, as being ultra vires the Constitution.
This decision of the Karnataka High Court comes in the aftermath of two comprehensive decisions of the High Courts of Madras (delivered on August 3, 2021) and Kerala (delivered on September 27, 2021), in which similar state-led interventions were struck down. The subject matter in these litigations was the legality of “online gaming”, in particular “online games of skill” such as ‘rummy’ and ‘poker’.
What is startling about the Karnataka episode is how little the Karnataka Legislative Assembly had learnt from the decisions of the Madras and Kerala High Courts, which were delivered a few months prior to the enactment of the amendment act.
Therefore, consecutive attempts made by three states (Tamil Nadu, Kerala and now Karnataka) to ban such activities have failed to come to fruition. The reasons given by the respective High Courts in all three decisions overlap significantly, primarily because all three states adopted identical paths to ban online gaming.
Also read: Bans on skill-based online games show the pitfalls of paternalistic laws
Lessons not learnt
What is startling about the Karnataka episode is how little the Karnataka Legislative Assembly had learnt from the decisions of the Madras and Kerala High Courts, which were delivered a few months prior to the enactment of the amendment act. The lessons that the Karnataka Assembly ought to have drawn from the two contemporaneous High Court decisions are the following:
- “Games of skill” constitute a distinct class and have been judicially held to be outside the definition of ‘gambling’ or ‘gaming’ (both expressions being synonymous to each other);
- Quite simply, states under List II of the Seventh Schedule of the Constitution do not have the legislative competence to ban ‘skill’ (as opposed to chance) since skill falls outside the purview of “betting and gambling” under Entry 34 of List II (both expressions are to be construed conjunctively, as ‘betting’ takes it colour from the companion word ‘gambling’);
- A game of skill, whether played “with or without stakes”, remains a game of skill and therefore does not become a ‘gambling’ activity;
- Absent any empirical data, blanket bans are disproportionate and fail to satisfy the test of proportionality (See the Supreme Court judgments in the Modern Dental College (2016) and Aadhaar (2018) cases); and
- Games of skill, whether played ‘online’ or ‘offline’, do not metamorphosise into a game of chance (an argument which was raised by the Karnataka state government, and was outright rejected by the Karnataka High Court);
In the midst of all this litigation, there was also a competing principle at play, that is, the states’ moral notion of what is good for its people (described by the Madras High Court as “state paternalism” and ‘populism’) as opposed to individual choice and freedom. All three high courts have given primacy to individual choice in their respective decisions and disapproved of state paternalism (either explicitly or implicitly).
What did the Karnataka Amendment Bill seek to do?
The amendment bill brought about substantial and sweeping changes to the principal act. It introduced an expansive definition of ‘gaming’ by including all online games which involved all forms of wagering or betting. The definition of the term ‘wagering’ itself was widened to engulf even a game of skill involving money or otherwise (excluding horse racing, subject to certain conditions). Similarly, it expansively altered the definitions of “common gaming house”, “wagering or betting”, “instruments of gaming”, “online gaming” and ‘place”. Thus, the amendments encompassed within its fold “games of skill”, offered to users through online platforms/portals/applications, whether played with monetary stakes or not.
The jurisprudential meaning given to the expression ‘gambling’ by the Supreme Court in four previous judgments enabled the Karnataka High Court to conclude in unequivocal terms that the state legislature does not have any legislative competence over games of skill under Entry 34 of List II of the Seventh Schedule of the Constitution.
These expanded definitions were the building blocks for enhanced penal provisions in the amendment bill. The net effect of the amendment was that owners of online gaming houses, providers of online gaming facilities and players of online games, all became liable to be jailed and fined in terms of the penal provisions.
Also read: Andhra’s Gaming Law: A Setback to Liberty and Human Agency?
Past precedents predominate
The seminal decisions of the Supreme Court in Chamarbaugwalla I and II (both delivered on April 9, 1957 by a five-judge Constitution bench), K. Satyanarayana (decided on November 22, 1967 by a two-judge division bench) and K.R. Lakshmanan (decided on January 12, 1996 by a three-judge division bench), comprise six decades of jurisprudence on ‘gaming’ and ‘gambling’, and the conceptual difference that exists between a “game of chance” and a “game of skill”.
The decision in K.R. Lakshmanan encapsulates the law on the subject, which is that:
i. Competitions which “substantially depends on skill” is not ‘gambling’ and such competitions are ‘business’ activities, the protection of which is guaranteed by Article 19(1)(g) of the Constitution;
ii. ‘Gaming’ is the practice of gambling on a “game of chance”; and
iii. ‘Wagering’ or ‘betting’ on a “game of skill” would not amount to ‘gaming’.
The said principles laid down in these four seminal decisions predominate and form the foundation of the Karnataka High Court’s decision. The jurisprudential meaning given to the expression ‘gambling’ in the said decisions enabled the Karnataka High Court to conclude in unequivocal terms that the state legislature does not have any legislative competence over games of skill under Entry 34 of List II.
Online games cannot give rise to “public disorder”
The Karnataka High Court also did not countenance the state’s attempt to invoke a catalogue of entries – Entries 1 (public order), 2 (police) and 26 (trade and commerce) – in the State List/ List II to draw legislative competence over games of skill. More specifically on the “public order” line of argument of the state, the High Court quite logically held that once games of skill have been judicially held to be business activities, protected under Article 19(1)(g) of the Constitution, such activities, cannot ‘intrinsically’ give rise to any issue of “public order”.
The High Court also did not accept the plea of the state that the possible pernicious effect of online games on the younger demographic can give rise to a public order issue. Relying upon a decision authored by Justice R.F. Nariman in Banka Sneha Sheela (2021), the High Court stated that public order implies an activity which affects the public at large and therefore, individual instances that do not generate “public disorder” cannot give rise to any public order issue.
“Games of skill”: a form of “expression”
An interesting and novel facet of the Karnataka High Court decision is that it has held that playing or conceptualising games of skill are a form of ‘expression’ protected under the fundamental right to freedom of speech and expression, protected by Article 19(1)(a) of the Constitution. Relying upon foreign case laws and academic literature, the High Court observed that “given the possibilities of expression in any medium, the guarantees under Article 19 (1) & (g) and Article 21 have to be broadly construed so as to protect all forms of activities that further the self-realization of value”. [emphasis supplied]
The Court further added that while interpreting fundamental rights, it has to “identify zones in which free people can experiment and develop their personalities in terms of enhanced character and virtue without causing excessive, immediate or discernible harm to others”. To digress a bit, these observations sum up in some way as to why the ‘Wordle’ phenomenon has taken over the internet, and how art and expression can take unique shape and form.
The High Court stated that public order implies an activity which affects the public at large and therefore, individual instances that do not generate “public disorder” cannot give rise to any public order issue.
Also read: Are Betting Games Based on Cricket and Fantasy League Games Nothing but a Source of Revenues for the Central Government?
Scare tactics employed by Karnataka, backed by no research or empirical data
To justify the blanket ban on online gaming, the state government, before the Karnataka High Court, vehemently made rhetorical arguments on the menace of online gaming, which according to the state, posed a deleterious effect on societal interests. However, the High Court was extremely circumspect while dealing with such scare tactics. The Court noted that there was a need for a more comprehensive and scientific understanding of behavioural addictions and disorders. Therefore before resorting to a statutory embargo, the state ought to have undertaken scientific study and empirical research as to the “arguable ill effects of online games specific to socio-economic & cultural conditions in the State.”
An interesting and novel facet of the Karnataka High Court decision is that it has held that playing or conceptualising games of skill are a form of ‘expression’ protected under the fundamental right to freedom of speech and expression, protected by Article 19(1)(a) of the Constitution.
Absent any empirical research, the High Court was of the view that the state had failed to satisfy the “proportionality test”.
Despite three High Courts unequivocally upholding the legality of online games and in particular games of skill, a new chapter of this long drawn saga will shortly open before the Supreme Court. The Tamil Nadu government has already filed a special leave petition against the Madras High Court decision and the Karnataka government has made it clear that it shall be approaching the Supreme Court against the decision of the Karnataka High Court. It, however, remains unclear how these states will be able to overcome six decades of Supreme Court jurisprudence which is heavily loaded against them when they commence their appeals before the Supreme Court.
(Nikhil Parikshith is an Advocate-on-Record at the Supreme Court of India. The views expressed are personal.)