No betting on chance in Karnataka govt's real-money gaming playbook

The Karnataka government has released a draft Bill proposing a ban on all forms of online betting, gambling, and games of chance, as the state moves to tighten oversight of the fast-growing real-money gaming (RMG) sector. A copy of the draft Bill has been reviewed by Business Standard.

 

According to the draft, the use of real money, tokens, virtual currency, or electronic funds for online betting or wagering is also prohibited. Games of skill shall, however, “be exempt from this prohibition, subject to regulation and licensing”, the draft Bill said.

 

The state government will determine, from time to time, what constitutes a game of skill or a game of chance. This will be based on judicial precedents, according to the draft. Karnataka joins a growing list of states looking to regulate the online gaming sector.

 

The Bill proposes the formation of a Karnataka Online Gaming and Betting Regulatory Authority, comprising a chairperson and three members — experts in information technology, finance, and social welfare — appointed by the state government.

 

The authority will be empo­wered to distinguish between games of skill and chance based on judicial precedents and industry standards, issue licences to operators of skill-based platforms, monitor and investigate unregistered platforms and illegal betting activity, and conduct public awareness campaigns on the risks of online betting. The gaming industry welcomed the draft and called it a “welcome step”. 

 

“At E-Gaming Federation (EGF), we have consistently advocated for a clear policy distinction between games of skill and games of chance, as this is foundational to ensuring user safeguards, enabling responsible innovation, and attracting sustained investment into the sector,” said Anuraag Saxena, chief executive officer, EGF. The proposal to incentivise whistle-blower reports, he added, signalled a strong intent to dismantle illegal operations, potentially serving as the cornerstone for a national whitelisting framework for the online gaming ecosystem. The state’s draft comes amid ongoing recommendations by RMG associations to the central government to set up a single, centralised regulator for the sector. Apart from Karnataka, Tamil Nadu’s Online Gaming Authority was among the first state-level bodies empowered to regulate real-money games and enforce local rules. Industry represe­ntatives, however, believe state-specific rules could complicate compliance and allow offshore operators to thrive.

 

“Different rules across states may cause a compliance burden for companies. Instead, one uniform regulation should govern the sector — including whitelisting legitimate operators — which can be enforced either directly through the Ministry of Electronics and Information Technology (Meity) or via self-regulatory bodies under Meity,” said an industry official.

 

In the digital gaming world, real-money games refer to skill-based formats such as rummy, poker, or fantasy sports, where players stake money to win cash rewards. The push for central regulation comes at a time when the Madras High Court upheld Tamil Nadu’s curbs on real-money games such as rummy and poker, including time restrictions on when these games can be played. 

In June, the Allahabad HC directed the UP government to form a committee to examine the need for regulation of online gaming and betting in the state. 

 

States draw lines in the sand

 

Tamil Nadu: Regulator in place; curbs on real-money games with time limits

 

Karnataka: May introduce licensing and regulatory framework this year

 

Andhra Pradesh, Telangana: Blanket ban on real-money gaming

 

Maharashtra: Considering a licensing regime