Games of skill cannot be reclassified as gambling; blanket bans on online skill-based play fail proportionality scrutiny.

The Karnataka HC examined whether the Karnataka Police (Amendment) Act, 2021 could treat online games of skill as betting and gambling, and whether its blanket prohibition on such games was constitutionally valid. It applied the settled predominance test, under which a game substantially dependent on skill does not become gambling merely because stakes are involved, and noted that police, public order and public health entries could not sustain a complete ban. The court also discussed Articles 19(1)(a), 19(1)(g), 21 and Article 14, focusing on reasonableness, proportionality, manifest arbitrariness and hostile discrimination in the statutory scheme.

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Issues: (i) Whether the Karnataka Police (Amendment) Act, 2021 was beyond legislative competence and impermissibly treated games of skill as betting and gambling; (ii) Whether the amendment violated Articles 19(1)(a), 19(1)(g) and 21 by imposing an absolute embargo on online games of skill; (iii) Whether the amendment was invalid for manifest arbitrariness and hostile discrimination under Article 14.

Issue (i): Whether the Karnataka Police (Amendment) Act, 2021 was beyond legislative competence and impermissibly treated games of skill as betting and gambling.

Analysis: The amendment expanded the statutory definitions of gaming, wagering, instruments of gaming, online gaming and place so as to include online games played with monetary stakes, including games involving skill. The existing constitutional distinction between betting and gambling on one hand and games of skill on the other had been settled through the predominance test. Under that test, a game substantially dependent on skill is not gambling, even if played for stakes. The Court held that Entry 34 of List II authorises regulation of betting and gambling, but not the conversion of skill-based games into gambling by legislative label. It also held that public order, police and public health entries could not be used to sustain a blanket prohibition on skill games.

Conclusion: The amendment was held to be beyond the permissible scope of Entry 34 and could not validly bring games of skill within the fold of betting and gambling.

Issue (ii): Whether the amendment violated Articles 19(1)(a), 19(1)(g) and 21 by imposing an absolute embargo on online games of skill.

Analysis: The Court treated online games of skill as having expressive content and business characteristics. Such activities were held to fall within the protective ambit of Articles 19(1)(a) and 19(1)(g), subject only to reasonable restriction. The amendment, however, imposed a blanket prohibition on all online games of skill played for stakes without adopting a less intrusive regulatory approach. The Court found that the State had not justified why regulation could not achieve the stated objective and that the measure was excessive in its impact on individual liberty, choice and lawful business activity. It therefore failed the test of reasonableness and proportionality.

Conclusion: The amendment was held to violate Articles 19(1)(a), 19(1)(g) and 21.

Issue (iii): Whether the amendment was invalid for manifest arbitrariness and hostile discrimination under Article 14.

Analysis: The Court found that the amendment irrationally equated games of skill with games of chance, despite long-settled jurisprudence drawing a clear distinction between the two. It also noted the internal inconsistency created by retaining the saving provision for pure games of skill while broadly redefining gaming to cover them. This overbreadth and lack of a coherent determining principle rendered the measure excessive, disproportionate and arbitrary. The selective exclusion of horse-racing while otherwise suppressing skill games further aggravated the equality concern.

Conclusion: The amendment was held to be manifestly arbitrary and violative of Article 14.

Final Conclusion: The challenged provisions were struck down and the petitioners were granted protection against interference with their online gaming business, while leaving it open to the Legislature to enact a constitutionally valid law on betting and gambling.

Ratio Decidendi: A legislative measure cannot constitutionally convert games substantially dependent on skill into gambling, and a blanket prohibition on such skill-based activity is invalid if it is excessive, disproportionate, and inconsistent with the settled distinction between games of chance and games of skill.

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