Karnataka is planning to introduce new laws that will ban gambling but allow skill-based games to continue operating in the state. This approach follows a similar model already used in Chhattisgarh.
"We are considering models that create a better environment for the gaming industry, including evaluating the Chhattisgarh model," said Karnataka IT-BT Minister Priyank Kharge during an event in Bengaluru on March 6, as reported by Moneycontrol.
The minister explained that they don't want to harm the gaming industry, which itself is asking for proper rules. "The idea is that we cannot kill the industry—even the industry itself wants regulation. We are working to ensure that, with their help, we can create a framework that fosters innovation, sustains the industry, and builds skills while also protecting people from losing money to fraudulent gaming sites," Kharge added.
Chhattisgarh's online gambling law, which began in March 2023, only applies to 'games of chance' where winning depends mostly on luck. Games that require skill, knowledge, training, and experience are not affected by the law.
Before drafting the bill, the government is talking with many departments. Kharge noted, "We are in discussions with Law and Home departments since this issue spans multiple sectors. Gaming and innovation fall under IT, so I must take the lead in educating them about its nuances. There is a fine line between a game of chance and a game of skill, and we must tread carefully."
This isn't Karnataka's first attempt at regulating online gaming. In 2021, the state tried to ban all forms of online gambling through the Karnataka Police (Amendment) Bill. That bill would have prohibited all betting and gambling except lottery and horse racing. However, it didn't distinguish between games of skill and games of chance, which meant skill-based gaming companies would also be banned.
In February 2022, the Karnataka High Court struck down most of the bill's provisions, calling them unconstitutional. The state challenged this decision in the Supreme Court, which issued notices to skill-based gaming companies. The case is still pending in the Supreme Court.
Karnataka's move comes at a time when India still lacks a uniform national framework for regulating the rapidly growing gaming sector. According to a report by gaming venture fund Lumikai, the Indian gaming industry generated revenues of $3.8 billion for the financial year 2024, growing 22.6 percent from $3.1 billion in the previous year. About $2.4 billion of this revenue came from real-money gaming.
Many gaming companies have been pushing for uniform central regulations to avoid the confusion of dealing with different state laws that often disrupt their operations. For example, Tamil Nadu recently introduced state-specific rules with time and usage restrictions on real-money gaming platforms. These rules are now being challenged in court by several gaming companies and an esports association.
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