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Karnataka is one of the many Indian states with a hostile attitude towards gambling. The state has explicit provisions in its own legislation, the Karnataka Police Act, 1963 to prevent gambling in the state. Several portions of this Act are similar to the archaic Public Gambling Act, 1867, of the Government of India.
That central law states that all forms of gambling are illegal in India except for horse racing. Chapter VII of the Karnataka Police Act 1963 deals with the prevention of gaming and operation of gaming houses where those found guilty face a prison term ranging from three months to a year.
According to a KPMG study, India’s betting market was worth over $60 billion. By 2015, this had grown to $150 billion per year, according to the Hindustan Times. And with a huge population of 60 million, Karnataka accounts for a significant share in this large underground market.
This is in spite of the rather stringent provisions against gambling in the state’s laws. The Prevention of Gaming chapter in the Karnataka Police Act 1963 dictates that all games of change except betting on horse racing are punishable. Games of chance include a combination of games of chance and skill.
According to KPA 1963 (ii) “… ‘game of chance’ includes a game of chance and skill combined and a pretended game of chance or of chance and skill combined, but does not include any athletic game or sport;”
There is an enormous amount of funds pumped into illegal betting while law enforcement has failed to have any impact on the illegal betting market even in Karnataka. Those who get caught are only the small fry while the kingpins go about their business with gay abandon. In rural areas, people are often arrested for wagering on cockfights under the provisions of Prevention of Gaming while millions of dollars continue to roll in cricket betting.
Horse Race Betting in Karnataka
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Betting on horse racing has been ruled as a game of skill by the Honorable Supreme Court of India since it involves many things that require knowledge and experience – like knowing horse breeds, judging the form of both the horse and the jockey’s form, the state of the track, and other factors.
And since Karnataka has its own horse racing club – the Bangalore Turf Club (BTC) – hosting a full season of thoroughbred racing, betting on horses is big business here. The BTC has the requisite licensing under the Mysore Race Course, Licensing Act, 1952 to operate totalisator betting counters.
In exchange, the government collects a tidy sum in taxes. Bookmakers are also licensed to operate by the BTC and accept wagers in cash or credit from their customers. They are directly responsible for paying taxes due to the government.
According to The Mysore Betting Tax And Race Courses Licensing (Karnataka Amendment) Act, 1974, the Government of Karnataka permitted the BTC to conduct off-course betting under a mutual arrangement with the RWITC or Royal Western India Turf Club Limited, Bombay from May 1973. The objective of this was to prevent illegal betting and help the state government and the BTC earn revenue and create employment for a large number of people. A full-fledged off-course betting centre also exists at Mangalore.
The Bangalore racecourse is one of the finest in the country that hosts a number of Grade 1 races including classic races such as the Kingfisher Derby, Colts Championship Stakes, Fillies Championship Stakes, and Bangalore St. Leger. It also hosts a number of sweepstakes races that includes the Chief Minister’s Cup and Governor’s Cup.
The other prestigious club in Karnataka is the Mysore Race Club, a three hours drive from the capital city of Bangalore. The club also hosts a number of high profile races and was the first to introduce horse racing in the state under the patronage of the rulers of Mysore.
There are three ways of betting in horse racing. A tote is a computerized form of betting where wagers are added to a pool and divided among the winners. The winning amount is derived only after the race with the government getting its share in the form of taxes. The other forms of betting are fluctuating or fixed odds and payouts with the bookmakers.
The BTC profits significantly from off-course betting, earning as much as $21,000 per day from the 217 off-course betting days in the season.
Frequent Troubles At BTC
The Bangalore Turf Club has had a long series of troubles with the government in the last decade. The lease agreement the club had for the land had ended in 2009, giving rise to a threat of eviction from the authorities. This was compounded by several prominent controversies.
In 2014, the Karnataka Government suspended racing at the club during the peak season following allegations of race rigging by the club’s stewards. A lack of evidence prevented the police from charging them while a fierce battle between government and BTC officials continued.
The government passed an order banning race-horse owners from becoming a steward in the managing committee of BTC. Stewards were also banned from betting directly or indirectly on the races. This resulted in four of the nine racing stewards having to resign from the club’s managing committee.
In 2019, further trouble arose as allegations of unpaid taxes led to investigations by the state Public Accounts Committee. The Club was accused of owing unpaid rent to the government, amounting to Rs 32 crores. The PAC recommended that the government cancel the license and shut down the club as it was functioning illegally.
But as of 2020, the Karnataka government is yet to take action against the club, citing an ongoing case in the Supreme Court. That case arose in 2009 when the Club opposed the Government’s decision to shift it from its present location to the outskirts of Bangalore city.
Betting Cricket and Other Sports
Betting on sports has always been a grey area in India, including the State of Karnataka.
While horse racing enthusiasts enjoy all the privileges of placing wagers on thoroughbred horse racing held at the Bangalore and Mysore race tracks, betting on sports like cricket is still illegal in the state. But it is still part of a thriving business worth $150 billion and more at the national level.
Cricket matches in Karnataka are mainly held at the Chinnaswamy Stadium in Bangalore where thousands of people throng to watch both international and domestic games. The stadium also hosts many of the IPL matches, with the Royal Challengers Bangalore as the home team.
The Federation of Indian Chambers of Commerce and Industry has been urging the Central Government to legalize sports betting, including cricket, which could help the government rake in millions of dollars in tax revenue. However, under the Karnataka Police Act, 1963 and Public Gambling Act, 1867, betting on cricket and any other sport remains illegal and punishable by law.
Under the Public Gambling Act of 1867 operating, assisting in the operation of and visiting a gambling house is a crime. In the case of M.J. Sivani and Others v. State of Karnataka and Others, the Supreme Court held that when an element of change is strongly preponderated, the game cannot be a game of mere skill. On the other hand, Justice Mudgal has observed that these regulations are inconsistent where betting on the skill of horses and jockeys is permitted but betting on the skill of sportsmen is prohibited.
The investigations on match-fixing allegations in the Indian Premier League (IPL) in 2013, one of the most popular cricket events held during the Indian summer has led to hundreds of bookies in the state of Karnataka going underground although they have been back to business in subsequent years of the IPL.
Apart from Bangalore and Mangalore, there are several cricket betting hubs in small cities and districts such as Hubli, Manipal, and Gulbarga, to name a few.
According to some legal experts, the Karnataka Police Act does not state anything that criminalizes the act of placing bets on athletic games and sports. The Act, in the opinion of a former advocate general, B.V. Acharya, does not apply to wagering on athletic sports or games. The Act defines ‘game of chance’ as any game that requires a combination of skill and chance and does not mention athletic sports and games, which according to some legal experts makes sports betting in Karnataka legal.
In the opinion of the former additional advocate general, K. M. Nataraj, sports is defined as activities that involve skill and physical exertion where teams or individuals compete against each other. Therefore, all forms of sports betting including wagers on cricket, tennis, football and other sports are legal in Karnataka as long as betting is done within the jurisdiction of the state. However, betting can only be done on the final result.
However, the matter gets more complex when it comes to betting on whether a ball in cricket could result in a four, six, or dismissal of a player, or betting on which player would score a goal in the first half of a football match since it involves a combination of chance and skill.
According to the current law in India and the Information Technology Act, online betting can be prohibited under the same law and the guilty can be prosecuted. However, there are loopholes that allow online betting in many sports in India to continue. And Karnataka does not have any specific legal provisions targeting online betting sites.
Proponents of online betting argue that legalizing online sports betting in India can only result in additional revenue to help build better sports facilities and infrastructure in the country. Outright banning can only result in the proliferation of illegal betting.
Lottery in Karnataka
Ironically, the Public Gambling Act, 1867 excludes horse racing and lottery from ‘gaming’. However, the State of Karnataka was among the numerous states to eventually ban all forms of lottery gaming in the 2000s.
Under the Lottery Regulation Act of 1998, state governments were given the powers to make rules.
The ban resulted in a ‘mobile lottery’ racket being discovered by the State Excise and Lottery Enforcement Cell. A gang was busted in the town of Ramnagaram for running a racket where bets were placed on a specific number and prizes distributed through a physical network and the internet.
One of the main reasons for the Karnataka ban was the introduction of single-digit lottery which had an adverse impact on the labour and lower middle class who spent their wages on buying lottery tickets. The state ban on lotteries was upheld by the High Court of Karnataka in 2007.
Subsequent state governments have not shown any interest in renewing the lottery. This is despite widespread recognition that the ban is a farce, due to the presence of numerous online lotteries in the state. News media reported in 2016 that the state was losing as much as Rs 10,000 crore annually to unregulated lotteries in Karnataka.
Legal experts say the businesses took advantage of a loophole in Section 5 of the Lottery Regulation Act which bans all kinds of lotteries operated through vending machines and not through the internet or mobile networks. The law enforcement agencies expressed their inability to book anyone due to the loophole although they have been advised to book cases under Section 78(3) of the Karnataka Police Act, 1963. Legal experts say that this doesn’t carry sufficient weight to deal with this form of illegal betting.
In 2017, the Karnataka State Lottery Dealers association petitioned the government to restart lotteries following the Kerala system. In that neighbouring state, the lottery is legal and has flourished under the strict control of the Kerala State Government. But the Karnataka Government has not shown any concrete interest in this proposal, despite the ban affecting the livelihood of nearly 800,000 lottery sellers and agents.
Flush, Rummy, Poker and other Card Games
Karnataka has a huge following when it comes to poker, rummy and other card games, which is evident by the number of poker and rummy clubs in the city of Bangalore alone.
A number of poker rooms have mushroomed across the city riding high on a 2013 judgment by the Karnataka High Court which declared poker in India a game of skill and not a game of chance. Many who have played the online version have been attracted to these poker rooms located across the city of Bangalore.
In Indian Poker Association v. State of Karnataka, (WP Nos. 39167 to 39169 of 2013), the Karnataka High Court ruled that no license was required by recreational clubs that offer poker and that the game could be freely permitted.
Justice AS Bopanna observed that if played as a game of skill, poker does not require a license while the petitioner in the case was entitled to conduct such games in accordance with the law. The court order also mandated that the police refrain from interfering with the running of lawful activities by the club.
With this order, poker is permitted for ‘recreational purposes’ and the legality of it being played for profit or stakes is still unclear. However, this decision opened the gates for offline and online poker in Karnataka. The popularity of poker clubs in cities like Bangalore is evidence that the state is poised to benefit from a legalized gambling market with the potential to funnel millions of dollars in revenue.
Rummy enthusiasts in cities like Bangalore also received a fillip from the landmark case of MJ Shivani v. State of Karnataka (1995), in which the Supreme Court determined that Rummy was game of skill and not gambling. The decision was based on State of Andhra Pradesh v. K. Satyanarayana in which the court ruled that Rummy required a certain amount of skill since the cards had to be memorized and were not entirely a game of chance.
The Karnataka High Court dismissed charges against 19 people who were arrested for playing rummy. Incidentally, the city of Bangalore went on to host the World Rummy Tournament (WRT) in May 2012 at The Bangalore City Institute with the grand finale hosted in Goa where the winner took home a purse worth approximately $166,000.
According to a report, Bangalore police did cut a sorry figure in December 2013 when they shut down hundreds of sports and recreation clubs. However, their prosecutors argued under an outdated order following which the clubs were allowed by the court to resume business. Apparently, the government’s advocates were behind the times on the law and did not refer to the relevant order where the High Court had ruled that licenses were not necessary to run poker and rummy.
Several cases were thrown out the court with as many as seven on one day. Subsequently, the Karnataka Government passed an order on September 12, 2013, making it mandatory for clubs that offer games of chance and gaming to register under the Karnataka Co-operative Societies Act of 1959 or Karnataka Societies Registration Act of 1960.
But the trouble did not stop for the clubs in Bangalore. In 2018, the City police raided and closed over 500 clubs across Bangalore, for hosting “illegal” high stakes card games. But the crackdown did not impact gambling activity, as players and organizers moved underground, hosting discreet house parties outside city limits and in rural areas.
As for online gambling on rummy, poker, and other card games, cities like Bangalore have a thriving online gaming scene. The Karnataka state does not have any specific laws targeting online gambling.
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And since online gambling is not limited to specific jurisdictions, implementing any online gaming law is a daunting task since different states in India like Karnataka, Tamil Nadu and Goa and High Courts adopt different laws. Goa from all the Indian states it has been widely successful allowing gambling to some extent. Read more on Goa state laws here.
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Even countries like the USA are also struggling to bring about complete legalization on several gaming laws. There is no doubt that the bets are high in the Indian gaming market and stakes are even higher. It would be interesting to see how states like Karnataka are able to monetize in the rapidly growing betting market.