Karnataka to establish ‘regulatory authority’ for online gaming and betting

BENGALURU: In a major move aimed at curbing the growing menace of unregulated online betting and gambling, the Karnataka govt has proposed to establish a dedicated “Karnataka Online Gaming and Betting Regulatory Authority” through a new legislation titled ‘The Karnataka Police (Amendment) Bill - 2025’.

The Bill, to be tabled in the coming legislature session, seeks to overhaul the regulatory framework governing online gaming and introduces stringent penalties for operators of illegal online betting platforms. The draft bill proposes outright ban all forms of online betting, wagering, or gambling involving ‘“Games of Chance” including those using money, tokens, virtual currency, or electronic funds. However, “Games of Skill’ will be exempted, but regulated and licensed.

The draft bill clearly defines “Game of Chance,” “Game of Skill,” “Online Betting,” and “Unregistered Platform” to distinguish between legal and illegal activities. “Game of Chance” refers to any game, contest, or online gambling where the outcome is predominantly determined by luck, randomness or uncertainty. “Game of Skill” means any game, contest, or activity where the outcome is determined by the skill, knowledge, training, or expertise of the participant.

The proposed regulatory authority will distinguish between ‘games of skill’ and ‘games of chance’ based on judicial precedents and will issue licenses only to operators of skill-based gaming platforms. Licenses will be issued for three years and will be renewed based on compliance levels, the bill stated. Operators of illegal platforms will face imprisonment up to three years and penalties up to Rs one lakh. Promoters or advertisers aiding such platforms can face up to six months in jail and fines up to Rs 10,000.The regulatory mechanism has been mooted at a time when Karnataka has emerged as one of the major gaming hubs in the country. According to latest gaming reports, India’s skill-based online gaming sector is valued at around $4 billion, contributing approximately $1.44 billion (Rs 12,000 crore) in taxes annually. Karnataka accounts for about 25 percent of the Indian online gaming market, generating around Rs 1,350 crore in annual taxes, and its gaming market poised for rapid growth in the next five years.The regulatory authority will be headed by a chairperson appointed by the state govt with experience in law, public administration or technology and will have three other experts drawn from fields of information technology, finance and social welfare. The bill empowers the authority to issue cease-and-desist orders to unregistered platforms and individuals involved in illegal betting, to impose civil penalties (in addition to criminal penalties) up to Rs 5 lakh five lakh for repeated violations and to conduct searches, seizures, and audits of premises, servers, and records of suspected illegal operators, subject to a warrant from a competent court.The authority will establish a helpline and support mechanisms for individuals affected by betting-related addiction or financial distress. The licensed operators are mandated to maintain five-year records of all transactions and report all suspicious transactions within 48 hours to authorities.The bill has also proposed insertion of a new Chapter VIIA into the Karnataka Police Act -1963, devoted entirely to the regulation of online betting and gaming.