Confederation of All India Traders ( CAIT), the powerful trade body, that represents 8 crore traders and over 40,000 trade associations, said that a proposed bill in the Karnataka assembly to ban online gaming, will hurt the Indian startup sector, the Indian gaming and animation industry and millions of Indian gamers and esports players.

The Karnataka Police (Amendment) Bill, 2021 was tabled in the Karnataka assembly on 17th September. The bill is expected to be discussed in the Karnataka legislative assembly this week. While this bill proposes to ban online gambling, the bill has also introduced a clause that will ban all online games of skill. This will affect Indian startups like Dream11, Nazara, MPL, Games 24*7, and Paytm First Games. According to the data platform Tracxn, there are 623 gaming startups in India.

In a letter addressed to Basavaraj Bommai, the Chief Minister of Karnataka, the National Secretary General of CAIT, Praveen Khandelwal said: “Unfortunately, the Karnataka bill does not distinguish between a game of skill and a game of chance. Game of chance is pure gambling and should be rightfully banned. However, by including games of skill in the ambit of the bill, it has not only gone against established jurisprudence but threatens the thriving Indian gaming startup sector.

“The gaming startup sector is the pride of India. Many of these homegrown startups have carried the Indian flag across the world by launching operations in various countries. Bills such as these will end up stifling innovation and enterprise shown by these startup and discourage Indian developers and help Chinese and other foreign companies profit at India’s expense.”

CAIT also said that this bill will end up encouraging illegal offshore gambling and betting apps that operate in the online grey market. Thousands of common Indians have lost their life savings to these illegal casino apps. In August 2020, the Hyderabad police busted an online gambling racket involving a Chinese firm called Beijing T Power Company. This Chinese company had floated several online gambling platforms and done illegal transactions worth Rs. 1100 crores.

“Once the bill bans online skill gaming, law abiding Indian companies will exit the market and users will turn to harmful offshore and betting apps,” Khandelwal added

CAIT also batted for a “strong and stable regulatory mechanism for online skill games” and requested the Karnataka government to relook at the bill, keeping in mind the interests of Indian companies and developers.