Karnataka Gaming Bill May Hurt Indian Startups

1:22 PM, Friday, November 19th, 2021

Gaming BillBengaluru :  When you think about Karnataka or its capital city Bangalore, the first images that come to mind are that of the IT industry and the growing startup ecosystem.

According to an expert report, Bangalore ranks 23rd among the world’s most favorable ecosystems to build a successful startup. Indeed, Bangalore is aptly called the Silicon Valley of India.

This has led to Bangalore becoming the home of hundreds, if not thousands of startups in India that work in a wide variety of different industries. One such industry is the gaming industry.

Recently, many gaming startups have emerged in India. In fact, according to a report by Traxn, India is home to a total of 623 gaming startups.

However, a recent bill passed by the Karnataka State government may threaten the growth of the gaming startup ecosystem in India by making it illegal for gaming startups to operate within the state. Here’s what that law is proposing:

The New Karnataka Gaming Bill Explained
According to the Karnataka Police Bill 2021, all online games involving any exchange of money or virtual currency are banned in the state.

The first offence can lead to 6 months in prison and a cash fine of Rs 10,000. The second offence leads to one year of prison and a fine of Rs 15,000.

In case of a third offence, the offender can be subject to 18 months in prison and a fine of Rs 20,000. Individuals or organizations aiding such online activities will also be punished.

A spokesperson of the Karnataka government said that the law was enforced in the wake of rising cases of cyber crimes in the state.
The Bill Will Negatively Impact Indian Startups

According to The Confederation of All India Traders (CAIT), the effects of the new bill will have a significant impact on the gaming startup scene in India.

In a recent letter by the CAIT to the Karnataka Chief Minister, the organisation mentions that the amendment threatens the growing Indian gaming startup industry.

While CAIT is in support of placing a ban on games of chance, it believes that betting on games of skill must be permitted.

The Karnataka bill does not distinguish between games of skill and games of chance. Furthermore, the inclusion of games of skill in the bill goes against the established precedence.

CAIT also calls out that such bills stifle the growth and innovation shown by Indian gaming startups. The bill could also discourage several Indian developers and benefit China and foreign companies at the expense of India’s economy.

The budding animation industry in India also fears a decline in animation jobs due to the new bill.

Gaming Industry Advocates Speak Out Against the Bill
Other industry leaders within the gaming sector have come out in full force against the bill which they have dubbed “detrimental to the Indian gaming industry”.

According to Mr. Tomesh Kulkarni, Chief Editor of MyBetting.in and a renowned name in the gaming industry: “the ban will negatively affect Indian startups like Dream11, Nazara, MPL, Paytm First Games, and others.”

“Furthermore, the bill will not achieve its intended purpose of curtailing online gaming in India, but will simply encourage illegal gambling venues, or push players to use international betting sites.

“For this reason, we encourage the government of Karnataka to seriously consider the impact of this bill.”

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