Karnataka's IT Minister Criticizes Centre's Ban on Real Money Gaming

Bengaluru, Aug 20 (PTI) - In a significant development, Karnataka's IT and Biotechnology Minister, Priyank Kharge, on Wednesday voiced strong criticism against the Centre's sweeping ban on online real money gaming (RMG). Describing the move as "another masterstroke by Modi Sarkar in bad policy making," Kharge expressed his concerns over the detrimental impact on state revenues, job opportunities, and investments.

The Minister, who is also the son of Congress president Mallikarjun Kharge, highlighted that India's earnings from GST and income tax via online RMG stand at Rs 20,000 crore annually. This revenue stream is now jeopardized due to the ban, he noted in a post on 'X'.

Kharge further emphasized the potential risk to over 2,000 gaming startups and more than two lakh jobs across IT, AI, and design sectors. He warned that the ban could stifle India's gaming talent pool and push entrepreneurs to move abroad. Moreover, he pointed out that the Rs 23,000 crore of foreign direct investment witnessed in the last five years could dwindle, and about Rs 7,000 crore invested annually in advertisements, data centers, sponsorships, and cyber security might disappear overnight.

Highlighting the unintended consequences, Kharge noted that such bans do not mitigate addiction or suicides but instead encourage users to flock to unregulated offshore platforms worth Rs 8.2 lakh crore annually, where government oversight is absent.

"Security risks are rampant with unregulated sites, which facilitate money laundering, terror financing, and data theft," he warned, citing alerts from FATF and Rashtriya Raksha University regarding these issues. Kharge also questioned the urgency of the ban while the Supreme Court is still deliberating whether the Centre or states have the jurisdiction to regulate online gaming.

He contended that prohibition is not the solution, advocating instead for the regulation of skill-based platforms, adherence to IT Rules, 2021, and whitelisting of legitimate operators.

Kharge argued that a balanced regulatory framework would support jobs, revenue generation, ensure user safety, bolster national security, and foster global innovation. He cautioned that a blanket ban would not only cause revenue loss but also lead to illegal markets that might threaten national security while hampering innovation. "Regulation is the way forward," he affirmed.

In related news, the Union Cabinet cleared a proposed online gaming bill on Tuesday. The bill bans online money gaming and related advertisements, prescribing penalties such as imprisonment or fines, or both, for violations, distinguishing these games from eSports or online social games.

The bill simultaneously seeks to promote eSports and online social games, acknowledging that formal recognition of eSports could propel India into the global competitive gaming landscape. This shift is expected to spur innovation, create opportunities for the Indian startup ecosystem, and establish the country as a significant hub for game development.

Under the proposed legislation, individuals offering online money gaming services in violation of its provisions could face imprisonment of up to three years or a fine up to Rs 1 crore, or both. Advertisers flouting the rules could be imprisoned for up to two years and/or fined up to Rs 50 lakh. Additionally, those involved in transactions or fund authorizations violating the rules could face up to three years of imprisonment or a fine reaching Rs 1 crore, or both.

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