In a significant move, the Karnataka government has announced its decision to bring in a new law aimed at regulating online betting and gambling. This step comes amid growing concerns around the unregulated nature of online gaming platforms and the lack of a legal framework governing these activities.

Home Minister G Parameshwara, while speaking to the media on Wednesday, said that the government is actively working on a draft for a new bill. This draft is expected to be ready within a month and will address the growing online gaming and betting space, which currently lacks structured oversight.

Committee Formed for Drafting the Law

The minister revealed that a committee comprising senior government officials and industry stakeholders has been constituted. This panel has been assigned a one-month timeline to draft the proposed law. The decision to involve industry representatives indicates that the government is aiming for balanced and collaborative regulation that considers the concerns of all stakeholders.

"There is nothing to regulate them so far," Parameshwara said, referring to online gambling and betting platforms.

He added that during the committee’s meeting, industry representatives expressed their willingness to accept a license system and abide by regulations under the law.

Proposed Licensing System for Online Gambling

One of the key features of the upcoming law will be a licensing system for online betting and gambling platforms. The government is seeking to establish a clear legal mechanism to identify, monitor, and regulate entities offering real money games and betting services.

This move is expected to:

• Curb illegal operations

• Ensure fair play

• Protect users from financial exploitation

• Bring transparency in online gaming operations

The licensing model will likely define:

• Eligibility criteria for operators

• Compliance requirements

• Penalties for violations

• Data protection and user safety norms

Coordination Between Home and IT Ministries

The announcement came after a joint meeting chaired by Home Minister G Parameshwara and IT & BT Minister Priyank Kharge. The participation of both ministries shows that the government is taking a technological and legal approach to tackle the growing concerns in this domain.

Last month, IT Minister Priyank Kharge had indicated that the government was seriously considering placing all online gaming and real money gaming platforms under a legal framework. This aligns with national trends, where states like Tamil Nadu and Telangana have also moved to regulate or ban online gambling due to its social and financial risks.

Why This Move Matters

Online betting and gambling have grown significantly in India, especially post-pandemic with the surge in smartphone usage and high-speed internet access. However, this industry remains largely unregulated, leading to several issues including:

• Addiction among youth

• Financial losses

• Debt traps

• Data privacy concerns

• Lack of accountability from platforms

Karnataka’s attempt to create a law will serve as a blueprint for other Indian states facing similar challenges. It could also pave the way for national-level policy discussions on regulating the booming real-money gaming sector.

Key Challenges in Regulating the Sector

While the intent to regulate is clear, implementing such a law comes with challenges:

• Distinguishing games of skill from games of chance: The legal interpretation of whether a game involves more skill or luck can significantly affect its classification as gambling.

• State vs Centre Jurisdiction: Betting and gambling are state subjects, but many online platforms operate nationally or globally, making jurisdiction complex.

• User Verification and Data Security: Ensuring robust KYC mechanisms, preventing underage participation, and maintaining data privacy will require strong enforcement measures.

• Enforcement Mechanism: The government will need to equip law enforcement and cybercrime units with tools and training to monitor online platforms effectively.

Response from the Industry

Interestingly, the industry players welcomed the idea of a licensing system and regulation. Many gaming platforms have been pushing for legal clarity to operate confidently in India. A structured legal framework would allow them to:

• Operate with transparency

• Attract investor confidence

• Implement user protection tools

• Build trust with players

The Gaming Industry Association and Real Money Gaming platforms have been advocating for such a move, claiming that self-regulation has its limits, and government intervention is essential for long-term credibility.

Future of Online Gaming in Karnataka

With the draft expected in a month, Karnataka could become a model for responsible regulation of online gaming. The law is anticipated to define clear legal definitions, enforceable compliance measures, and protect consumer interests while also allowing the industry to flourish under the watchful eye of the law.

If passed and implemented effectively, this law could:

• Bring legitimacy to online platforms

• Generate revenue for the state through licensing fees

• Control illegal betting rings

• Minimise social and economic harm to citizens

Looking Ahead

As Karnataka prepares to introduce this legislation, other states and even the central government will be observing closely. The success of this law could influence broader discussions around a national framework for online gaming and gambling. In a country with over 500 million internet users, establishing guardrails around real-money online platforms has become a necessity.

This move, if implemented effectively, balances both innovation and responsibility—encouraging the growth of digital entertainment while ensuring public safety and legal compliance.

The Upcoming IPOs in this week and coming weeks are Aten Papers & Foam.

Start your Stock Market Journey and Apply in IPO by Opening Free Demat Account in Choice Broking FinX

Join our Trading with CA Abhay Telegram Channel for regular Stock Market Trading and Investment Calls by CA Abhay Varn - SEBI Registered Research Analyst.