Karnataka HC to hear first challenge against India’s online money gaming ban

India’s first legal challenge to its new online gaming prohibition has emerged, with a real-money gaming firm taking the government to court. On Thursday, the Karnataka High Court agreed to hear a petition filed by Heads Digital Works Pvt. Ltd, challenging the constitutional validity of the new law.

The petition, seen by Mint, argues the law is unconstitutional because it fails to distinguish between games of skill and games of chance—a distinction upheld by Indian courts for decades. It contends that by equating skill-based games like rummy and poker with gambling, the law exceeds Parliament’s legislative authority, a power traditionally reserved for state governments.

The company said the ban infringes on its fundamental rights to trade, equality, and livelihood, as protected by the Indian Constitution. The court will hear the matter on 30 August.

“This abrupt action has resulted in the potential disruption of employment of 606 employees of the petitioner; and crores of rupees in investment in the petitioner company being lost overnight; but also potential loss of livelihood of over two lakh employees across the sector, and has resulted in the total loss of over ₹23,440 crore worth investments,” the petition said.

The new law bans all forms of online money gaming, casting an existential question over the sector which generated nearly $3 billion in revenue until the last fiscal. Gaming companies are now hoping for a partial strike-down of the law.

The company, which operates platforms like A23 Rummy and Poker, asked the court to temporarily block the key sections of the law and grant a protective order to prevent any enforcement action against it, its directors, or its employees while the case is pending.

The petition highlighted a long history of court rulings that recognized skill-based games as distinct from gambling. It cites a 1968 Supreme Court decision that classified rummy as a game of skill, noting that state high courts have since struck down multiple attempts to ban such games, even when played for stakes.

The petition comes as other major industry players re-evaluate their business models. Dream11, one of the industry’s largest companies, recently hosted a town hall where it alerted employees to a potential pivot away from money games toward areas like content streaming.

The petition said the government itself had favoured a self-regulatory approach and that senior leaders, including the Prime Minister and IT minister, have described online gaming as a “sunrise sector.”

However, Vaishnaw has defended the law, pointing to the social harm from addictive gaming, devious algorithms that make the player lose over the long term, and protracted engagement with the industry.

“It seems like an appropriate legal move by the gaming company to approach the Karnataka High Court, especially since the court had earlier, in 2022, struck down provisions of the Karnataka Police (Amendment) Act, 2021, which sought to ban online real-money games of skill. That ruling has not been stayed by the Supreme Court, meaning it still holds, at least in the territory of Karnataka. Once the petition is filed, the Hon’ble High court while hearing the merits, may decide to admit the petition and may issue notices to the Centre and Respondents to respond,” said Vidushpat Singhania, Managing Partner at Krida Legal.

In its petition, the company also raised concerns over the speed at which the legislation was passed. It said that the government’s claims of a link between online gaming and social harms like suicides or financial crimes are unsubstantiated by official data.

The petition also said that the law fails the proportionality test. It argues that a blanket ban is an excessive response when the industry already has multiple safeguards.

The company said it has raised money from both Indian and international investors, including well-known firms like Matrix Partners and Paragon Partners, as well as the Burman Family, who control Dabur Group. All of these investments were made legally and followed all relevant laws and regulations.

The petition further contends that the law fails the proportionality test. Existing safeguards in online skill gaming include Aadhaar-based KYC, age restrictions, deposit limits, self-exclusion tools, certified random number generators, anti-bot measures, and advertising regulations under ASCI codes.

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