Centre petitions for reply regarding lawsuit challenging the Online Gaming Act, presented in Karnataka High Court
The Karnataka High Court is seeking the Union government's response to a plea challenging the validity of the Promotion and Regulation of Online Gaming Bill, 2025, which was passed by both Houses of the Indian Parliament and received Presidential assent on August 22. The petition, filed by Head Digital Works Private Limited, one of the largest online gaming operators, argues that the legislation effectively imposes a blanket prohibition on online gaming, infringing upon several constitutional rights.
Senior Advocates CAryama Sundaram and Dhyam Chinappa, representing Head Digital Works, have contended that the Act, now an Act, classifies online skill games such as Rummy and Poker alongside gambling, a move that could endanger investments of nearly ₹23,440 crore, including foreign capital, and undermine ongoing CSR initiatives.
The plea claims that the parliament lacks legislative competence to enact such a prohibition and that the law disregards binding Supreme Court and High Court precedents which have consistently recognized skill games as legitimate business activities protected under Article 19(1)(g).
The Promotion and Regulation of Online Gaming Act, 2025 is the first central legislation to impose a nationwide prohibition on online games played for stakes. The law criminalizes offering or playing online money games, regardless of whether they are games of skill or chance, with offenses classified as cognizable and non-bailable.
Head Digital Works, which operates the A23 platform, has moved the Karnataka High Court challenging several sections of the Act, including Sections 2(1)(g), 5, 6, 7, and 9. The company argues that these sections impose a blanket prohibition on online skill games.
Justice BM Shyam Prasad has issued notice to the Union and directed that the matter be taken up on September 8 at 2:30 PM. The petition contends that this infringes upon Articles 14, 19(1)(a), 19(1)(g), 21, and 301 of the Indian Constitution.
The Solicitor General (Tushar Mehta) and Additional Solicitor General (N Venkataraman) represented the Union of India during the hearing. Mehta stated that once the President of India has assented, notifying is a Constitutional function. However, he acknowledged that a notification of the law could be possible.
Mehta also contended that this was the first time a court would test the parliament's competence to legislate on gaming with money. The Solicitor General further argued that the Act provides for regulation and licensing of online gaming, ensuring that only legitimate operators can continue to operate.
The petition has been filed by Keystone Partners Pradeep Nayak and Sankeerth Vittal. Head Digital Works also highlights the economic impact of the law, stating that it employs over 600 staff across multiple cities, provides livelihoods to nearly two lakh people, and has paid ₹1,643 crore in GST since the inception of the tax, including ₹687 crore in 2024-25.
Sundaram submitted that a sudden closure of the industry would cause a "huge backlash" and urged the government to not notify the law until the Court has examined the matter. The company argues that the abrupt prohibition endangers investments and undermines ongoing CSR initiatives.
The Karnataka High Court hearing marks a significant development in the ongoing debate over the regulation of online gaming in India. The Court's decision could set a precedent for future legislation in the sector.
