• The Indian state of Karnataka will await a report from a high-level expert committee before deciding on a new regulatory framework for online gaming.
• The move signals a more measured, evidence-based approach, following the state’s previous attempt at an outright ban in 2021, which was struck down by the High Court.
• The expert panel, headed by senior police officer Pranab Mohanty, is expected to submit its recommendations in September 2025.
• The debate comes as India’s Supreme Court is hearing separate, but related, appeals on the legality of state-level bans, a case with national implications.
• State ministers have acknowledged the challenge of the 28% GST rate, which is reportedly driving operators to host servers offshore and complicating enforcement.

The government of Karnataka, a key technology and gaming hub in India, has confirmed it will formulate a new policy for the online gaming sector based on the findings of an expert committee. The panel is expected to deliver its recommendations in September.

Speaking in the Legislative Assembly, Home Minister G Parameshwara stated that this measured approach will guide the state’s future regulations. This marks a significant pivot from the previous government’s strategy of an outright ban, which was ultimately overturned in the courts. Parameshwara also confirmed he had met with industry representatives, who expressed their readiness to cooperate with the state in framing the new rules.

A Complex Legal Backdrop

Karnataka’s new approach is heavily influenced by its recent legal history. In 2021, the government amended the Karnataka Police Act to ban all forms of online gaming for stakes. However, in a major victory for the industry, the Karnataka High Court struck down the amendments in 2022. The court found that the law was unconstitutional as it failed to make a distinction between games of skill (which are legal) and games of chance (which states can prohibit).

That High Court ruling has since been appealed by the state government and the case remains pending before India’s Supreme Court, creating a complex legal backdrop for any new legislation.

The Political Debate: Protection vs. Pragmatism

The debate in the Assembly highlighted the different pressures facing lawmakers. Some, like BJP legislator S Suresh Kumar, criticised what they see as a lack of action and raised concerns about the aggressive marketing of online rummy platforms.

However, a more pragmatic view was offered by the state’s IT and BT Minister, Priyank Kharge. He pointed out that courts have repeatedly categorised fantasy sports as games of skill and stressed the need for a joint legal framework between the central government and the states. He also made a critical point about the impact of the national 28% GST on the industry. Kharge noted that the high tax rate is driving many platforms to host their servers overseas, which complicates enforcement against fraud and illegal betting.

Implications for the Indian Market

Karnataka’s decision to pursue an expert-led, consultative approach is a significant development, suggesting a move away from the prohibitive measures of the past. For an industry that thrives on regulatory certainty, this is a cautiously optimistic sign.

However, the future of online gaming in one of India’s most important states now rests on two key outcomes: the recommendations of the Mohanty panel in September, and the eventual verdict of the Supreme Court. The interplay between these two processes will be pivotal in shaping the regulatory landscape for years to come.