The Karnataka High Court on August 30 issued notice to the Centre over gaming company Head Digital Works' plea challenging the new online gaming law that imposes a blanket ban on real-money games.
A single judge bench of Justice BM Shyam Prasad said it will hear the company's plea for interim relief on September 8.
Head Digital Works, which operates the online rummy platform A23 Rummy, had approached the Karnataka High Court on April 28, challenging the constitutional validity of the government's new online gaming law.
This is the first legal challenge to the legislation, which was cleared by Parliament and received the President's assent a week ago.
In its petition, the Hyderabad-based company had requested a temporary stay on the enforcement of these provisions to the extent they cover skill-based games such as rummy and poker as well as direct the authorities to not take any coercive action or penal action against the company, its officers, and employees.
It had also requested the court to strike down key sections of the law related to the prohibition of online money games in the country, arguing that they are beyond the legislative competence of the Centre.
During the hearing on August 30, senior counsel C. Aryama Sundaram, representing the petitioner, asked the court to request the government not to immediately notify the law or at least inform the petitioners a week in advance before bringing it into force.
"If this industry is closed overnight, there would be a huge backlash... we are talking about employment of lakhs of people," Sundaram argued.
The request was met with resistance from Solicitor General Tushar Mehta, who stated that once the legislation has received the President's assent, notifying is a "constitutional legislative function".
"In a Constitutional scheme of things, when Parliament passes a legislation, the requirement of the assent has been satisfied indisputably. Merely because one particular individual is aggrieved, it would not be desirable that we inform him in advance that we are going to implement the law. The law will have to be implemented because that is the mandate of the Constitution," Mehta stated.
The new law prohibits online money games, where a user makes a deposit, directly or indirectly, with the expectation of earning winnings on that deposit.
After the Parliament gave its nod to the bill on August 22, real-money gaming companies suspended contests and games involving money on their platforms, though they continue to offer free-to-play options.
Several companies, including Dream11 parent Dream Sports, Gameskraft, Mobile Premier League (MPL), Zupee, and Pokerbaazi parent firm Moonshine Technology, have decided not to challenge the law.
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