Amidst the central government's recent enactment of the Promotion and Regulation of Online Gaming Act, 2025, which imposes a blanket ban on all categories of online money games, the Karnataka government is considering a different approach. Instead of a complete prohibition, Karnataka is proposing a regulated licensing regime for ‘games of skill’. This move comes as the state anticipates significant revenue losses due to the central ban.

Karnataka's proposed solution involves amending the Karnataka Police Act, 1963, to establish the Karnataka Online Gaming and Betting Regulatory Authority (KOGBRA). This four-member body will be responsible for overseeing real-money gaming (RMG) within the state. KOGBRA will have the power to classify games as either skill-based or chance-based. While online betting involving games of chance will be completely prohibited, skill-based games will be allowed under a strict licensing and compliance framework.

The authority will consist of a chairperson with experience in law, technology, or public administration, along with experts in IT, finance, and social welfare. KOGBRA's mandate includes issuing licenses to skill-based gaming operators, monitoring illegal platforms, coordinating with law enforcement and IT departments to block access to illegal betting services, launching public awareness campaigns on gambling-related risks, and developing compliance standards for player protection.

Under the proposed licensing regime, operators will need to adhere to rules such as Know Your Customer (KYC) and anti-money laundering checks. There will also be limits on advertising, user safeguards, and requirements for quarterly reporting. Licenses will be valid for three years and renewable. Violations will attract severe penalties, including imprisonment of up to three years and a fine of ₹1 lakh for operating illegal platforms. Aiding or promoting such platforms could result in imprisonment of up to six months and a fine of ₹10,000. The state also plans to collaborate with the IT Department and Cyber Crime Branch to block unregistered platforms across websites, apps, and digital services. Internet service providers (ISPs), search engines, and payment gateways will be required to cut access and financial links to illegal operators. The bill includes a whistleblower protection clause, offering rewards for those who help expose illegal betting networks.

Karnataka's IT-BT Minister Priyank Kharge has stated that the bill aims to ensure a fair, transparent, and responsible gaming environment, not to stifle innovation. He also highlighted that Karnataka holds 30% of the online gaming market and will lose a legal revenue stream due to the central ban on real-money games. Since 2017, Karnataka has earned ₹1,157.22 crore under the State Goods & Services Tax (SGST) from online gaming.

The central government's Promotion and Regulation of Online Gaming Act, 2025, which received Presidential assent on August 22, bans all types of online real-money games, including gambling, betting, and fantasy sports, regardless of whether they are based on chance or skill. The government has stated that these games cause addiction, debt traps, fraud, scams, and family problems, especially among youth. The Act also bans advertisements, money transfers, and even apps or websites that promote such games. Violations may result in 3 years imprisonment and fines up to ₹1 crore, with harsher penalties for repeat offenders. The Act does, however, encourage safe gaming like e-sports, casual games, and educational apps under a new central regulator.

The central act mandates financial institutions to block payments to banned platforms. Senior officials from the Ministry of Finance (FinMin) and the Ministry of Electronics and Information Technology (Meity) are scheduled to meet with representatives of banks and fintech companies to discuss the implementation of the Act.

The Supreme Court is currently adjudicating on whether online gaming is a state or central subject. The central government's decision to rush the bill has been criticized, and the Supreme Court is also considering the treatment of fantasy sports, poker and rummy as games of skill or gambling, and on retrospective tax for RMG firms.