The recent Karnataka Police Act (Amendment) has majorly affected the fantasy sports platforms in India.
Recently, the Karnataka state government made a few changes to the Karnataka Police Act of 1963. The law was amended to prohibit indulgence in online games of chance that involve the wagering of money. Karnataka Police Act, 2021 basically prohibits both offline and online gambling, betting, and related activities. While many believe the law does not apply to fantasy sports, several such platforms have already stopped offering products to Karnataka residents.
In the past few years, online fantasy sports have shown extensive growth in India and have become a popular form of online gaming in India. The legality of fantasy sports is quite confusing for many people. It is basically a game of prediction where players create their own imaginary team by selecting real sportspersons. There have been many debates about whether fantasy sports should be legalized in India or not.
According to many people, fantasy sports come under the category of “games of chance” and should be prohibited in India. However, online gaming companies claim that fantasy sports are “games of skill.” In fact, the popular fantasy sports platform, Dream11 has often been the center of this debate. The Supreme Court of India has declared Dream11 as a fantasy gaming platform and hence is not prohibited in India.
One of the leading platforms for fantasy sports, Dream11 has a wide user base in Karnataka. Now due to the Karnataka Police Act 2021, the virtual sports platform had to suspend its Karnataka operations. One more reason behind this suspension was the FIR against the Dream11 founders. The Bengaluru police registered the FIR against the founders of Dream11 under the new Karnataka Police Act, 2021.
Multiple Online Gaming Companies Suspend Their Operations in Karnataka
Following the ban, many online gaming companies have blocked access to Karnataka users. The players in Karnataka have expressed their concern for safety and security after the government had made it illegal to indulge in games of chance. To relieve the worries of users, gaming companies had to suspend their operations in the state. After the government amended the Karnataka Police Act 1963, many online gaming companies that offer games involving the risk of money were withdrawn from the Google Play store except the Dream11. This resulted in the FIR against the founders of this fantasy sports company.
While the companies are planning to challenge the new law, the ban has already affected online fantasy sports in India. Karnataka has always been a top development hub for online gaming startups and companies. This move by the government has come as a shocker to fantasy sports companies as the state has always been a center of innovation, creativity, and cutting-edge manpower in India. Fantasy sports companies will not only experience a decrease in their user base but also be removed from the entrepreneurial hub of India.
The Bill Can Tarnish The Image of “Startup Hub of India”
Now that the state has banned all forms of gambling, this bill may also hurt the image of Karnataka as the “startup hub of India.” Due to the ban, gaming companies now have to shift their offices to another state. This may result in the loss of revenue and jobs in the state. The online gaming firms have provided employment to thousands of people in Karnataka.
Aside from providing employment, gaming companies have also attracted many native as well as offshore investors to Karnataka. According to a recent study, offshore investors have invested more than INR 3000 crore in online gaming startups. In fact, the companies have also generated a whopping revenue from the state. This is why the ban will affect both the startup hub and gaming companies.
Fantasy sports are considered games of skill and do not come under gambling. However, it has been criticized because many people put their money at risk and often lose a huge amount of money on fantasy sports platforms. The new Karnataka law has set an imprisonment of up to three years and a fine of INR 1 lakh for gambling in the state. The Karnataka government has also categorized online games that involve the electronic transfer of funds as gambling.
Bottom Line
Online gaming and fantasy sports companies demand a central level regulation of gaming activities in the country. As gambling in India is a state subject, different state governments have different laws and regulations. Indian states like Karnataka and Tamil Nadu have chosen to make gambling platforms illegal within their jurisdiction, due to which the industry is going to be affected to some extent.
The debate can be quite confusing as the Supreme Court had called online games like Rummy as the games of skills. On the other hand, the Karnataka state government is restricting all the games that involve wagering money. It is clearly stated in the Karnataka Police Act, 2021 that “games that involve any act of risking money or games of chance which depend on luck are non-bailable offenses.” Although fantasy sports platforms do not face such restrictions in many states, it is not sure whether all states will legalize this gaming option. Fantasy sports and gaming platforms in India need a single law so that the different state legislations can not affect the industry.
Due to this controversial gambling act, now different fantasy sports platforms have to shut their operations in the state and shift their offices and business from Karnataka to some other place. From Dream11 to Mobile Premier League (MPL), Karnataka has aimed to restrict all fantasy sports companies in the state. Overall, the new legislation has made gaming companies stop doing business in this potential market. Due to the unfair legislation and laws, fantasy sports may experience a loss in revenue this year.