Karnataka Online Ban In Force As Industry Prepares Legal Action

October 6, 2021
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Indian fantasy sports companies are now blocking users in Karnataka after a ban on all gaming with stakes came into force in the southwestern state on Tuesday, but market leader Dream11 has yet to declare its hand.

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Indian fantasy sports companies are now blocking users in Karnataka after a ban on all gaming with stakes came into force in the southwestern state on Tuesday, but market leader Dream11 has yet to declare its hand.

The publication of the Karnataka Police (Amendment) Act 2021 on Tuesday confirms Karnataka’s state government has rebuffed gaming industry and trade association appeals to exempt skill gaming from its ban.

The amendment clarifies that “all forms of wagering or betting” are covered by the act, except for lotteries and horseracing, and extends to “any act or risking money, or otherwise on the unknown result of an event, including on a game of skill”.

The ban imposes three-year, non-bailable jail terms on operators, as well as jail terms for customers.

Some fantasy sports companies have interpreted the law to include their products and have begun to block users in Karnataka.

Indian media reported that platforms such as the Sequoia Capital-backed esports and fantasy sports venture, Mobile Premier League (MPL), and fantasy sports company BalleBaazi have geoblocked their websites or have warned that gaming transactions will not be processed for Karnataka customers.

However, at publication time, market leader Dream11 had not included Karnataka among restricted states in its terms and conditions.

Implementation of the law virtually guarantees industry action in the Karnataka High Court, which had ordered the government to clarify a regulatory or punitive stance on online gaming.

Roland Landers, CEO of skill gaming lobby All India Gaming Federation (AGIF), told VIXIO GamblingCompliance on Wednesday that the AGIF will take the government to court.

“As the apex industry body, AIGF will challenge this in court and seek legal recourse,” he said.

“The industry did get success in Madras High Court in August this year on a similar law that was brought about by the Tamil Nadu government.

“The regulatory framework has clearly differentiated between games of skill and games of chance and that Indian online skill gaming companies have the constitutional right to do business/trade,” he said.

Legal action would attract significant attention, given the aggressive nature of the act and the array of gaming industry and technology industry interests that have spoken out against the bill.

Supreme Court protection of skill gaming with stakes and recent progressive rulings that backed online gaming operators in the Tamil Nadu and Kerala state high courts, only add to the stakes of an appeal in Karnataka.

“While the judiciary is constantly trying to counteract state paternalism … the passage of the Karnataka Police (Amendment) Bill highlights the fact that lawmakers refuse to see the pitfalls of paternalistic laws and pay scant attention to previous judicial orders,” Koan Advisory Group consultant Priyesh Mishra said in a commentary in The Print on Tuesday.

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