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Dream11 halts operations in Karnataka, but not to comply with the online gambling ban

The decision comes just days after Karnataka’s online gaming bill which has been criticised as far-reaching, took effect.

Dream11 has decided to suspend its operations in Karnataka to ensure the safety of users following the ban on online gambling in Karnataka, the company said in a statement to the press. The move comes days after an FIR was filed against the founders of the company for flouting the state’s ban.

The Karnataka government passed an amendment to its Police Act on October 5, outlawing all kinds of online betting and gambling, including games of skill. Mobile Premier League (MPL) has also blocked its users from Karnataka following the ban, the Times of India reported.

While fantasy sports apps like Dream11 and MPL have currently suspended operations in Karnataka, it is widely anticipated that the state’s ban on online gambling will be challenged in court. In several past instances, the judiciary has curtailed state governments’ ability to outright prohibit betting and gambling when they involve some element of skill.

Suspending operations only for user safety, not compliance: Dream11

In a press note shared with MediaNama, Dream11 highlighted that the decision to suspend operations is only to protect users and not intended to comply with Karnataka’s online gambling ban:

We have been advised by the Federation of Indian Fantasy Sports (FIFS) […] that the Karnataka Police (Amendment) Act 2021 does not apply to its member Fantasy Sports Operators. This is because the FIFS format of Fantasy Sports has been upheld by the hon’ble Courts of India as not amounting to gambling, betting or wagering.

However, following the recent media coverage, our Karnataka users have expressed deep concerns and anxiety on their safety and security. In order to allay our users’ concerns, we have decided to suspend operations in Karnataka. This decision is without prejudice to our rights and contentions under law. (emphasis added)

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What do Karnataka’s new rules for online gambling say?

Besides the ban, the amendment to Karnataka’s Police Act also increases the severity of punishment for people caught gambling:

  • Inclusion of online gaming: The Police Act amendment expands the definition of “gaming” to include online games and games that use “electronic means and virtual currency, electronic transfer of funds in connection with any game of chance. Instruments of gaming also include digital devices, software, and even cyber cafes.
  • Games of skill banned: The amended act bans “any act or risking money, or otherwise on the unknown result of an event including on a game of skill” (emphasis supplied)
  • Fines increased: The amendment increases the fines and prison time to people caught under gambling prohibitions. A maximum term of one year has been made three years, and a Rs 1,000 fine has been increased to Rs 1,00,000. Minimums for these penalties have also been changed from one month to six months and from Rs 500 to Rs 10,000.

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