Dream11 Suspends Operations in Karnataka, Days After FIR Against Founders

The online sports platform suspended its operations days after online gambling ban in the state came into effect.

3 min read
<div class="paragraphs"><p>The development comes days after other online fantasy sports or gaming platforms, including MPL and RummyCircle, took similar steps.</p></div>

Days after the Karnataka government passed a controversial bill that outlawed online gambling and 'games of chance', online fantasy sports platform Dream11 has stopped operations in Karnataka, reported The Times of India on Monday, 11 October.

This came after the Bengaluru Police filed a First Information Report (FIR) against the company's founders Harsh Jain and Bhavit Sheth, based on a complaint that Dream11, which has Falcon Edge and Tiger Global among its backers, had violated the Karnataka Gaming ban that came into effect on 5 October.

The development comes days after other online fantasy sports or gaming platforms, including MPL and RummyCircle, took similar steps.

The company also showed a message on its website which stated that users who live in Karnataka or have bank accounts in the state could not participate in cash contests on the app.

Dream11 Issues Statement

In a statement released to the press, Dream11 said, "The Karnataka Police Act recently amended its gaming law to prohibit online gambling, betting and wagering. We have been advised by the Federation of Indian Fantasy Sports (FIFS), who have shared an opinion from a former Supreme Court Judge, stating 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," the statement added.

Complaint Filed Against Dream11 Owners

On Thursday, 7 October, Manjunath, a cab driver and resident of Nagarbhavi in Bengaluru, filed a complaint against the owners of Dream Sports, reported The Indian Express.

Manjunath had read about the amended Karnataka Police Act in newspapers and had searched Google Play Store to see how many such online gaming platforms had withdrawn their services. He found that a number of them had blocked their mobile applications, but not Dream11.

"I came to know many players in expectation of winning have lost their money. But it is surprising that who grabs the money is not transparent, and players do not have control over the activities. So, this is a clear case of running online games of wagering and skill risking the money of the players," he alleged in the complaint,as per the report.

Sanjeev M Patil, the deputy commissioner of Police (west), told The Indian Express that a case was registered against Harsh Jain and Bhavit Sheth, directors of Sporta Technologies Private Limited and Dream11 "under Section 79 (Keeping common gaming house) and 80 (Gaming in common gaming-house) of Karnataka Police Act, 1963".

Later, Dream11 said in a statement, "We believe the complaint is motivated and are examining our legal remedies. We are a responsible, law-abiding company and will extend our full cooperation to all authorities."


What does the Karnataka Police Act Say?

On Tuesday, 21 September, the Karnataka government had passed a controversial bill that outlawed online gambling and 'games of chance'. The Legislative Assembly then decided to amend the Karnataka Police Act to bring the ban into effect.

Earlier, the Karnataka High Court had urged the state government to come up with a law on online gambling.

Interestingly, this Bill came at a time when fantasy gaming players and startups were looking to cash in on the upcoming ICC T20 World Cup and the ongoing Indian Premier League (IPL).

Here's what the new Bill changes are:

  • The Bill states that “gaming means and includes online games, involving all forms of wagering, including electronic means and virtual currency, electronic transfer of funds in connection with any game of chance, but does not include a lottery or wagering or betting on horse race run on any race course within or outside the State, when such wagering or betting takes place."

  • The law's ambit will now include "any act or risking money, or otherwise on the unknown result of an event including on a game of skill and any action specified above carried out directly or indirectly by the players playing any game or by any third parties."

  • Devices of gaming now includes, "computers, mobile app or internet or cyberspace, virtual platform, computer network, computer resource, any communication device, electronic applications, software and accessory or means of online gaming, any document in electronic or digital form. Interestingly, cyber ​​cafés are also included in the amendment."

  • The maximum jail term of one year has been increased to 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 Rs 500 to Rs 10,000.

(With inputs from The Times of India and The Indian Express)

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