Dream11 continues to function despite Karnataka’s law banning online gaming; operators miffed about double standards

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Governor’s final stamp of approval on the bill banning online gaming for stakes which went into effect on 5th October spelled closing time in the playgrounds of real money gaming segment in Karnataka.

Notwithstanding the myriad economic challenges brought about in the wake of Covid-19 pandemic, the passage of the bill has directly impacted hundred-odd Bangalore-based operators, laying waste to about four thousand jobs in the ‘City of Start-ups’.

However, even though most operators are grudgingly toeing the line, Dream11 appears to be the unruly kid in the class. Apparently, long after the ban went into effect, Dream11, India’s leading fantasy sports operator was operating with full force.

In fact, Dream11’s defiance isn’t limited to one geography as it was accessible to some users in states like Assam, Telangana, Odisha and Arunachal Pradesh as well; states where playing online games for monetary stakes is strictly prohibited by law.

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The controversial bill has drawn rebukes from various organisation ever since it was tabled. The Federation of Indian Fantasy Sports (FIFS), the industry body for fantasy sports, had highlighted that it creates confusion and uncertainty for legitimate online fantasy sports businesses while the Confederation of All India Traders (CAIT), the powerful trade body, representing eight crore traders and over 40,000 trade associations had expressed concerns about its implications.

Even in all the discombobulation, one thing is clear; playing skill-based games for stakes is banned. As explained by Jay Sayta, a technology and gaming lawyer, who informed Outlook that the new law passed by the Karnataka legislature applies to all skill-based games played for wager or stake.

“The law in its present form does not exempt any game or format. If any company or person is aggrieved by the current law, the available remedy is to challenge it in court and get an order. Continuing to offer services in Karnataka after the law is in force can attract criminal liability,” he further explained.

Most of the Real money gaming operators have already blocked access to residents of Karnataka after the state government notified the online gaming ban law for stakes with immediate effect on October 5. The law passed last month by the legislature received governor assent on October 4.  

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Fantasy gaming is completely reliant upon live events and cricket tournaments, making this time of the year the harvesting season for the booming segment. Giants like Dream11, MPL and Paytm are partnered up with the Board of Control for Cricket in India (BCCI) and Indian Premier League, the 2021 edition of which is currently being held in the UAE.

“We are not commenting on the matter,” said a company spokesperson to Outlook. The fact that Dream11 continues to operate despite the ban has definitely drawn the ire of other operators who had to shut shop in Bengaluru.

In a note (assessed by Outlook) sent to its members, the FIFS (Federation of Fantasy Sports) said: “Given the penal consequences prescribed for violation of the Police Act, members must exercise abundant caution in the State of Karnataka.

“Members are strongly encouraged to consult with their legal counsel while deciding on whether to continue to offer pay-to-play variants of fantasy sports in the State of Karnataka in light of the amendments. We will continue to track the associated legal developments.”

The online gaming sector has been a strong financial contributor to the Indian economy and is further expected to generate revenues in excess of $3 billion by 2025. India currently has more than 400 online gaming startups and, as of 2020, had around 360 million gamers, according to an EY-All India Gaming Federation report. With the bill taking effect, the future online gaming sector in Karnataka is in dire straits.