Karnataka Online Gaming Ban: FIFS obtains a legal opinion from former SC judge Ashok Bhushan

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Federation of Indian Fantasy Sports (FIFS), the self-regulatory body of online fantasy sports (OFS) platforms in the country had obtained a legal opinion from the Hon’ble Justice (Rt) Ashok Bhushan on the applicability of the recently notified amendment to the Karnataka Police Act, 1963 (KPA) to OFS operators.

FIFS, a section 8 not-for-profit company is founded and controlled by Dream11. The fantasy sports unicorn continues to function while all other major operators appeared to have shut shop since the notification of the amendment. MPL, BalleBaazi, PaytmFirst, Nazara’s HalaPlay, and RummyCircle have blocked access to residents of Karnataka from October 6. Meanwhile, an FIR was lodged against Dream11 with Annapoorneshwari Nagar police station under the Bengaluru city limits for operating in the state despite the ban.

The intent of the legislature was not to cover legitimate business activity which is evident from the substantive section 2(7) and in line with the settled legal position that OFS based on FIFS charter, does not amount to wagering or betting,” reads the opinion which is now available on the FIFS website.

Section 2(7) of the KPA deals with the definition of gaming. The explanation to Section 2(7) introduced by the 2021 amendment expands the ambit of wagering or gambling by including any act or risking money, or otherwise on the unknown result of an event including on a game of skill.

The opinion cites decisions by multiple High Courts across India and the Supreme Court of India, including its recent order dated 30.07.2021 in the case of Avinash Mehrotra vs. State of Rajasthan & Ors. Stating the fantasy sports operators are the business being protected under Article 19(1)(g) of the Constitution of India, the former judge opines that there is no underlying basis to artificially include fantasy sports by expanding the ambit and scope via the explanation route.

In the format of OFS the amounts pooled in the escrow account is an ‘actionable claim’, which is to be distributed amongst the winning participating members on the basis of the results achieved by their respective virtual teams. The winning participating members have a legal/enforceable claim to same under the Transfer of Property Act, 1872. This cannot be treated as betting/gambling or wagering,” the opinion reads. The legal opinion also states that the amendment is a colourable exercise of power as the legislature has travelled beyond its legislative competence by equating a skill predominant format with betting/gambling or wagering.

Concluding the opinion, the judge states that OFS is not covered under gaming as defined under Section 2(7) of the KPA and the operators can very well continue their legitimate business activity as it is protected under Article 19(1)(g) of the Constitution. As a legal remedy for any action, OFS operators can challenge the same before the High Court and seek interim measures. Earlier, FIFS had circulated a note to its members advising abundant caution by the OFS platforms in the state of Karnataka.