Dream11 is a founding member of the Federation of Indian Fantasy Sports (FIFS), which has filed a new writ suit in the Karnataka high court contending that the state's gaming ban does not extend to fantasy sports platforms.
The court agreed to hear FIFS' arguments on the case's next hearing date, which is December 14, 2021. The petition filed by FIFS will be heard together with six other petitions challenging the state's anti-gambling law. The All Indian Gaming Federation (AIGF), Mobile Premier League, Games24x7, Gameskraft, Head Digital Works Private Limited, and Junglee Games are among the other six petitioners.
Because the arguments have been extended in length, the court concluded last week that the ongoing interim plea hearing will be regarded the final hearing on the case.
Dream11 has previously stated in a media release that FIFS recommended that the Karnataka Police (Amendment) Act 2021 did not apply to its member fantasy sports operators, which is why the company continued to operate after the new law was announced on October 5, 2021.
Subsequently, after a FIR was filed against Dream11 co-founders Harsh Jain and Bhavit Sheth in the Bengaluru police station, Dream11 ceased its operations in Karnataka. The court granted interim protection to the two co-founders after they petitioned the court to have the FIR quashed. The state has been ordered not to adopt any coercive measures against the petitioners until the next hearing date.
Karnataka isn't the first state to implement laws governing online gambling. Various state rules have driven organisations that operate in forms like online fantasy sports (OFS) and online rummy to exhibit skill superiority in their specific game formats over the years.
The Karnataka legislature amended the Karnataka Police Act, 1963, on September 21, making all types of gambling, including online gambling, a cognizable and non-bailable offence. On October 5, the Karnataka Police (Amendment) Act, 2021 was notified and comes into effect.
It was passed in Karnataka despite similar legislation being challenged in Tamil Nadu, Kerala, and Telangana for widening the scope of gaming beyond what has been defined by law. The Tamil Nadu Gambling and Police Laws (Amendment) Act, 2021 was declared extra vires by the Madras High Court on August 3. On September 27, the Kerala High Court, based on the Madras High Court's decision, dismissed the case.
According to the Karnataka High Court, no warrants to be made under the new gambling legislation
The Advocate General arguing on behalf of the state government was directed by the Karnataka High Court on October 22 not to make any arrests under the new online gambling law, which is being challenged in court by multiple gaming companies.
Advocate Arvind P Datar, who spoke on behalf of the All India Gaming Federation, a skill gaming industry organisation that has opposed the law, sought that no arrests be made because the new law included provisions for arrests and FIRs.
The Karnataka Police Department filed a FIR against Dream11 cofounders Harsh Jain and Bhavit Sheth earlier this month, the first such case under the new rule, for continuing to operate on t he site.
According to media sources, a case was also registered against online rummy portal SilkRummy.
Datar's appeal to group together petitions contesting the law that took effect on October 5 was also granted by a single-judge bench led by Justice Krishna S Dixit. On October 27th, the matter heard again..
Apart from AIGF, real-money gaming companies Mobile Premier League (MPL), Games24x7, A23(Ace2Three), Junglee Games, and Gameskraft are among the six petitioners who have filed a petition against the statute in the high court.
The constitutional validity of revisions to the Karnataka Police (Amendment) Act is being challenged in these challenges. All forms of internet gaming involving the transfer of money were prohibited by the law.
After a public interest litigation was brought at the high court seeking to ban online gambling, the adjustment was made. It destroyed the distinction between a skill-based and a chance-based game, bringing skill-based gaming firms under its jurisdiction.
Datar stated that a similar amendment passed in Tamil Nadu was overturned by the Madras High Court, which ruled that a game of skill cannot be prohibited as a wagering game.
Under Entry 34 of the state list, the law did not apply to "gambling and betting," and states did not have the authority to prohibit online skill-based games.
Gaming is becoming increasingly popular in India, thanks to rising internet penetration and a young population. As per the EY-All India Gaming Federation report, the country had roughly 80 million real money gamers in 2020, with that number predicted to rise to 150 million by 2023.
According to the estimate, the market would be worth $2 billion in rake fees by 2023.
However, throughout the last year, numerous states, including Andhra Pradesh, Telangana, Tamil Nadu, and Kerala, have prohibited or attempted to outlaw real-money gaming.
A similar judgement by the state government was recently overturned by the Kerala High Court. In July, the Supreme Court maintained fantasy sports as a skill-based activity.
On October 6, Moneycontrol was the first to announce that gambling platforms such as MPL, Games24x7 (RummyCircle, My11Circle), Ace2Three, and RummyCulture had begun banning access to Karnataka residents.
Dream11, a popular fantasy sports service, also stopped operations on October 10.
The Dream11 founders have been granted relief from arrest by the Karnataka High Court
During the last month around November 9, the Karnataka High Court stayed an interim order in the case of Dream11 founders Bhavit Sheth and Harsh Jain seeking to nullify a Karnataka Police FIR till the next hearing date.
The change came after a government lawyer told the court that the state intended to file a statement of objections and that the Advocate General would speak to the court during the hearing. After two weeks, the case is expected to be scheduled for a hearing.
The Karnataka High Court, on October 28, ordered the state government not to pursue any coercive step against the Dream11 duo over the state's new online gambling legislation, which took effect on October 5. It was highlighted, however, that this ruling does not halt the probe.
In the last hearing Judge Sreenivas Harish Kumar confirmed this, saying that he believes the probe should continue in this case.
While the Dream11 lawyer argued that the Supreme Court had already handled the issue and that the revisions to the Karnataka Police Act do not apply to the corporation, the court stated that after hearing the arguments, they will apply the Supreme Court decision if it is applicable.
The Karnataka Police Department filed a complaint against Dream11 and its cofounders on October 9 for continuing to operate on their platform after the law took effect on October 5. This was the first prosecution under the new rule, which made all forms of internet gaming including money transfers illegal.
Members of the Federation of Indian Fantasy Sports (FIFS), a self-regulatory industry organisation for fantasy sports, are exempt from the law, according to Dream11, because the format "has been upheld by the courts of India as not equivalent to gambling, betting, or wagering." Nevertheless, on October 10, it halted operations in Karnataka.
On October 24, Moneycontrol revealed that Dream11 has discontinued permitting only Karnataka individuals having a bank account in the state to enter sponsored contests on the platform. Other sites, including Mobile Premier League, Junglee Games, Adda52, and Games24x7-owned My11Circle, have implemented geoblocking limitations for users in the state.
The Dream11 co-founders later filed a petition with the Karnataka High Court, alleging that the case was filed on the basis of "bald and vague allegations" made by the complainant, at the request of its business competitors, with the "mala fide purpose of brushing the colour of gambling, betting, and wagering to the activities of fantasy sports" conducted on the Dream11 platform.
The All India Gaming Federation and real-money gaming companies such as Mobile Premier League (MPL), Games24x7, A23(Ace2Three), Junglee Games, Gameskraft, and Pacific Games have filed petitions in the Karnataka High Court. The constitutional validity of modifications to the Karnataka Police (Amendment) Act is being challenged in these obstacles.
With the exception of horse racing and lotteries, the modified law encompasses all types of wagering or betting "in relation with any game of chance." It also classifies betting on other people's abilities as gambling. It only makes an exception for genuine skill games, not for "wagering by persons participating in such skill games."
"All kinds of wagering or betting, including tokens valued in terms of money paid before or after issue, or electronic means and virtual currency, electronic transfer of funds in connection with any game of chance," according to the modified law, will be considered gambling. The new law treats gaming websites in the same way as it treats brick and mortar casinos.