Dream11 has halted operations in Karnataka, the firm announced on Sunday, as it battles allegations alleging violations of the state’s recently enacted gaming law.
Following a complaint that the Mumbai-based firm had continued to offer gaming services on its platform a week after the state government notified the new rules prohibiting what it called “games of chance,” the Bengaluru Police filed a first information report (FIR) against Dream11 founders Harsh Jain and Bhavit Sheth on Saturday.
Dream11 maintains that it complies with all applicable laws.
“However, in light of recent media attention, our Karnataka users have voiced grave fears and anxiety for their safety and security,” the business stated in a statement. “We have chosen to cease operations in Karnataka to alleviate our users’ fears.” This decision is without prejudice to our legal rights and claims.”
Karnataka’s new rule, which took effect on October 5, prohibits internet games that are essential “games of chance.” It declares internet games involving the exchange of money, betting, and wagering to be a “cognizable and non-bailable violation.”
Dream11 has joined the ranks of companies such as Mobile Premier League (MPL), Paytm First Games, Games24X7, and others in deactivating their platforms for Karnataka consumers.
The announcement comes while the Indian Premier League (IPL) is in full swing, with the T20 Cricket World Cup set to begin later this month. These sporting events are critical for gaming platforms to increase engagement and gain new users in a competitive market.
According to industry experts, Karnataka is one of India’s top three online fantasy game users. MPL only became a unicorn last month, while Dream11 is the most significant participant in the market, with a valuation of roughly $5 billion.
Manjunatha, a Bengaluru cab driver, lodged the complaint that led to the filing of the FIR. The cofounders of Dream11 are named as defendants in the FIR filed by Annapoorneshwari Nagar Police in West Bengaluru. According to ET on Saturday, the police are ready to issue a notice requesting their appearance to react to changes made in a complaint.
The allegation was “motivated,” according to Dream11, which is looking into legal options.
According to the corporation, the Karnataka gaming ban only applies to gambling or betting, and that it is a “responsible, law-abiding company that will give our full assistance to any authorities,” according to a company spokeswoman quoted in a Saturday ET storey.
On Sunday, Dream11 maintained that the Federation of Indian Fantasy Sports (FIFS) had warned it that the Karnataka Police (Amendment) Act, 2021, does not apply to its member fantasy sports operators, citing an opinion from a former Supreme Court Judge.
The business explained that “the Hon’ble Courts of India have upheld the FIFS structure of Fantasy Sports as not equivalent to gambling, betting, or wagering.”
The first case filed under the new law, according to Karnataka Home Minister Araga Jnanendra, was a “major triumph” in the government’s campaign against internet gambling. On Saturday, he told ET that online betting games were harming many people’s lives and that the public was thanking the government for enacting the ban.
After the law was notified last week, many online game operators, according to the minister, banned access to the games in Karnataka.
He said that the government had only banned games of chance, not games of ability. Even in games of skill, however, betting and wagering are not permitted.