Dream11, a company co-founded by Harsh Jain & Bhavit Sheth in 2008, which provides a Fantasy Gaming platform for many games such as cricket, football, baseball, basketball, handball, has suspended its operation owing to the newly enacted Karnataka Police (Amendment) Act, 2021(1) passed on 5th October 2021.

This Act bans all forms of gambling the state that are “Game of Chance”, involving exchange of money, wagering and betting making it a cognizable and non-bailable offence.

An FIR was filed by Manjunatha, a cab driver in Bengaluru and the names of co-founders of Dream11 was accused. However, according to Dream11 Karnataka gaming ban is not applicable to games of skill but only gambling or betting. “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,” the company said.

Previously, in July 2021, the Supreme Court upheld Online Fantasy Gaming site Dream11’s Fantasy sports gaming format as a “Game of Skill”(2). A Special Leave Petition alleging Dream11 amounting to wagering, gambling and betting and is not a “Game of Skill” was dismissed through the above order.

In Shri Varun Gumber v. UT of Chandigarh and others(3), the High Court of Punjab and Haryana became the first only Indian Court to rule Fantasy sports to be skill based. The High Court of Punjab and Haryana upheld the Supreme Court’s decision in K.R. Lakshmanan v. State of Tamil Nadu(4) that “competition in which success depended upon a substantial degree of skill were not gambling and despite there being some element of chance, if game was preponderantly of skill, it would be a game of mere skill.”

The High Court of Punjab and Haryana stated that playing fantasy sports required a level of considerable skill, judgment and discretion. Hence, it was held that fantasy games were of “mere skill” and could not amount to gambling and that Dream11 was conducting a business activity protected under Article(19)(I)(g)7 of the Constitution of India.

What does the new Karnataka Police (Amendment) Act, 2021 cover?

  1. All forms of wagering or betting “in connection with any game of chance” with the exception of horse races and lotteries. The amended law also puts betting on the skills of others in the category of gambling and also states that “any act of risking money or otherwise on the unknown result of an event including on a game of skill” is an offence.
  2. All forms of wagering or betting, including in the form of tokens valued in terms of money paid before or after issue of it, or electronic means and virtual currency, electronic transfer of funds in connection with any game of chance,” will be considered as gambling.

What are the punishments for gambling under the amended law?

Maximum punishment for owners of gambling centres from one year to three years of imprisonment and fines from Rs 1000 to Rs 1 lakh. The minimum punishment is six months instead of the current one month and a fine of Rs 10,000 instead of Rs 500. For aiding or abetting gambling, the punishment has been enhanced to six months imprisonment and a Rs 10,000 fine.

A first offence of managing a gaming house will attract the minimum sentence of six months in prison and a fine of Rs 10,000 while a second offence will entail imprisonment for a year and fine of Rs 15,000. A third offence will attract an imprisonment of 18 months and a fine of Rs 20,000.

The content of this article is intended to provide general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

[1]Available at: https://prsindia.org/files/bills_acts/bills_states/karnataka/2021/Bill%20No.%2037%20of%202021%20Karnataka.pdf

[2] Special Leave Petition (Civil) Diary No(s). 18478/ 2020.

[3] CWP No. 7559 of 2017.

[4] AIR 1996 SC 1153.

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