Dream11 suspends Karnataka operations, counsel says amended law misclassifies game of skill

Supreme Court lawyer and Federation of Indian Fantasy Sports adviser Gopal Jain said, “Karnataka was the state where the start-up ecosystem started. Look at the message they're sending now: that we are going to attack innovation, investment, ban consumer-friendly platforms.”

With Dream11 suspending operations in Karnataka after its directors were booked under the amended Karnataka Police Act, which seeks to ban online gaming, it is likely that the modified law will be challenged in court soon. On Sunday, the online fantasy sports platform said “in order to allay our users’ concerns, we have decided to suspend operations in Karnataka,” adding that “this decision is without prejudice to our rights and contentions under law.”

Supreme Court lawyer and Federation of Indian Fantasy Sports (FIFS) adviser Gopal Jain Sunday said the Karnataka Police Amendment Act can be challenged with a writ petition in the Karnataka High Court as it is ultra vires — being contrary to Supreme Court judgments on Article 19 (1)(g) related to the right to business, and Article 14 because it is manifestly arbitrary.

“First, it misclassifies a game of skill with other categories to which it does not belong. Second, if a complaint or an FIR has been registered, one can approach the High Court to quash it because no offence is made out,” he told The Indian Express.

The Karnataka Police (Amendment) Act, 2021, which got the Governor’s assent on October 4, says the words “gaming means and includes online games, involving 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…”

Jain countered this by saying a law which has its scope confined to things that affect public order cannot be expanded to change the context of something that has got judicial recognition.

Soon after the law came into effect, some of the gaming platforms, including Mobile Premier League (MPL), began blocking access to users from Karnataka geo-location. Dream11 has decided to do so this Sunday, after a case was filed against its directors Harsh Jain and Bhavit Sheth.

Speaking to The Indian Express, Deputy Commissioner of Police (West) Sanjeev M Patil said a case has been registered under sections 79 and 80 of the Karnataka Police Act. “We cannot divulge any information as the investigation are underway,” he added.

Elaborating on the legal basis of his arguments against calling online fantasy sports gambling, Jain said, “Online fantasy sports have received recognition from several high courts and the Supreme Court as a game of skill, which is entitled to Constitution protection under Article 19 (1)(g).” He said the format of the online fantasy sports has also been considered to be correct by the Punjab and Haryana as well as the Rajasthan high courts.

This July, the Rajasthan High Court held that “offering of online fantasy sports in accordance with the Charter of the FIFS has already been judicially recognised as a business and consequently, entitled to protection under Article 19(1)(g) of the Constitution…”

Dismissing a Special Leave Petition filed on this order, the Supreme Court said on July 30, 2021 that “this matter is no longer res integra”, where it needs to examined.

Jain also claimed that the prize pool collection which is used reward winners is recognised by law under the Transfer of Property Act and under the Finance Act.

Asking when will we have clarity on this matter, Jain added: “When the courts have recognised it, where it is fundamentally different, they have gone threadbare and examined it, then it is for governments to respect judgments of the court.”

On why Dream Sports was calling the October 7 complaint by Bengaluru resident Manjunath “motivated”, Jain said it has no mention of any “injury caused” to the complainant and the complainant’s number is not verified for the KYC process under the Dream11 game.

“Also, it names Sporta Technology Ltd, which is the name of the company known to very few as you go by the brand that it is known by,” he highlighted, calling the complaint “vexatious and frivolous” given its timing – the IPL is in its last stages.

“Karnataka was the state where the start-up ecosystem started. Look at the message they’re sending out: that we are going to attack innovation, investment, ban consumer-friendly technology-enabled platforms. It is striking at the very core of the start-up ecosystem,” Jain claimed.

Citing how this also goes against the central government’s stance of decriminalising law, the lawyer said: “This is exactly the opposite… trying to criminalise something which the courts have held as legitimate. You cannot prohibit or ban something which is constitutionally protected, it is always to be regulated.”

He said this self-regulation in this segment happens through the FIFS, which has a charter and format scrutinised by two High Courts. “You cannot convert a game of skill into a game of chance by draftsmanship, you have to have a source of power, and you can exercise it within the field that is given to us.”

“Future businesses, which attract investment, providing for innovation and have employment generation, have to be recognised and protected,” Jain said. “When we say we are in a regime of ease of business, and maximum governance and less government, decisions have to be taken with far more foresight, not short sightedness. You have to create an enabling and supportive framework for this because it fits into a larger public policy objective.”

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