The government of the Southern State of India  — Karnataka, Home to India’s Silicon Valley aka Banglore, has proposed a law to ban online games and gaming activities involving elements of wagering and gambling in an effort to curb the increasing gambling addiction among the rural youth population. 

The Karnataka government has moved a bill proposing an amendment to the “Karnataka Police Act” to include online games, seeking to ban “any act of risking money, or otherwise on the unknown result of an event including on a game of skill,” according to the bill seen by Reuters.

The bill was proposed for the sole purpose of “safeguarding” the rural youngsters from becoming “habitual gamblers.” As per the government officials, the youth population from the rural areas of the state are left idle due to coronavirus pandemic induced lockdowns and staying at home most days. While the bill looks surprising at first, Karnataka isn’t the only state in India to ban online games involving prize money and gambling elements. It is the 4th state after Telangana, Tamil Nadu, and Andhra Pradesh to introduce such a bill.

Dream11

It is important to note that the bill will directly affect India’s leading fantasy gaming platforms – Dream11 and Mobile Premier League (MPL), which offer fantasy cricket and football games with the prospect of money to be won. Some industry sources spoke with Reuters and said:

Business of MPL, Dream11, and everyone in the sector will suffer. These states are important – they roughly account for 20% of (the total) business for such companies.

Due to the covid induced lockdowns across the country, the online gaming industry in India has grown significantly to the point of foreign investors showing great interest in gaming startups and investing funds. As per a report by All India Gaming Federation, India currently has more than 400 online gaming startups and will have 550 million online gamers by 2022, a staggering growth from the 360 million online gamers in 2020. The gaming industry is expected to be worth more than $2 billion by 2023 making it the fourth-biggest gaming market after China, the USA, and the European Union (EU). 

While The Dream11 and MPL platforms have grown considerably during the past few years, legislation like these will directly hurt their business model and make it incredibly difficult for them to turn a profit. Dream11 is also seeking a U.S. listing by early next year which will become harder after losing 20% of its total business due to the said gambling bills.  

Sandeep Chilana, a New Delhi-based lawyer, spoke with Reuters and said that these laws have a weak legal standing given the Supreme Court has repeatedly said skill-based games – like fantasy cricket – are not like gambling which remains largely prohibited across India.

“Indian states are overreaching and will face legal challenges by banning such skill games,” said Chilana.

The potential ban of one of India’s biggest sponsors of esports tournaments will also hurt professional players, said Esports Players Welfare Association, a non-profit for online gamers.

“Games and esports are areas where skill can be developed as a result of which it is not a sin activity,” the group said.

The companies affected by such bills will likely form a group and move to the Supreme Court of India in the hope for the court to strike down these laws and give a legal shielding for the companies from such bills in the future.

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