Dream 11 Activity Suspension in Karnataka and Online Fantasy Sports Ban Explained

Dream 11, one of India's most famous fantasy sports platforms, recently had its operations banned in Karnataka after a complaint was filed against it after the state's ban on online gambling. Let's break down the debate around fantasy sports.

What is a fantasy sport?

Fantasy sports became popular in the United States following World War II. Fantasy golf was the earliest version, which appeared in the 1950s.

Despite being a little late to the game, fantasy sports have quickly become one of the most popular pastimes among Indian sports fans. Fantasy sports are played online, with participants selecting fictitious or virtual athletes they believe will perform best in a contest. It is a prevalent practise in sports such as cricket, football, and baseball around the world.

This burgeoning technological industry has progressively emerged as the next step in the evolution of Indian sports. And, of course, the rise of league-based sports, as well as the growth of internet watching paired with greater smartphone penetration, may be ascribed to a big portion of the interest.

How many fantasy sports apps are there?

There are too many to mention. There are at least 40 apps in India alone, including My11Circle, HalaPlay, and Paytm First Games. Dream 11 is a popular gaming software with a huge number of users. It was founded in 2008 by Harsh Jain, and with a few changes to its concept, it has gained a lot of popularity over the last few years and taken the online gaming world by storm.

What is the fuss about games of skill and chance?

The Public Gambling Act of 1867 is the primary statute in India that governs fantasy sports. The antiquated legislation criminalises gambling in public, but it distinguishes between betting on a game of skill and betting on a game of chance. Section 12 of the Act exempts certain games from the Act if they demand skill and chance is not the sole determinant of the game's outcome.

Games of chance include roulette and three-card games such as flush. Indian courts have recognised horse racing betting as a game of skill, but the laws differ from state to state. However, in Assam, Odisha, and Telangana, playing a game of skill for money is banned, making fantasy sports unlawful as well.

This specific dispute between a game of chance and a game of skill has been the central point of all judicial issues questioning the legality of fantasy sports.

The commonly followed line of argument says that because it is a game of pure chance, it is gambling and thus falls under Section 12 of the Public Gambling Act of 1867. However, noteworthy judgements by other state High Courts and even the Supreme Court have recognised fantasy sports as a game of "skill and not mere chance."

What was the Supreme Court ruling on this matter?

Varun Gumber, a Dream 11 user who had lost approximately Rs 50,000 on the site, decided to take the corporation to the Punjab and Haryana High Court in 2017.

While investigating the case, the Punjab and Haryana High Court concluded that success in online fantasy sport activities is dependent on a participant's use of ability, superior knowledge, judgement, and application of mind.

As a result, online fantasy sports games need more than just chance, and they put a person's abilities to the test through the many movements they make throughout the game.

When confronted with comparable situations later, the Bombay High Court and the Rajasthan High Court applied the same reasoning. The Rajasthan High Court had also stated that Dream 11 games requiring "significant talents" were a "business activity" protected under Article 19(1)(g) of the Constitution's basic freedom to pursue trade or any profession.

Dream 11 activity suspension and related issues

It was further cemented when an appeal against the Rajasthan High Court's ruling was filed in the Supreme Court in August of this year, where the SC dismissed the petition and confirmed the Rajasthan High Court's verdict. The Supreme Court further noted that the matter was not res integra (unique) and had been the subject of previous decisions.

Now, what is happening in Karnataka?

Early last month, the Karnataka legislature enacted a Bill to modify the Karnataka Police Act, 1963, to prohibit all types of gambling in the state, including online gaming. The new law aims to reinforce the Karnataka Police Act by making gambling a cognizable and non-bailable offence, as well as to "curb the problem of gaming through the Internet and mobile apps."

However, the Karnataka Police (Amendment) Bill, 2021 was passed by the legislature despite a similar bill passed in Tamil Nadu in February, the Tamil Nadu Gambling and Police Laws (Amendment) Act, 2021, being ruled down by the Madras High Court this August as being ultra vires (invalid). As a result, there are genuine concerns that the new law enacted by Karnataka will be challenged in higher courts.

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