FIFS Pleads Karnataka Government to Remove Doubt in Bill Banning Online Gaming for Stakes

Karnataka's legislative assembly passed the Karnataka Police (Amendment) Bill, 2021 on Tuesday, outlawing all kinds of internet gambling for monetary gain in the state. The law, which was introduced on September 17, proposes a maximum sentence of three years in prison and a fine of up to Rs 1 lakh for anyone who engages in online gaming or betting in the state.

The bill intends to alter gaming and police legislation in order to outlaw all kinds of internet gambling, betting, and wagering (“the Bill”). While well-intentioned legislation, the aforementioned Bill causes confusion and ambiguity for genuine online fantasy sports enterprises. While the government's worries are understandable, the bill appears to be misplaced in that it penalizes respectable enterprises by lumping them in with illicit online gaming, betting, and wagering services.

The legal experts of FIFS (Federation of Indian Fantasy Sports) believe that the bill's agenda contradicts a slew of court decisions. In reality, the Supreme Court has affirmed the legality of online fantasy sports in a ruling dated 30 July 2021, noting that the question of whether fantasy sports format constitutes gambling, betting, or wagering is no longer res integra.

Furthermore, the Supreme Court reaffirmed the judgments of the Rajasthan, Punjab, and Haryana High Courts, as well as the Bombay High Court, all of which upheld the legitimacy of fantasy sports as legitimate businesses entitled to protection under Article 19(1)(g) and Article 14 of the Indian Constitution.

Rajasthan High Court vide judgment

In its ruling dated 22 July 2021, the Rajasthan High Court stated (excerpt below):

“We are, therefore, of the view that offering of online fantasy sports in accordance with the Charter of the FIFS has already been judicially recognized as a business and consequently, entitled to protection under Article 19(1)(g) of the Constitution of India and the prayer seeking directions to the State Government to prohibit the same would be opposed to Article 14 and 19(1)(g) of the Constitution of India.”

Online fantasy sports is a distinct and distinct legal class of digital sports interaction platforms based on legally sanctioned live sporting events. Through an overbroad and vague definition of ‘gaming,' it appears that the Bill aims to treat unequal similarly, which would be a violation of Article 14 of the Constitution.

Given the unique character of fantasy sports, FIFS members ask the government to recognize and adhere to the judicial and constitutional safeguards afforded to its commercial operations.

Many of FIFS's member firms have operational offices in IT and ITES centers, where they create and develop software, services, products, and technology for the fantasy sports industry.

According to a NITI Aayog research on online fantasy sports, the industry has the potential to create over 12,000 new highly skilled technical jobs in the next few years, attract over Rs 10,000 crore in FDI, and pay over Rs 13,500 crore in taxes to the government.

FIFS and its members believe the Bill needs to provide certainty and clarity to businesses

FIFS and its members think that certainty is essential to the rule of law, and so the Bill must give certainty and clarity to companies, the investment community, and consumers in order for the sector to flourish and evolve in an orderly manner.

By sponsoring, investing, and growing the sports ecosystem, FIFS members have done a great service both nationally and in the state of Karnataka. Almost every major sporting event, league, international, and national-level competition has investments and relationships with one of our member firms. Such perplexing messages from the Karnataka administration may stymie the development of sports in the state.

Today, India has the world's largest user population for fantasy sports, and the Indian entrepreneurs who have established these enterprises exemplify the prime minister's vision of Atma Nirbhar Bharat, which is about technology built in India, for India, and by Indians. It is critical that the State Government realizes that the unintended beneficiaries of this bill would be grey market platforms and offshore online gambling/betting businesses, which represent a major risk to Indian customers, according to a statement from FIFS.

FIFS urged the Karnataka government to remove any ambiguity or confusion in the law in order to safeguard the continuation and expansion of the state's fantasy sports industry.

Former Karnataka Minister for IT, Tourism, and Social Welfare Priyank Kharge rushed to Twitter to condemn the law in a series of tweets.

With the backlash against the decision growing by the day, it remains to be seen how India's online gaming sector can weather the storm.

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