FIFS implores Karnataka government to remove ambiguity in bill banning online gaming for stakes

Karnataka’s legislative assembly on Tuesday passed the Karnataka Police (Amendment) Bill, 2021 to ban all forms of online gaming for stakes in the state. The bill tabled on September 17, advocates maximum imprisonment of three years and a penalty up to Rs 1 lakh for those indulging in online gaming or betting in the state.

The bill proposes to amend the gaming and police laws seeking to prohibit online gambling, betting, and wagering in all forms (“the Bill”). The said Bill while being well-intentioned legislation creates confusion and uncertainty for legitimate online fantasy sports businesses. While the government’s concerns may be valid, the bill appears to be misguided since it penalizes legitimate businesses by treating them at par with illegal online gambling, betting, and wagering platforms.

FIFS’ (Federation of Indian Fantasy Sports) legal experts opined that the bill’s agenda is contrary to a catena of judgments delivered by the courts. In fact, vide judgment dated 30 July 2021 the Supreme Court has upheld the validity of online fantasy sports by stating that the issue of whether fantasy sports format amounts to gambling or betting or wagering is no longer res integra.

Moreover, the Supreme Court also reaffirmed the judgments of the Rajasthan, Punjab, and Haryana, and Bombay High Courts all of which upheld the validity of fantasy sports as being legitimate businesses entitled to protection under Article 19(1)(g) and Article 14 of the Constitution of India.

The Rajasthan High Court vide judgment dated  22 July 2021, opined as follows (extract 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 sui generis which is a unique and independent legal class of digital sports engagement platforms based on officially sanctioned real-live sporting events. It appears that the Bill intends to treat unequal equally which would be in violation of Article 14 of the Constitution through an overbroad and ambiguous definition of ‘gaming’.

Given the unique nature of fantasy sports, the FIFS members urge the government to respect and align with the judicial and constitutional protections provided to its business activities.  

FIFS has many of its member companies with operating offices in the IT and ITES hubs where they are creating and developing software and services products and technologies for the fantasy sports sector.

According to a report by NITI Aayog on online fantasy sports, the sector has the potential to create over 12,000 additional highly skilled engineering jobs in the next few years, attract an FDI of over Rs 10,000 crore and contribute over Rs 13,500 crores in taxes to the government.

FIFS and its members strongly believe that certainty is integral to the rule of law and hence the Bill needs to provide certainty and clarity to businesses, the investor community as well as consumers for the orderly growth and development of the industry.

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FIFS members have been doing a yeomen service nationally and in the state of Karnataka by sponsoring, investing, and building the sports ecosystem. Almost every major sports tournament, league, International, national-level competitions have investments and partnerships with our member companies. Such confusing signals from the Karnataka government could result in impeding the development of sports in the state.

“Today, India is the world’s largest market for fantasy sports by user base, and the Indian entrepreneurs who have built these businesses epitomize the prime minister’s vision of AatmaNirbhar Bharat which is a technology built in India, for India, by Indians. It is imperative that the State Govt. recognizes that the unintended beneficiaries of this bill would be the grey market platforms and offshore online gambling/betting companies which pose a serious risk to Indian users,” shared FIFS in a statement.

FIFS implored the Karnataka government to remove any ambiguity or uncertainty in the bill to ensure continuity and growth of the fantasy sports sector in the State.

Priyank Kharge who is the former Minister for IT, Tourism & Social Welfare, Govt of Karnataka also took to Twitter, excoriating the bill in a series of tweets. “Govt needs to be more specific & identify games that encourage betting instead of a blanket ban for all online games. Govt should form a committee With industry stakeholders & come out with a law that curbs online betting instead of a bill that won’t stand the test of law,” he shared.

Calling out the decision, he shared, “Moreover, it doesn’t look like the State has even bothered looking at the most recent judgment of Junglee Games v/s State of TN which struck down TN Govt’s Police & Gaming Amendment which is on the same line.”

With criticism against the move piling up with each passing day, it remains to be seen how India’s online gaming ecosystem will overcome this upheaval.