Dream11 suspends its operations in Karnataka

Fantasy sports platform Dream11 has suspended its operations for users in Karnataka following a first information report (FIR) lodged against the company’s founders for violating the new law banning wagering and betting in online games.

Dream11 continued to operate in the state until the first half of Sunday even though its peers including Mobile Premier League (MPL), Paytm First Games and RummyCircle had suspended their services for users in Karnataka after the state legislature had passed a law banning money wagering and betting platforms.

“In order to allay our users’ concerns, we have decided to suspend operations in Karnataka,” said Dream11 in a press statement. The Mumbai-based company further added that it is compliant with all the laws.

According to the company, it has been advised by the Federation of Indian Fantasy Sports (FIFS) that the Karnataka Police (Amendment) Act 2021 does not apply to its member Fantasy Sports Operators. “The FIFS format of Fantasy Sports has been upheld by the courts of India as not amounting to gambling, betting or wagering,” the statement added.

The withdrawal of the app comes soon after an FIR was registered against Dream11 co-founders Harsh Jain and Bhavit Sheth by Annapoorneshwarinagar Police Station in West Bengaluru.

Before Karnataka, states like Assam, Odisha, Nagaland, Sikkim, Meghalaya, Andhra Pradesh and Telangana had already outlawed online gaming apps. While fantasy sports platforms position themselves as a game of skill, Karnaraka’s ban doesn’t include games of skill but only their money wagering component.

Earlier, the FIFS [Federation of Indian Fantasy Sports] members had urged the Karnataka government to respect and align with the judicial and constitutional protections provided to its business activities. Dream11 is the founding member of FIFS, which also counts MPL as one of its members. 

To recall, the Supreme Court in August had upheld a verdict by the Rajasthan High Court, holding that Dream11 was a game of skill and not chance. 

Dream11 is the highest valued startup among real money gaming platforms. According to Entrackr’s exclusive report on August 30, the Tiger Global-backed company is in late-stage talks to mop up a new round at over $8 billion valuation. 

Dream11 is also one of the top consumer internet unicorns in India with a hefty profit. 

According to Fintrackr, the company had posted Rs 181 crore in profit with operating revenue of Rs 2,070 crore in FY20. The company is yet to file its annual financial report for FY21.