Karnataka’s Bill erroneously clubs the ‘good’ with the ‘bad’

Press Release

• 30-09-2021

The Karnataka Police (Amendment) Bill, 2021 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 a well-intentioned legislation creates confusion and uncertainty for legitimate online fantasy sports businesses. While the government's concerns are maybe valid, however, 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's legal experts have opined that the Bill runs contrary to a catena of judgments delivered by the Courts. In fact, vide judgment dated July 30th, 2021 the Hon’ble Supreme Court finally 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. Further, the Hon’ble Supreme Court also reaffirmed the judgments of the Rajasthan, Punjab & Haryana & 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. Going one step further the Rajasthan High Court vide judgment dated  22nd July 2021, opined as follows (extract below):

quote “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.” unquote;

Online Fantasy Sports is sui generis i.e. 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 & 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 INR 10,000 crore and contribute over INR 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.

Needless to add, Members of FIFS 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 Hon’ble Prime Minister’s vision of AatmaNirbhar Bharat i.e. 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. 

Therefore, on behalf of the members of FIFS, we request 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.

PK Misra, President of the Players Association at AIGF (Ex-IAS) stated “Considering the support the online skill-based gaming sector has received in past rulings by both the Supreme Court - under article 19(1)(g) of the Indian Constitution, and various Karnataka High Court judgments, the move by the Karnataka government in tabling the Karnataka Police (Amendment) Compliance Act, 2021 comes as a real setback to the large professional player's community that resides in the state. These players, who represent India in domestic and international level tournaments such as the 2018 Asian Games and World Series of Poker look to this globally accepted sector as a means to their livelihood, which has already witnessed a severe impact due to the Covid-19 pandemic. I really hope the state is able to review this matter and to adhere to a clear distinction between gambling and skill-based gaming.”    

“India is the fifth-largest online gaming market globally and skill-based gaming, a sunrise sector, is giving birth to an increasing number of unicorns within the country, especially Karnataka. The sector has been a strong financial contributor to the Indian economy even during an unprecedented period of slowdown and is further expected to generate revenues in excess of $3 billion by 2025. The move by the Karnataka government in tabling the Karnataka Police (Amendment) Compliance Act, 2021 act is highly regressive in nature and a huge setback to the state's reputation of being a tech-hub and start-up capital. Skill-based gaming cannot be compared with gambling, and banning is not a solution. The sector needs the support of state governments to promote initiatives towards responsible gaming and recognition of the AIGF ‘Self-regulation Framework’. AIGF and its advisory members look forward to an opportunity to engage stakeholders within the state government to make an industry representation on the matter.” stated Roland Landers, CEO, AIGF. 

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