Skill gaming startups caught in Karnataka's online gambling ban

Business Standard Skill gaming startups caught in Karnataka's online gambling ban

For sectors like 'online gaming' and 'cryptocurrency', one word that best describes the present regulatory scenario is 'ambiguous'.

Both sectors are booming in India, but governments have their concerns related to user safety.

This dilemma played out again recently, with Karnataka notifying a law to ban online gambling and betting.

The law provides for up to three years of imprisonment, or a fine of up to Rs 1 lakh.

And here's the confusing part…

The Karnataka law states that 'games of chance' like online casinos and betting websites should be banned. But additionally, it has said that 'games of skill' where there is a risk of the player losing money should also be banned.

Now, several Indian courts have previously called games like poker, rummy, and fantasy sports 'games of skill' and deemed them legal. The Supreme Court, too, upheld Dream11's online fantasy sports format as a 'game of skill'.

The ban has come into effect and top gaming companies such as Mobile Premier League, have begun informing Karnataka users that the law in their state doesn't allow playing games for cash.

Nazara-owned fantasy sports app Halaplay, Paytm First Games and online rummy portals Ace2Three and RummyCulture have also stopped offering cash games to users in Karnataka.

Dream11 didn't suspend its cash games along with everyone else, leading to an FIR against the company.

Dream11 has claimed that the complaint is 'motivated', but it has also suspended its services in Karnataka now.

A source close to one of the gaming companies affected by the ban said the company was blocking access to Karnataka users through their IP addresses and KYC information.

The source added that the gaming company also had VPN blockers to ensure Karnataka users wouldn't bypass the ban.

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