Karnataka HC quashes FIR filed last year against Dream11 co-founders

In February, the Karnataka High Court struck down a state government law that banned online gambling

An FIR filed last year against Dream11 co-founders Harsh Jain and Bhavit Sheth in Bengaluru has been quashed by the Karnataka High Court.

This was done on the grounds that in view of a division bench’s order striking down several provisions of Karnataka Police (Amendment) Act, 2021 – which had banned real money based online gaming in the state – nothing remains in the FIR.

In February, the Karnataka High Court struck down a state government law that banned online gaming. The state government had notified the law banning betting and wagering in online games in October last year, after Governor Thawar Chand Gehlot gave his assent.

“While the development is a positive step and a temporary relief, however if the Karnataka Govt were to challenge the decision bench order before the High Court or make a specific legislation on fantasy gaming then the nascent industry could face a major challenge,” said Salman Waris, a partner at Delhi-based law firm TechLegis.

The Tamil Nadu government had, earlier last year, passed a law to ban online games such as rummy, poker and other skill-based games that involve betting and money prizes, but it was revoked in August 2021. Other states that have clamped down on the industry include Telangana, Andhra Pradesh, Kerala, Assam and Odisha.

Senior Advocate Gopal Jain said, "Several High Courts are gradually but steadily recognising the distinction between fantasy sports and games of chance, gambling, betting and wagering.”

“The FIR registered by Karnataka Police against Dream11 founders was quashed in court today, signalling another positive step toward deeming India's sunshine sector legal. Such moves will enable more investment in the fantasy sports industry, which has already extensively contributed to creating a deeper engagement with sports,” he added.

Dream Sports, the parent firm of fantasy sports platform Dream11, raised an investment of $840 million at a valuation of $8 billion in November. This was led by Falcon Edge, DST Global, D1 Capital, Redbird Capital and Tiger Global, even though the larger gaming sector faced regulatory uncertainty.

While Dream Sports is the most valuable start-up in the sector, Virat Kohli-backed MPL is at the second spot as it raised $350 million at a valuation of $2.3 billion in September 2021.