Gaming apps block access in Karnataka as ban takes effect

Sequoia Capital-funded Mobile Premier League (MPL) was among the first few gaming startups that began blocking access to users in the Indian state of Karnataka on Wednesday following a ban on online gaming.

The law, which came into effect late on Tuesday, bans online games involving betting and wagering, and "any act or risking money, or otherwise on the unknown result of an event including on a game of skill".

The latest ban has intensified concerns that growing state regulations could hit the nascent but booming gaming sector in India, where foreign investors have pumped in millions of dollars in recent months.

On Wednesday morning, MPL's gaming app showed messages to users in Karnataka that said: "Sorry! The law in your state does not permit you to play Fantasy sports", "Fantasy games are locked" and "cash games are locked".

The gaming app offers fantasy cricket and football games and allows real-money wagering on them.

Dream11, one of India's most popular gaming apps backed by Tiger Global, was still operational, but Paytm First Games was not.

Dream11 declined to comment, while MPL and Paytm did not immediately respond.

Karnataka, home to some of the world's biggest tech companies and India's tech capital Bengaluru, is the latest Indian state that has banned such online games after Telangana and Andhra Pradesh. Tamil Nadu had also imposed such bans, but its bill was struck down by its high court.

An industry source had told Reuters earlier that these states were important for the gaming business and account for roughly 20% of the total business for companies.

Roland Landers, the chief executive of the All India Gaming Federation, said "the industry will challenge this in court and seek legal recourse".

Two other industry sources told Reuters on Wednesday that gamers and some companies were planning to file court challenges against the new Karnataka law.

The law imposes hefty fines and prison terms on violaters and has been implemented amid growing concerns that online gaming platforms, like gambling, are addictive and can cause financial harm.

 

(Reporting by Chandini Monappa and Vishwadha Chander in Bengaluru and Aditya Kalra in New Delhi; Editing by Subhranshu Sahu)