Indian state of Silicon Valley seeks to ban online gaming, worrying booming industry



By Vishwadha Chander and Aditya Kalra

BENGALURU (Reuters) – The Indian state of Karnataka, home to India’s Silicon Valley, has proposed a ban on online gambling involving wagering and betting, sparking fears that growing state regulation will hit the nascent industry but booming.

Karnataka proposes an amendment to the Karnataka Police Act to include such online gambling, seeking to prohibit “any act or risking money, or otherwise on the unknown outcome of an event, including on gambling address, “according to the bill seen by Reuters. Many breaches of the law already result in prison terms, and the bill proposes to increase those penalties.

The Karnataka government said the bill was necessary because young people in rural areas, mostly inactive in cities during the COVID-19 pandemic, “showed a tendency to become habitual gamers.”

It comes as the fantastic online gaming platforms such as Dream11, backed by Tiger Global, and the Premier League mobile (MPL) funded by Sequoia Capital, which features fantastic cricket and soccer games, have become increasingly popular. popular in India.

Karnataka, home to some of the world’s largest tech companies and India’s tech capital, Bengaluru, is the fourth Indian state to seek to ban online gambling involving cash prizes after Telangana, Tamil Nadu and Andhra Pradesh .

“The business of MPL, Dream11 and everyone in the industry will suffer,” said a gaming industry source, who declined to be named because the person was not authorized to speak to the media.

“These states are important – they account for about 20% (of the total) of the business of these companies.”

India’s online gambling industry has grown in recent years. Foreign investors have shown increasing interest in supporting Indian gaming startups since last year, as the COVID-19 pandemic has caused people to stay stuck indoors towards such games.

India currently has more than 400 online gaming startups and as of 2020 around 360 million gamers, according to a report by the EY-All India Gaming Federation. Online gamers are expected to reach 510 million by 2022 and the industry will be worth $ 2 billion by 2023, according to the report.

The Dream11 and MPL platforms, offering paid contests with cash prizes for players, have grown rapidly in recent months with extensive marketing and hiring. Dream11 is seeking a listing in the United States by early next year, local media have said.

Such growth has raised concerns that these platforms, like gambling, are addictive and can cause financial damage.

The Indian states of Tamil Nadu, Telangana, and Andhra Pradesh have all banned online games offering cash prizes in recent years, though Tamil Nadu’s bill was later overturned by its high Court.

Sandeep Chilana, a New Delhi-based lawyer, said these laws have weak legal status as the Supreme Court has repeatedly ruled that games of skill – like fantasy cricket – are not like the game that remains largely banned throughout India.

“Indian states are going too far and will face legal challenges in banning such games of skill,” Chilana said.

Karnataka’s proposal also comes at an inopportune time for the industry, during the popular Indian Premier League cricket tournament. The fantastic gaming competitions around the tournament are one of the biggest fee generators for online gaming companies, said a second industry source, who asked not to be identified.

The potential ban will also hurt professional players, said the Esports Players Welfare Association, a non-profit organization for online gamers.

“Games and electronic sports are areas where skills can be developed, which is not a sinful activity,” the group said.

(Reporting by Vishwadha Chander in Bengaluru and Aditya Kalra in New Delhi; Additional reporting by Chandini Monnappa; Editing by Ana Nicolaci da Costa)


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