For the first time in India, a legal battle has begun against the ban on online money games
Money Games Ban: In the first action against a rule that caused the abrupt closure of well-known competitions and has cast doubt on the future of the business, Indian gaming firm A23 has contested the government’s prohibition on online money-based games, according to a court filing.
Last week, the government of Prime Minister Narendra Modi passed legislation outlawing these games, which the industry claims depend on ability and are not gambling. In India, gambling was already strictly regulated.
The law is a blow to a sector supported by venture capital companies like Tiger Global and Peak XV Partners, which, according to industry estimates, was expected to reach a valuation of $3.6 billion in India by 2029.
A23, a company that provides poker and rummy games, said in a legal filing at the High Court of Karnataka in southwest India that the statute “criminalizes the legitimate business of playing online games of skill, which would result in the closure of various gaming companies overnight.”
A23 said in its complaint that the new regulation is a “product of state paternalism” and requested that it be ruled unlawful when it comes to skill-based games like poker and rummy.
Reuters examined the August 28 filing, which is not publicly available. Questions were not immediately answered by India’s IT minister.
According to A23.com, there are over 70 million users on this online gaming site. The popularity of applications like Dream11 and Mobile Premier League, which build virtual cricket teams based on actual players and award points for runs, wickets, and catches, has increased thanks to endorsements from top Indian cricket players and other marketing initiatives.
Following the restriction, both apps stopped offering their money games.
A senior source at the gaming firm told Reuters that MPL has chosen not to fight the gaming legislation in court and has instructed industry organizations it is a part of to concentrate on free-to-play revenue models instead. The individual requested anonymity, as they lacked the authority to discuss the matter in public.
Dream11’s CEO, Harsh Jain, told CNBC TV 18 this week that “95% of our group’s revenues have disappeared overnight,” but the company would not contest the legislation either.
Dream11 said that it intends to “build a great Indian sports company, driven by AI and the creator economy,” while the MPL did not reply to questions from Reuters.
The administration of Modi has often voiced its displeasure with money-based games, claiming that they lead to addiction. It said that it had an obligation to combat “social evils” when it announced the legislation last week.