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Dream11, one of India's most popular gaming apps backed by Tiger Global, has suspended operations in the southern Indian state of Karnataka after a complaint was registered against its founders claiming it was in violation of a new state gambling law.

"Following the recent media coverage, our Karnataka users have expressed deep concerns and anxiety on their safety and security. In order to allay our users' concerns, we have decided to suspend operations in Karnataka. This decision is without prejudice to our rights and contentions under law," Dream11 said in a statement on Sunday.

The online fantasy gaming platform took to Twitter to announce the suspension: 

Police records on Saturday showed a case has been registered in India's tech capital Bengaluru, in Karnataka, following a complaint by a 42-year-old cab driver who reported it as being operational after a ban on online games involving betting came into force.

Dream11, which provides a fantasy gaming platform for various sports, last year became India's first gaming startup to be valued at over $1 billion. It has faced legal challenges in the past due to the similarities of fantasy gaming to gambling.

The state law, which came into effect last week, 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".

A Dream11 spokesperson said on Saturday that the company is examining its legal remedies, and added that "we are a responsible, law abiding company and will extend our full cooperation to any authorities".

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.

Dream11 was still operational, but Paytm First Games was not.

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.

With inputs from Reuters

 

 

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