Dream11, one of India’s most popular gaming apps and a major sponsor of India cricket, 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 that outlaws any such activities.

“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 company, however, looked to explain that such a government ban may not apply to it.

“The Karnataka Police Act recently amended its gaming law to prohibit online gambling, betting and wagering. We have been advised by the Federation of Indian Fantasy Sports (FIFS), who have shared an opinion from a former Supreme Court Judge, stating that the Karnataka Police (Amendment) Act 2021 does not apply to its member Fantasy Sports Operators. This is because the FIFS format of Fantasy Sports has been upheld by the hon’ble Courts of India as not amounting to gambling, betting or wagering,” the gaming company added.

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 Dream11 as being operational after a ban on online games involving betting came into force in the State, Reuters reported Sunday from New Delhi.

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”.

Meanwhile, last week various gaming companies began blocking access to users in Karnataka following the ban on online gaming.

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, Reuters reported from Bengaluru and New Delhi

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.

Earlier, an industry body IAMAI had criticized the Karnataka law stating the law to ban on online games was badly drafted and not progressive.

In a statement, IAMAI said the bill “appears to have been drafted without considering the various legal and constitutional positions by including a wide definition of ‘gaming’ in amendments” against various judgements of the Supreme Court and high courts.

“Legislative actions such as this, may create a cloud of confusion and create regulatory uncertainty, which may unintentionally result in investors recalibrating their investments in the state and many existing companies may consider shifting base from the state,” IAMAI had said in a statement.