Introduction:
In the age of pandemic and unprecedented technological advancement, fantasy sports is the new way of transforming passive viewers into active participants in their beloved sports, and the surge in the popularity of Online Fantasy Gaming in India during the past few years only exemplifies this claim. The term ‘Online Fantasy Sports’ refers to the online games on various platforms, where the users get to assemble teams with counterparts based on real players of professional games. The users can pose as the managers of their teams, and use their knowledge regarding the proficiency of the various players to build a virtual team and participate in games modeled on the conditions of the real game. These players are then allotted points in the game based on their real-life performances and thus, the users get to engage with these games in a personal capacity while also retaining an interest in the real games. Such fantasy games have been gradually gaining popularity since the advent of the Internet in the 1990s, but it wasn’t until the 2000s that these games became popular in India, with the most popular platform being Dream11. This platform has grown exponentially since its inception in 2008 and even earned the title sponsorship of IPL 2020. This widespread popularity of fantasy sports and cricket in particular, in India, can be accredited to the large-scale following that the game of cricket garners in the country. While fantasy sports in India have yet to go a long way when compared to the US and Canada, the industry is growing dynamically with almost 100 million users joining various platforms in 2020.
Despite being such an incessantly growing industry, it is curious to note how vague and ambiguous the regulation regarding fantasy games currently is. As these games involve real money transactions, it has been considered by some to be on the lines of betting and gambling. Hence, the major issue in the debates regarding the legality of these games remains whether they come under the ambit of betting/gambling or the legally permitted ‘games of skill’. Here, it is important to note that betting and gambling fall under the 2nd list of the 7th Schedule of the Indian Constitution, and hence, the states have the discretion to regulate the same. While some states like Andhra Pradesh, Assam, Sikkim, Nagaland, Tamil Nadu, Telangana, and Odisha have banned online fantasy sports, there is currently no central legislation on the same. This leaves a gaping hole in place of any concrete centralized legislation on these games. This lack of regulation is particularly harmful because these games attract large amounts of domestic and foreign investors, who are deterred in light of these ambiguities.
Before the enforcement of the Constitution, the Public Gambling Act of 1867 regulated gambling in the country. As per this Act, all forms of betting, including online betting, are illegal in India. However, the Act does make an exception for games of ‘mere skill’ as mentioned in Section 12. After the promulgation of the Indian Constitution, the states retained the power to legislate upon the subject of gambling as mentioned under Entry 34 of List II of the Seventh Schedule as well as the power to legislate upon the taxation of gambling and betting, as mentioned under Entry 62 of the same list. Currently, all states in India, except Sikkim and Goa, explicitly prohibit any sort of betting or gambling on games of chance while many others have banned fantasy sports as a whole. Hence, the differential approach to the legislation as well as the vagueness of the terms ‘game of skill’ and ‘games of chance’ create much ambiguity.
Game of Skill v. Game of Chance
The terms ‘game of skill’ and ‘game of chance’ have largely been left to the interpretation of the courts when considering the legality of fantasy gaming and hence, it is imperative to consider the exact meanings of the two. A game of skill primarily involves games where factors like efficiency and practice play a big role and where one can improve with time and practice. Real-time sports such as cricket and football are prime examples of this kind. On the other hand, games of chance are ones where efficiency plays an insignificant role and mere luck determines the outcomes. The lines between the two are hence, often blurred in games like cards, where chance does play a major role in determining the winner, but the players must also be well-acquainted with the rules and strategies of the game.
Hence, the courts often determine these terms on a case-by-case basis, but majorly consider one criterion: games of skill can be improved upon over time while games of chance cannot. While games of skill are allowed in most parts of the country, games of chance are completely prohibited in most parts of India, owing to their historic perception of immorality and indecency in the country. Hence, while The Public Gambling Act of 1867 is the central legislation currently that explicitly prohibits gambling as considered to be a game of chance, it does allow certain games that would require ‘mere skill’. The Act, however, does not explicitly state what can be considered as a ‘game of skill’. This term was first interpreted by courts in the case of State of Bombay v. R.M.D. Chamarbaugwala[1], where the court stated that such games must be predominantly determined by skill, regardless of whether they contain elements of chance as well. In State of Andhra Pradesh v. K. Satyanarayan[2], the court opined upon what constitutes a ‘game of skill’, where it was held that “Rummy” would be considered a game of skill as it requires skills such as memorization and judgment. Subsequently, in K.R. Lakshaman v. State of Tamil Nadu[3], horse-racing was held to be a game of skill and it was stated that games where the success primarily depended upon knowledge, training, experience, and adroitness and the element of skill dominated upon the element of chance, would be considered ‘games of skill’. Hence, the ‘dominant factor test’ was established, which recognizes the fact that most games contain both an element of luck as well as skill. However, the dominant factor between the two must be considered to determine it to be a game of ‘chance’ or ‘mere skill’.
The Legality of Fantasy Sports in India
In the matter of Varun Gumber v. Union Territory of Chandigarh[4], the High Courts of Punjab and Haryana, Dream11 was held to be a game of skill, and the courts also provided numerous reasons for this claim. First, the users of these games assemble virtual teams that require them to assess the individual potential of these players against that of the other available selections. Further, since no virtual team can contain more than 7 players from a single team, a duplicate version of a real-life team cannot be created. These users, who serve as managers to their teams, must constantly monitor scores, wickets, runs, and catches as well as conditions of the pitch and match. Additionally, they must also assess the individual potential of each player and choose a ‘captain’ and ‘vice-captain’. All of these technicalities require a certain level of acquaintance with the game of cricket and hence, must be considered under the ambit of ‘game of skill’. In Gurdeep Singh Sarchar v. Union of India[5], the Bombay High Court upheld the decision of the Punjab and Haryana High Courts and stated that since the platform does not require its users to bet on real-life outcomes of the game but merely assemble teams modeled on the real-life conditions, it cannot be considered as gambling. In the case of Chandresh Sankhla v. State of Rajasthan[6]. The petitioner filed a PIL in the Rajasthan High Court against Dream11 and the state government for promoting gambling amongst the youth. The petitioner prayed to stop Dream11 and their ‘organized crime’ in the country. The court held that the result of the fantasy game did not depend on the winning or losing of any particular team in the real world on any given day. The petitioner himself had also created a virtual cricket team as per his selection and judgment. The court relied on the Varun Gumber and Gurdeep Sachar decisions as well as dismissals to the challenges against these decisions by the Supreme Court, to hold that the issue of the legitimacy of fantasy sports is no longer open for debate.[7]
However, the Supreme Court of India, by its order dated 6 March 2020 has stayed the operation of the decision rendered by the Bombay High Court and the issue remains unresolved. As recently as August 2021, the Supreme Court upheld the validity of the fantasy sports platforms in an appeal made against the aforementioned Rajasthan High Court order.
Initiatives for Regulation
The regulation regarding these platforms is uncertain not only due to its jurisdiction being enjoyed by the states individually but also due to the differential interpretation of the terms that are mentioned under this archaic law governing gambling. Additionally, since the platforms operate through online mediums, it becomes even more difficult to legislate upon its regulation. In light of these issues, the Federation of Indian Fantasy Sports was set up as the online fantasy sports industry that gained popularity in India. It is a self-regulatory body that formulates ethical practices to ensure the protection of the consumers of these services. The FIFS publishes a charter that must be abided by the various fantasy sports platforms like DREAM11, MYTEAM11, FANCODE, and so on.
The Ministry of Information and Broadcasting also issued an advisory requesting all private television broadcasters to follow the guidelines issued by the Advertising Standards Council of India (ASCI) when making advertisements relating to online fantasy gaming. It requires that every gaming advertisement must carry the following disclaimer: “This game involves an element of financial risk and may be addictive. Please play responsibly and at your own risk” and such a disclaimer occupies at least 20% of the advertisement space. The guidelines also require that gaming advertisements do not depict users under the age of 18 years as engaged in playing a game of “online gaming for real money winnings” or suggest that such users can play these games. The advertisements should neither suggest that online gaming presents an income generating opportunity as an alternative to employment nor depict a person playing such games as more successful than others.[8]
NITI Aayog Recommendations
The NITI Aayog, a public policy think-tank of the Government of India, upon acknowledging the legislative void regarding the issue of these games, noted that the platforms “have to shelter under an undefined exception to the state gambling and public order laws”. It had released a draft discussion paper in December 2020, on Guiding Principles for the Uniform National Level Regulation of Online Fantasy Sports Platforms in India (“Discussion Paper”).
The draft points out the following impediments to the industry as a result of the legislative void –
- There is no strict or universally applicable rule as to which games would be considered as a ‘game of skill’ and which one a ‘game of chance’. Hence, this lack of clarity often stifles creativity.
- The variations between the rules that the states impose pose an unnecessary issue of ambiguity and also make things more vague and difficult for the platforms that need to comply with these rules. Hence, uniformity in the rules would ensure clarity and better compliance.
- Differential regulation in various states also makes it harder for the public to comply with these rules. For example, a user living normally in Delhi may face prosecution if using the app within Nagaland.[9]
Through the Discussion Paper, NITI Aayog has put forth the proposal for formal recognition of the fantasy sports industry and proper governance which will involve principle-based guidelines, recognized both at the national and the state level institutions. Hence, it was recognized by NITI Aayog by this draft, that the lack of uniformity in regulation and implementation is stifling innovation and in turn, deterring the foreign investors from the industry. It thus proposed a self-regulatory organization to regulate the functioning of these platforms, which would be supervised by an independent board. Such an organization would also contain a committee that would determine the ‘skill’ level in the game. Acknowledging the gaps existing in the legislation around these games in various states, the body suggested that self-regulatory organizations could request State governments to consider granting online fantasy sports platforms immunity from criminal prosecution subject to compliance with the guidelines and other applicable laws. Further, NITI Aayog also proposed the formulation of guidelines for these platforms which would include ensuring proper governance, transparency, and consumer protection, and also ensuring that the platforms function in compliance with the applicable laws of India. The guidelines provided by NITI Aayog must be succeeded with robust implementation to ensure that the fantasy gaming industry is allowed to grow lucratively in the coming years.
Conclusion
As it stands, the current legislation regarding the online gaming industry, and fantasy gaming, in particular, requires a robust revamp considering the archaic laws they are still governed by. Not only will proper legislation ensure the curbing of illegal activities on these platforms but it will also garner greater investments by increasing accountability. While various courts have, on several occasions, reiterated the legality of these activities, the restrictions in light of the Public Gambling Act continue to haunt the emerging industry. What is curious, however, is that its restrictions have been brought forth more due to the aspect of taxability of betting and gambling than due to any legality questions per se. Hence, it is the need of the hour to do away with such archaic legislation in light of modern changes.
References:
[1] 1957 AIR 699
[2] 1968 AIR 825
[3] 2 SCC 226.(1996)
[4] CWP No. 7559 [2017]
[5] Cri. PIL No. 16 [2019]
[6] C.W. No. 6653 [2019]
[7] Ashmin, Fantasy Sports and Law: An Indian Perspective, https://www.ashrayalegal.com/2021/03/03/fantasy-sports-and-law-an-indian-perspective/
[8] Ministry of Information and Broadcasting, https://mib.gov.in/sites/default/files/Advisory.pdf
[9] Sudhansu Sahoo, Fantasy Sports in India: a Report, https://www.mondaq.com/india/gaming/1112720/fantasy-sports-in-india-a-report
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