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Fantasy Sports And It’s Legality In India

Introduction

Recently Google pulled Paytm and Paytm games from its app store regarding repeated violation of its Gambling policy. [1] It was alleged that Paytm promoted 3rd party fantasy sports gambling app in its app which is violative of google gambling policy. Google has a strict policy related to Gambling, it earlier gave notice to Disney + Hotstar, for not showing warning before displaying ads related to online gambling. Google’s intervention fuelled controversy on whether fantasy sports applications should be regarded as a gambling application or not. This debate now has a higher significance when the title sponsor of IPL is Dream11 which is itself a fantasy sports app.

According to the IFSG-KPMG report the market of fantasy sports in India is humongous currently there is 20 million fantasy gamer and the industry is projected to become a one billion dollar industry by 2021[2].

Law Related To Gambling

In India gambling is strictly prohibited and punishable under Section 4 of The Public Gambling Act of 1867[3] . But this age-old law nowhere mentions the word “online Gambling” in it and there is no recent amendment to this law. In India, everything that has any connection to the internet is governed by the Information Technology Act, 2000 and surprisingly this Act also has no imprint of online gambling in it. The reason why gambling is banned in India because gambling is considered as a game of chance and not a game of skill. But under Section 12 of this Act expressly state that this law does not apply to the game where there is skill involved and this won’t be considered as gambling [4].

In a simpler term, a  game of chance is a game whose outcome is affected by a random number generator in which the participant may choose to gamble money for that outcome. While in a game of skill, A person bet on the outcome which comes out of the skills of the person gambling or any other person. A nice explanation and interpretation of the term ‘mere skill’ were explained by Venkatarama Ayyar in the case of R.M.D. Chamarbaugwala v. Union of India [5] wherein the Court said the phrase ‘game of mere skill’ to mean “preponderantly a game of skill” in detailed orders and has held that despite there being an element of chance, if a game is “preponderantly a game of skill”, in essence, the skill dominates over the element of luck/chance it would nevertheless be a game of mere skill.

But Gujrat high Court in Dominance Games Pvt. Ltd. v. State of Gujarat & Ors[6] held that poker is a game of chance and accordingly poker games and conducting the poker games falls within the prohibitions under the Gujarat Gambling Legislation it also said that a game in which even if the skill is involved but is played with stakes would fall within the ambit of gambling. In my point of view, this should be the criteria for a game to be considered as a game of skill or as a  game of chance.

Fantasy sports games are the games that involve the drafting of fantasy teams based on certain practical conditions from a pool of players that are going to play the live games on a certain day. The users pay an entry fee to enter a contest and it is pooled and later distributed among the player. This entry fee which is first collected and then distributed among the player is the bone of the contention.

So what is the legal status of Fantasy sports in India? This question was settled by the Supreme court in the case of Varun Gumber v. Union Territory of Chandigarh[7] or popularly known as the Dream11 judgment. In which court considered fantasy sport as a game of skill and cited this reason

  • User is required to deploy skill and judgment and Discretion informing their fantasy team
  • Users are required to study the rule of the games and point systems deployed by the fantasy operator.
  • The user must have prior knowledge of the player stats which he is picking in his team.

The main reason was that the Court considered Fantasy sport as a game of skill and not a game of chance. The fact that people choose their team on their knowledge based on stats and their understanding of the player’s previous matches performance. But the court here didn’t take the point that whether the player will perform or not there is a chance involved in that too so this makes fantasy sport a game of both chance and skill.  So calling fantasy sports only a game of skill will be a blunt statement.

Past Action To Regulate It

The law commission in 2018 recommended to legalize sports betting the reason which was given by the law commission was it can generate immense revenue which can be used in social welfare and the system was to allow the licensed operator to run gambling store where the participant can bet on the prescribed limit and the whole system will be cashless so it is easy to monitor it. [8]and FICCI also said that by legalizing Online betting Indian Govt can earn 19,000 cr rupees by the tax. FICCI with AIGF( All India Gaming Federation) proposed a regulatory framework for online sports betting[9]. Also, Shashi Tharoor introduced a private member bill to regulate online betting namely (Online Gaming and Prevention of Fraud) Bill but all these efforts are on paper but even the realistic execution is unbegun.

Problems

The main problem is considering Fantasy sports as a game of skill will open a floodgate of other fantasy game gambling which is not regulated by any body or statute and this will de facto legalizing gambling online and any organization can just by adding a rule to a game call it a game of skill as the person playing it should be aware of that rule and this is an also a skill.

Research by the International Journal of Mental Health and Addiction shows investigated the actions of 563 male online gamblers and identified 23 percent of them as “problem” gamblers, too. These players were considerably more likely to pay more than “social” gamblers per game, and generally do betting while drinking or taking illegal drugs[10]. So basically allowing fantasy sports betting will be like promoting future gamblers which is dangerous for society.

[1] Nasir Kachroo, Google pulls India’s Paytm app from Play Store for repeat policy violations, Techcruch, (Sept. 19, 2020, 10:04 AM), https://techcrunch.com/2020/09/18/google-pulls-indias-paytm-app-from-play-store-for-repeat-policy-violations/

[2] Online gaming in India: Reaching a new pinnacle, KPMG and Google,(Sept.19,2020,11:04 AM),,https://assets.kpmg/content/dam/kpmg/in/pdf/2017/05/online-gaming.pdf.

[3] The Public Gambling Act, 1867  § 4

[4] The Public Gambling Act, 1867  § 12

[5] The State Of Bombay vs R. M. D. Chamarbaugwala, 1957 AIR 699

[6] Dominance Games Pvt. Ltd. v. State of Gujarat & Ors, 2018(1)RCR(Criminal)629

[7]Varun Gumber v. Union Territory of Chandigarh, 2017(4) RCR(Criminal)1047

[8] Report 276 Legal Framework: Gambling and Sports Betting including Cricket in India , Law Commission of India, (Sept. 19, 2020, 9:04 AM), http://lawcommissionofindia.nic.in/reports/Report276.pdf

[9] Rohan Abraham, Fun, games and money: Legalising online sports betting can make India richer by Rs 19,000 cr, The Economics Times ,(sept. 19, 2020, 9:04 AM), https://economictimes.indiatimes.com/magazines/panache/fun-games-and-money-legalising-online-sports-betting-can-make-india-rich-by-rs-19000-cr/articleshow/70475644.cms

[10] Jessica McBride & Jeffrey Derevensk , Internet Gambling Behavior in a Sample of Online Gamblers,7, International Journal of Mental Health and Addiction .149 (2009) 

This article has been written by Ritik Kumar Rath And Aakash Arun Rao, both are 3rd year law student at NLIU, Bhopal.

Also Read – Is Online Betting Legal In India?

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