Playing the Game: The Legal Status of Fantasy Sports in India

Introduction

Since the 16th edition of Indian Premier League (IPL) 2023 is going on, the Indian fantasy sports industry is expected to attract a record-breaking number of users.

In the discussion of legality, the industrial growth of Indian fantasy sports cannot be undermined. The industry has already experienced a significant growth over the past few years. India has become the largest market of fantasy sports in the world with over 200 Indian operator companies and around 13 crore Indian users. In February 2022, the Federation of Indian Fantasy Sports (FIFS) and Deloitte estimated in the report ‘Fantasy Sports: Creating a virtuous circle of sports development’ that the Indian fantasy sports industry, which was worth INR 34,600 crore in Financial Year 2020-21, is expected to grow to INR 1,65,000 crore by the year 2024-25. Interestingly, around 85% revenue is generated through cricket, including IPL and other contests and tournaments.

State-Level Regulation of Gaming Activities:

However, gaming activities are regulated by the state-level laws in India. It becomes important for users to be aware of the legalities of fantasy sports in their respective states. Many states, including Uttar Pradesh, Madhya Pradesh, Punjab and Haryana, have adopted the central legislation the Public Gambling Act, 1867. Some states have amended the Act with suitable modifications to regulate gambling activities in their territories, while others have enacted their own state laws for the same.

The states of Meghalaya and Sikkim have developed the limited licensing regime to regulate the online gaming activities. Meghalaya provides the licenses to the operators as per the Meghalaya Regulation of Gaming Rules, 2021 to offer online games of chance and skill only from the physical premises within the territory. Similarly, in Sikkim, online games can be played only through the intranet terminals under the Sikkim Online Gaming (Regulation) Act, 2008. It is pertinent to note that only the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2016 has expressly categorised the virtual sport fantasy league games as the games of skill.

Fantasy Sports: A Game of Skill:

Due to the uncertainty of outcome of online fantasy sports and the engagement of non-professional users, it is argued that it should be declared a game of chance and therefore be prohibited under the provisions of Public Gambling Act. However, the report of FIFS says that the fantasy sports users require certain skills such as, “digital literacy, statistical analysis, knowledge of the strengths and weaknesses of real-world sports person, knowledge of the environment, weather conditions, ground conditions, etc., and knowledge of the sport”. Because it requires knowledge and active engagement, more than half of fantasy sports users have started watching more sports than before, which reinforces the argument that fantasy sports is a ‘game of skill’.

The Punjab and Haryana High Court in Sri Varun Gumber v Union Territory of Chandigarh and Ors., 2017, Bombay High Court in Gurdeep Singh Sachar v Union of India and Ors., 2019, and Rajasthan High Court in Chandresh Sankhla v The State of Rajasthan and Ors., 2020 did not find any element of betting/gambling in the fantasy sports format offered by the leading operator ‘Dream11’ and declared it as a game of skill and legitimate business activity under the Indian Constitution. Reaffirming the judgments of Punjab & Haryana and Bombay High Courts, the Hon’ble Supreme Court in the case of Avinash Mehrotra v The State of Rajasthan and Ors., 2021 said, “this matter is no longer res integra”. It means that the issue has been addressed and resolved by the High Courts, and further the Supreme Court has upheld their judgments. The matter of legality of fantasy sports is settled now, and it is no longer open to further legal action.

Comparative Analysis:

The legality of betting on horse races was settled by the Apex Court in 1996, in Dr. K.R. Lakshmanan v State of Tamil Nadu and Ors. The Court declared it a game of skill and held that the betters exercise their judgment and discretion to determine the horse for the betting based on the condition, speed and endurance of the horse and the skill and management of the rider. Recently an appeal (Keshav Ramesh Muley v State of Maharashtra), to declare the online ludo as a game of chance, was filed before the Bombay High Court.

In the last few years, some of the states have amended their gaming laws to impose a blanket prohibition on the online games, including online rummy, online poker, etc., which are played for money or other stakes. The Madras High Court in Junglee Games India Private Limited and Ors. v The State of Tamil Nadu and Ors., 2021 and the Karnataka High Court in All India Gaming Federation and Ors. v State of Karnataka and Ors., 2022 struck down the amendments declaring them to be ultra vires the Constitution. Also, in Head Digital Works Private Limited v State of Kerala and Ors., 2021, the Kerala High Court declared the notification issued by the state government as arbitrary, illegal and violative of Articles 14 and 19(1)(g) of the Constitution, and held that online rummy played with or without stakes remains a game of skill. However, the Andhra Pradesh High Court recently, in Play Games 24x7 Private Limited v State of Andhra Pradesh, 2021, ordered the state to set up a committee to find whether the online rummy is a game of skill. The matter is pending before the division bench.

Proposed Laws and Regulations for Online Games:

Considering the fast-growing industry of online gaming in the country, there is a need to have a uniform legislation and the regulatory body to regulate the online gaming activities. The Central Government has introduced the Information Technology (Intermediary Guidelines and Digital Media Ethics Code), Rule, 2021 to meet the requirement. In 2022, a private member’s bill ’Online Gaming (Regulation) Bill, 2022’ was also tabled in Lok Sabha to provide a model legislation and remove the inconsistency among the laws and regulations of different states. Similarly, the Rajasthan government has also proposed a bill ’Rajasthan Virtual Online Sports (Regulation) Bill, 2022’ to regulate the online sports under the licensing regime within its territory.

Besides these, the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Ordinance was promulgated in October 2022 on the ground of socio-economic conditions. The government argued that children and youth are getting addicted to online games, and therefore, the online gambling/betting & online games played for real-money should be banned to protect the public from financial loss and mental health issues. The addiction of mobile, computer, and cyber games among teenagers and youth is also recognised by certain High Courts from time-to-time. Therefore, it is important for policy makers, law enforcement agencies, operators, and the players of online games to come together to address these issues.

Conclusion:

As the fantasy sports industry is booming in India, it becomes important for the users to understand its legal status. However, the laws regulating the online games varies from state to state, but some states have adopted the Public Gambling Act, 1867 to regulate the gaming activities in their territories. A few states have developed the limited licensing regime, whereas the state of Nagaland has expressly categorised the fantasy sports as the game of skill under the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2016.

Various high courts have also declared the fantasy sports as the game of skill and a legitimate business under the Constitution of India. With time it became important to address the legality of other online games as well, for which several petitions have been filed before the regional courts. Considering the diverse socio-economic and cultural impact of such platforms, all the stakeholders are required to come forward with uniform laws across the country. Proper implementation, adoption of best practices by the operators are the need of the hour for spreading awareness amongst the players.

~MD Najrul Islam