Online fantasy sports gaming is booming in India and has in a short span become a prominent form of online gaming in the country, despite legal and regulatory challenges. Fantasy sports is predominantly a prediction game where players assemble a dream team of real sportspersons active in a variety of sports such as football, cricket, basketball, kabaddi etc. and thereafter participate in contests, competitions that mimic and convert the performance of the sportsman in real life into fantasy points. Fantasy sports and fantasy sport operators have often been caught in the cross hairs of gambling legislation in India from a perspective of whether online fantasy sports gaming would be considered gambling. In this two-part article, we will analyse two main legal hurdles that fantasy sports operators have encountered in India - (i) the impact of gambling legislation in India; and (ii) the role of intellectual property rights given that fantasy sports draws from intellectual property (brand names, team names, players and statistics) to offer users products and services.
In India, gambling is a state subject, which implies that states have the authority to regulate and legislate on the practice of gambling in a manner they deem fit. The Public Gambling Act, 1867 ("Act") is the only act notified by the Central Government on this subject and is a century old act that pre-dates online gaming. Most states have however notified this Act, with respective state derogations. The Act prohibits all common gaming houses indulging in games of chance, while carving out an exception for games of mere skill1.
Games of Chance Vs. Games of Skill
Gambling legislations in India typically differentiate between games of chance and games of skill. A game of chance is equated to gambling and prohibited, while a game of skill is typically distinguished from gambling and is not prohibited, subject to state legislation. Some exceptions to this general rule can be seen in the legislations of Assam, Orissa, Sikkim and Nagaland (both of which require a license to be obtained), Nagaland, Andhra Pradesh and Telangana, which do not carve out exceptions for games of skill from the blanket restriction on gambling.
The Supreme Court of India ("Supreme Court"), while interpreting the requirement of 'mere skill', has reiterated at several places that for a game to be adjudged a game of skill, there has to be a preponderance of skill rather than chance. For instance, in the case of State of Andhra Pradesh Vs. K. Satyanarayana & Ors.2, the Supreme Court debated whether the game of Rummy was a skill-based game and stated that the game of Rummy is not a game entirely of chance3 and requires certain amount of skill. It was held a game of skill would include all games where there is a preponderance of skill over chance, including where the skill relates to (i) strategizing the manner of placing wagers or placing bets, (ii) selection of a team or virtual stocks based on analysis, or (iii) the manner in which the moves are made, whether through deployment of physical or mental skill and acumen. The Supreme Court noted that in a game of Rummy while there was an element of chance; as is the case with all games in which cards are shuffled; it was preponderantly a game of skill. We have in a previous post also written about the petition before the Bombay High Court regarding the game of Ludo. There have been other judgements by the Supreme Court with respect to what is considered a game of skill including some judgments related to fantasy sports.
Fantasy Sports- Judicial Precedent
The trajectory of fantasy games in India has been dependent on whether it is considered a 'Game of Skill' or a 'Game of Chance'. The importance of distinguishing games of skill from games of chance is essential to determine whether a certain activity will be permitted under Indian laws. If a game falls into the category of a 'game of chance', it is deemed to be gambling under the Act, and gambling has been prohibited under the Act. As mentioned hereinabove, the Act prohibits the operation of all common gaming houses indulging in games of chance, while carving out an exception for games of mere skill. Several Indian courts (specifically the Punjab & Haryana High Court (confirmed by the Supreme Court in an appeal) and the Bombay High Court) have ruled that fantasy games cannot be categorised as games of chance and therefore do not run afowl of the gambling legislation in India.
Varun Gumber v. Union Territory of Chandigarh (MANU/PH/1265/2017)
Dream 11 is one of the world's leading platforms for online fantasy sports games and offer fantasy cricket, fantasy kabaddi and fantasy football games in partnership with reputed websites and social media platforms, with a wide user base. This judgement by the Punjab and Haryana High Court ("PHC") has been the leading judicial precedent for fantasy sports. This case was concerned with deciding whether fantasy sports, a multiplayer online game, was skill based or would be caught by the gambling legislations. The PHC held that playing fantasy sports required considerable skill, judgment and discretion and the effective deployment of such skills and knowledge by the participant also has a definitive effect on the outcome of the game. In conjunction with the above conclusion, the PHC also reiterated the Supreme Court's stand that: (i) the competitions where success depends upon the substantial degree of skill is not competition; and (ii) despite there being an element of chance, if a game is preponderantly a game of skill, it would nevertheless be a game of mere skill. The decision of the PHC was appealed before the Hon'ble Supreme Court of India. However, the appeal was summarily dismissed.
Gurdeep Singh Sachar v. Union of India (MANU/MH/1451/2019
The Bombay High Court was next to rule on whether Dream11's online fantasy sports indulged in activities considered to be gambling/ betting/ wagering. A public interest litigation was filed before the Bombay High Court in this case and the Bombay High Court observed that unlike betting, winning or losing in fantasy sports was not dependent on any team winning or losing in the real world.
The Bombay High Court held that "the case of the Petitioner is wholly untenable, misconceived and without any merit. It can be seen that success in Dream 11's fantasy sports depends upon user's exercise of skill based on superior knowledge, judgment and attention, and the result thereof is not dependent on the winning or losing of a particular team in the real-world game on any particular day. It is undoubtedly a game of skill and not a game of chance. The attempt to reopen the issues decided by the Punjab and Haryana High Court in respect of the same online gaming activities, which are backed by a judgment of the three judges bench of the Apex Court in K.R. Lakshmanan (supra), that too, after dismissal of SLP by the Apex Court is wholly misconceived."
Ravindra Singh Chaudhary Vs. Union of India & Ors. (MANU/RH/0499/2020)
Another public interest litigation was filed with respect to Dream11's fantasy sports games before The High Court of Rajasthan (Jaipur Bench). The Court reiterated the position by the PHC, Bombay High Court and the Supreme Court and held that fantasy games involved substantial skills and therefore does not amounting to gambling.
A stay order in 2020, by the Supreme Court against the order of Bombay High Court ruling fantasy sports games as a game of skill, opened the debate once again. Though the matter is still pending before the Supreme Court, the Supreme Court in August 2021, upheld the legality of fantasy sports in an appeal made against the abovementioned order by the Rajasthan High Court order. It is evident from the available case law that a game of skill would not be considered as gambling and that fantasy sports would not be considered a game of chance.
Recent State Law Amendments
Recently, the Tamil Nadu government passed the Tamil Nadu Gaming and Police Laws (Amendment) Act of 2021 ("TN Act"), banning online wagering or betting. It also extended this prohibition explicitly to games of skill as well. The Madras High Court vide an order (Junglee Games & Ors. Vs. State of Tamil Nadu struck down the TN Act. The Court was of the view that imposing a blanket ban fell afoul of Article 19(1) (g) of the Constitution of India (Right to Practise any Profession, or to Carry on any Occupation, Trade or Business) and quashed the TN Act. The Court instead specifically stated that it is necessary to regulate online gaming rather than a blanket ban.
In a similar move, the Karnataka government has promulgated an amendment to the Karnataka Police Act, 1963 ("Karnataka Act") which received the Governor's assent on October 4, 2021. The Karnataka Act banned all forms of gambling in the state in connection with a game of chance (with the exception of horse races and lotteries), including online gambling. The Karnataka Act also stated that "any act of risking money or otherwise on the unknown result of an event including on a game of skill" will be an offence. The Karnataka Act also expanded on the definition of gaming including in its gambit all" online games, involving all forms of wagering or betting, including in the form of tokens valued in terms of money paid before or after issue of it, or electronic means and virtual currency, electronic transfer of funds in connection with any game of chance...".
Shortly after, the operators of Dream11 suspended its operations in Karnataka while simultaneously issuing the following statement: "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."
While fantasy sports operators may have overcome the hurdle of gambling legislation in most states barring a few hiccups, there is still a strong need to harmonise the various legislations impacting such games. Furthermore, this is not the end of the tunnel for fantasy sports operators who still need to focus on intellectual property rights and personality rights aspects of fantasy games (covered in Part 2 of our article series).
1 Section 12, The Public Gambling Act, 1857.
2 AIR 1968 SC 825
3 Paragraph 15, AIR 1968 SC 825
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.