Introduction
In recent years, India has experienced a significant growth in its online gaming industry, particularly various skill-based games involving usage of real money. In view of this growth as well as the rapid advancement of technology (within the gaming sector), there has been a surge of a specific segment of online real money games i.e. fantasy sports.
This article explores the legal standing of fantasy sports in India, examining whether the actions of both participants and platforms can be classified as gambling, betting, or wagering (or whether fantasy sports predominantly involve the exercise of skill in order to win the game). This distinction is important under Indian law, as skill-based games are generally exempt from gambling regulations, whereas chance-based games often fall within the purview of central as well as the state gambling laws.
What are fantasy sports?
Fantasy sports are a type of online games where participants build virtual sports teams by selecting real-life athletes from various professional sports matches. The concept revolves around these athletes' real-world performance, as the virtual teams compete based on the statistical outcomes of actual sporting events. Participants playing fantasy sports on various online platforms strategically select players for their teams, considering factors such as form, injuries, match conditions, etc. to maximize their team's performance. Points are awarded based on individual player statistics, such as goals scored, runs made, or wickets taken, depending on the sport.
Participants compete within a fantasy league, and their virtual team's performance is directly influenced by how well their chosen athletes perform in real-world matches vis-à-vis the teams formed by other users. The cumulative points earned by a team over the course of the match determines the player's standing in the competition. Fantasy sports thus require a blend of knowledge and strategy, as participants must analyze player data, trends and matchups to succeed in a fantasy sports game. The interactive nature of fantasy sports has led to its widespread popularity, particularly in team sports-crazed markets like India, where cricket, football, and kabaddi are widely followed.
The skill vs chance debate
Notably, one of the key legal questions surrounding fantasy sports in India is whether such games fall within the category of "games of skill" or "games of chance." While fantasy sports are not explicitly mentioned in Schedule VII of the Indian Constitution (which prescribed the subjects on the which the Central and State Governments are empowered to legislate), the Constitution does mention that gambling and betting are legislative subjects under List II, Entry 34 of the Seventh Schedule, giving individual states the authority to legislate on these matters. As a result, the regulation of betting and gambling, varies across different states. However, this gives rise to a pertinent question – whether fantasy games are a skill of game (and accordingly outside the purview of the State legislations on gambling and betting)?
Before the adoption of the Indian Constitution, gambling activities were governed by the Public Gambling Act, 1867, which still has some influence on many of the existing states' gambling laws. However, after the Constitution came into effect, the regulation of gambling and betting became an exclusive State legislative matter, leading to a diverse and sometimes conflicting legal landscape.
The legal status of fantasy sports in India (across various States) largely depends on whether they are classified as a game of skill or a game of chance. Games that require significant skill and judgment are considered "games of skill" and are exempt from the gambling laws of most states. On the other hand, games that rely predominantly on chance are classified as gambling and are subject to state restrictions. Fantasy sports, which involve participants selecting virtual teams of real-life athletes and earning points based on the athletes' performances in actual sporting events, have been at the center of this debate.
Key Judicial Pronouncements
A landmark case that shaped the legal understanding of fantasy sports in India was the Shri Varun Gumber v. Union Territory of Chandigarh (2017) ("Dream 11 Case"). In this case, the appellant, a former user of the Dream 11 platform who had lost money, argued that Dream 11 was essentially a gambling platform and, therefore, prohibited by state law. However, the Punjab and Haryana High Court rejected this claim and ruled that the fantasy game offered by Dream 11 constituted a game of skill, and not chance. The court noted that participants in fantasy sports must use considerable skill, judgment, and discretion when selecting their virtual teams. Players are required to assess the relative strengths and weaknesses of athletes, analyze rules and game conditions, and make strategic decisions, all of which are hallmarks of a game of skill. The court further observed that success in fantasy sports on platforms like Dream 11 is driven by users' superior knowledge and judgment rather than sheer luck.
This judgment by the Punjab and Haryana High Court set a crucial precedent for the legality of fantasy sports in India, as it classified these games as skill-based, thus excluding them from the purview of gambling laws. The Supreme Court later upheld this ruling, dismissing an appeal against the High Court's judgment, solidifying the legal standing of fantasy sports in the country.
Further, supporting the above, the Bombay High Court, in the case of Gurdeep Singh Sachar v. Union of India (2019), reaffirmed that fantasy sports like Dream 11 are games of skill. The court highlighted that these platforms do not involve gambling or betting because participants do not stake money on outcomes determined by chance. Instead, participants' success is based on their ability to predict the performance of real-life athletes and make informed decisions, further distinguishing fantasy sports from games of chance. The court concluded that such games do not violate gambling laws and are legally permissible in India.
Similarly, the Rajasthan High Court, in the case of Ravindra Singh Chaudhary v. Union of India (2019) upheld the view that online fantasy games are skill-based. The court referenced previous rulings, including the Dream 11 Case and the Gurdeep Singh Sachar case, to conclude that fantasy sports platforms, as structured, do not involve betting or gambling. The court emphasized that the rules and regulations of these platforms are designed to ensure that the games offered are games of skill, and the outcome depends on participants' abilities rather than sheer luck. Furthermore, the High Court noted that winning or losing in fantasy sports is independent of the outcome of real-world matches, underscoring the importance of skill in the gameplay.
The matter reached a final resolution in the Supreme Court in the case of Avinash Mehrotra v. The State of Rajasthan & Ors(2020) wherein the court decisively ruled that the Dream 11 platform offers a game of skill and does not constitute gambling or betting. The Supreme Court's ruling was instrumental in providing clarity on the legal standing of fantasy sports, categorically stating that such platforms are engaged in a legitimate business activity protected under Article 19(1)(g) of the Indian Constitution, which guarantees the right to practice any profession or carry out any occupation, trade, or business.
Conclusion
The legal standing of fantasy sports in India has been clarified through multiple court rulings, establishing that these games are predominantly skill-based and therefore do not fall within the category of gambling. However, given the fragmented nature of state-specific laws, working through the legality of fantasy sports can be complex. It is important for platforms (offering fantasy sports games) and participants alike to stay informed about the legal nuances pertaining to gaming laws in India. Consulting legal experts can come in handy in understanding the specific regulations that apply to fantasy sports, ensuring compliance with both central and state laws, and mitigating potential legal risks.
Co-Authored by Sheena Khan
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