Introduction

What doesnot crystallize as a gambling ?

The gambling and betting laws in India are regulated by the Public Gambling Act,

1867 (“Gambling Act”) which criminializes the gambling by imposing penalties and

_________. The only exception is Section 12 of the Gambling Act (reproduced

herein), which excludes the applicability of the statute on the games which involve

‘mere skill’.

“12. Act not to apply to certain games. - Nothing in the foregoing provisions

of this Act contained shall be held to apply to any game of mere skill

wherever played.”

Skill games are mostly defined as “Games of Skill” or “Game of Mere Skill” under

different state legislations in India. However, the Supreme Court in State of Bombay

v. R.M.D. Chamarbaugwala (1975) SCR 874, has interpreted the word “mere skill”

to include games which are preponderant of skill and even if there is an element of

chance, if a game is preponderantly a game of skill, it would nevertheless be a game

of “mere skill”.
In context to the above, the Supreme court has held certain games to be a game of

skill. In the matter of K.R. Lakshmanan v. State of Tamil Nadu (1996) 2 SCC 226

(‘K.R. Lakshmanan Case’), the Supreme court interpreted the provisions of the

Madras Police Act, 1888 and Madras Gaming Act, 1930 and while expounding on the

assessment to be done while ascertaining the nature of a game, held that horse racing

is a game of skill. In the same judgment, the Supreme Court referred to the matter of

A.P. v. K. Satyanarayana (1986) 2 SCR 387 (‘Satyanarayana Case’) wherein the

Supreme Court had stated the game of ‘Rummy’ as a game of skill while interpreting

the provisions of the Hyderabad Gambling Act (2 of 1395-F).

At the state level, there are laws enacted by the State Legislature keeping in mind the

provisions of the Gambling Act. Meaning thereby, most of the State Laws has created

exemption for games involving “skill” for the purpose of applicability of their

respective legislations. Such Act includes:

• The Bombay Prevention of Gambling Act, 1887

• The Meghalaya Prevention of Gambling Act, 1970

• The Rajasthan Public Gaming Ordinance, 1949

• The Goa, Daman and Diu Public Gambling Act, 1976

• The Tamil Nadu Gaming Act, 1930

All such aforesaid State Legislations have their genesis from the Gambling Act and as

such, provisions like Section 14 of the Hyderabad Gambling Act are Section 11 of the
Madras Gaming Act 1930 are pari materia to Section 12 of the Public Gambling Act

1867.

Understanding Online Fantasy Sports

Fantasy Sports are games of skill in which contestants assemble a roster of athletes in

a given sport and create their own virtual teams made up of real-life athletes. The

outcomes of Fantasy Sports are based on actual aggregated performance statistics of

those athletes in real matches. The culture of fantasy sports in India dates back to 2008

when the Indian Premier League took the Indian cricket world by storm which led to

the fame of “Fantasy Cricket”. Since then, there was rapid progress in fantasy sports.

KPMG India in its, July 2020 report i, noted that the number of users participating in

online fantasy sports rose from 2 million in 2016 to 90 million in 2019. Similarly, the

Price Water Cooper India in its May 2019 Reportii, noted that the fantasy sports

industry has the potential to generate an additional 5000+ direct and 7000+ indirect

job in next 2-3 years.

Regulation of Online Fantasy Games

Before the enactment of the Contitution, betting and gambling laws were governed by

the Gambling Act. However after our Constitution came into force, the union and state

were given different subjects to legislate on. Accordingly, as per Schedule VII of the

Constitution, the betting and gambling fell under the exclusive domain of the state

legislature. As a result ,differential state legislations governing Online Fantasy Games

were enacted, out of which only few states regularized and legalized the Online

Fantasy Games.
 - The Nagaland Prohibition of Gambling and Promotion and

Regulation of Online Games of Skill Act, 2015 (“Nagaland Act”)

The Nagaland Act is the first legislation for the regularisation of online gaming

which categorises certain games as as “games of skill”. Schedule A of the

Nagaland Prohibition of Gambling and Promotion and Regulation of Online

Games of Skill Act, 2015 (“Nagaland Act”) enlists the games that are to be

considered as games of skill for the purpose of the provisions under the

Nagaland Act and it includes “virtual fantasy games”.

The Nagaland Act provides for issuance of license specifically for the purpose of

enabling and entity to offer games of skill on a mobile platform, television, or

any other online media. Section 7 of the Nagaland Act provides for the

procedure for obtaining a license under the Nagaland Act and it mandates

procurement of license upon payment of a fees as fixed under the statute. The

provision also provides for disqualification of the Applicant of the license on the

ground of indulging in any online/offline gambling activities in India as well as

abroad.

A peculiar feature of the Nagaland Act is Explanation to Section 2(1) which

provides for using the license in any State or Union Territory of India. However,

such usage is subjected to scrutiny that the activities are not in contravention of

the prevailing laws of the State within the territory of which such activity is

taking place. In any case, the Nagaland Act also provides for bringing such
 activities to the notice of the Licensing Authority of the State of Nagaland by

such State and the Licensing Authority will take steps to resolve the issue raised.

- Sikkim Online Gaming (Regulation) Act, 2008 (“The Sikkim Act”)

The Sikkim Act regulates the operation of online games by granting licenses to

applicants with prescribed rules and regulations. The online games with respect

to which such licenses can be granted include games of skill as well as games

with a combination of skill and chance defined under Section 2(d) of The Sikkim

Act. The Sikkim Act also makes all the notifications and instructions pertaining

to gaming or wagering or betting inapplicable to the online games licensed under

The Sikkim Act and further, prohibits all kinds of online games without

obtaining a license under the Sikkim Act.

- The Telangana Gaming Act 1974 (“The Telangana Act”)

Post the Amendment of the Telangana Gaming (Amendment) Act 2017, The

Telangana Act has included online gaming under its applicability thus,

completely prohibits online gaming in all respects. Section 3 of the Telangana

Act provides for imposisiotn of penalty on persons who indulged themselves in

online gaming in any manner.

Legality of Fantasy Sports in India---Skill versus Chance debate

In context with the Fantasy sports or e-sports, the global debate that occurs today

among people including governments and policymakers is that: If anything is online

and virtual in nature and involves a money then does it qualify as a game of chance or

a game of skill?
For an uncertain peroid, gaming laws in India were only guided by the central Gaming

Act and other concurrent state legislations as discussed above, the majority of which

are silent on online gaming. Subsequent to the enactment of Nagaland Act, the legal

development of fantasy sports in India routed though juducial pronouncements. The

judicial recognition of fantasy sports preceded from the judgment of the Hon’ble

Punjab & Haryana High Court (“P&H High Court”) in the matter of Varun Gumber

v. Union Territory of Chandigarh 2017 Cri. L. J. 3827 (‘Varun Gumber Case’).

The P&H High Court while deciding a Civil Writ Petition filed by the petitioner who

alleged to be the victim of the online betting site that operates by the name of Dream

11, stated that the Dream 11 does not fall under within the gambling activities as it

involves substantial skills. The P&H High Court was of the view that Dream 11’s

success comes from its users’ exercise of superior knowledge, judgment and attention

and thus, Dream 11 has a predominant influence of the element of skill. All of such

observations were made by the P&H High Court while relying on the judgment of the

K.R. Lakshmanan Case.

A similar judgment was passed by the High Court of Bombay in the matter of

Gurdeep Singh Sachar v. Union of India Criminal Public Interest Litigation

Stamp No. 22 of 2019 (“Gurdeep Singh Sachar Case”) wherein an advocate had

filed a petition in the nature of public interest litigation on the ground that the

activities being carried by Dream 11 attract the penal provisions of the Gambling Act

and such activities are also evasive in terms of adhering to the provision under the

Goods and Services Tax Act. The High Court of Bombay, while relying on the ratio

given in the K.R. Lakshmanan Case, held that the activities being carried out by the
Dream 11 Fantasy Private Limited are not in the nature of gambling and is rather a

game of ‘skill’ and not a game of ‘chance’. The Gurdeep Singh Sachar Case was

challenged before the Division Bench of the High Court of Bombay as well as before

the Supreme Court and the judgment was upheld at both the stages of litigation.

Additionally, in the matter of Chandresh Sankhla v. State of Rajasthan 2020 SCC

OnLine Raj 264, the High Court of Rajasthan relying upon the ratio laid down in the

Vinod Gumber Case held that Section 12 of the Rajasthan Public Gambling

Ordinance, 1949 is pari materia to the Section 12 of the Gambling Act as well as

Section 11 of the Madras Gaming Act 1930.

A Way Forward:

Due to the differential state legislations governing Online Fantasy Sports Platforms

(“OFSPs”) in India, the operations of fantasy sports are largely impacted which leads

to an inconsistent experience for users and prevent sports fans from actively engaging

in fantasy sports. As it stands today, the states of Andhra Pradesh, Assam, Nagaland,

Odisha, Tamil Nadu, and Telangana have made it illegal for their residents to play

online fantasy games, with Karnataka reportedly considering a similar ban as well.

The fantasy sports industry is at the nascent stage has been attracting the attention of

the large number of sports fans, investors who recognise the immense potential for

growth. However, due to the uncertainties created by differential legislation and

without any proper distinction of which online fantasy games qualify as a ‘sport’, and

which falls under the ambit of ‘gambling’, the fantasy sports industry has found itself
surrounded by various legal battles, thereby limiting the prospects and potential of

sports fantasy industry.

Thus, self regulation is the need of hour. The establishment of the autonomous self-

regulatory body, composed of industry stakeholders and guided by independent

experts, will help ensure free and fair gameplay and development in the fantasy sports

sector through facilitating representation, transparency, neutrality, and accountability.

NITI Aayog’s efforts to give recognition to the rising gaming sector is certainly a step

in the right direction and indicate the forward-looking vision of the current

government, which seeks to create Aatmanirbhar Bharat, by assisting digital

entrepreneurs and nurturing the start-up ecosystem. The guidelines can also be seen as

a good initiative for the operators, consumers and investor as it would restore the

confidence of investor who has invested huge funds in this sector but were left with a

great deal of uncertainty after a spate of state-level bans on all kinds of online games

and ongoing litigations about the legality of game formats in various courts. However,

for a better impact of self-regulation, the interests of the industry, the government and

the consumers must be aligned.

Federation of Indian Fantasy Sports (“FIFS”)

In the absence of any specific law relating to fantasy sports in India, the industry

players regulate themselves by FIFS. FIFS is a Section 8 Company incorporated under

the provisions of the (Indian) Companes Act 2013 and provides self-regulatory norms

in the fantasy sports industry to its members. Such regulation is done keeping in mind

the prevalent laws of the country across States. FIFS was founded in 2017 as a
representative national body to protect the interests of Online Fantasy Sports contest

users and operators in India. There is a provision for voluntary membership with

specific charges in accordance with different membership plans available. With

Dream 11 as the founding member of the FIFS, the FIFS has over 25 members at

present. FIFS even has a self-disciplinary mechanism with an established Office of

Ombudsman and Ethics Officer (“Ombudsman”) for adjudication of grievance being

faced by the consumer or the federation members.

Conclusion
i
The Business of Fantasy Sports (July 2020)
Federation of Sports Gaming- Report on Taxation of Online Fantasy Sports Gaming Market in India (May
ii

2019)