Why is fantasy sports legal in India? - Karobargain

Why is fantasy sports legal in India?

Why is fantasy sports legal in India?

The fantasy sports market is a big business in India. The online gaming segment was worth Rs 6,500 crore in 2019 and is estimated to grow to Rs 18,700 crore by the end of 2020, as per an IFSG-KPMG report. After realizing the immense potential of the sector, several entrepreneurs and startups are looking to invest in the fantasy gaming market and grab a bigger piece of the pie.

The number of fantasy platforms which one could count on the fingers of one hand in 2016 has now grown to 140. Also, the number of fantasy sports users has grown to 90 million from 2 million in 2016. Despite the increased popularity of fantasy sports in India, many users are unaware of the laws surrounding fantasy gaming in the country.

Here’s an article that provides an insight into the legality of fantasy sports gaming in India.

What are fantasy sports?

Fantasy sports are a type of online prediction games where users put together a virtual team of real sports players scheduled to play a live sport on any given day. Users typically need to pay an entry fee to enter a fantasy sports content. After the deduction of a service fee by the platform operator, the remaining amount is pooled for distribution among the users on the platform depending on their performance.

Users create their teams based on their knowledge of the game, attention and experience regarding the underlying sport. Based on the real-life statistics of players selected by the user to create his/her team, they earn fantasy points. The better the user’s team players perform in real life, the higher are their fantasy points. Users are later ranked based on these points and accordingly receive money from the prize pool.

Current legal scenario

In India, there is no legal definition for “Fantasy Sports”. The legality is dependent on whether the game qualifies as a ‘game of skill’ or a ‘game of chance’. Games of chance fall under the ambit of gambling and are restricted by state gambling laws. However, games including a significant amount of skill (mathematically, more than 50%) fall outside the Indian gambling laws and hence are legal in the country. 

Whether a fantasy sport classifies as a game of skill or game of chance is based on its modalities. The question of whether the fantasy sports offering by Dream 11 classifies as a ‘game of skill’ or ‘game of chance’ was posed before the Bombay High Court and Punjab and Haryana High Court. Both the courts have analyzed the game format of Dream 11 and have considered its configuration as a ‘game of skill’.

However, it’s important to note that courts have not inspected any other fantasy formats and have not offered any perspective, decisions, or investigations of the configuration of other fantasy gaming platforms. Currently, there are over 140 other fantasy sports platforms operating in India, and all of them have their own system to analyze the performance of each player – all of which may or may not judge the skill of the player in creating a fantasy team. 

Who regulates the fantasy sports industry in India?

At present in India, there is no central statutory agency or uniform legislation regulating the fantasy sports industry. So, the fantasy industry standards are regulated by the Federation of Indian Fantasy Sports (FIFS). Self-regularization norms for the fantasy market are set up by the federation until the government comes with any fantasy gaming standards and laws. When it comes to taxation, 18% GST is applicable on skill-based games and fantasy sports gaming.

Is there any law that separates gambling and fantasy sports in India?

Yes. The Public Gambling Act, 1867 separates gambling and fantasy sports in the country. It primarily prohibits running or being in charge of a public gambling house. The act comprises 18 sections, and section 12 of the act states that – “Nothing in the provisions of this Act contained shall be held to apply to any game of mere skill wherever played.” This means fantasy sports that are part of skill-based games are excluded from the act.

Are there any separate gambling laws across Indian states?

The Constitution of India gives state legislatures the power to draft state-specific laws on gambling and betting. The Public Gambling Act, 1867 has been adopted by certain states in India. The other states in the country have enacted their own legislation to regulate gambling activities within their respective territory.

In 2016, the state of Nagaland passed “The Nagaland Prohibition of Gambling and Promotions and Regulation of Online Games of Skill Act”, that allows online gambling licenses to be issued for skill games (including fantasy sports) in the state. The Act also allows the license holder to offer skill-based games in other Indian states where they’re not classified as gambling and abide by the Act and local laws.

The Sikkim State Government also amended the Sikkim Online Gaming (Regulation) Act in 2015. The Act restricts the offering of ‘online games and sports games’ under the licenses issued under the said Act to physical premises of gaming parlours within the geographical boundaries of the state of Sikkim.

Conclusion

The Indian fantasy sports market, which picked up with the launch of Indian fantasy cricket games and apps during the inaugural edition of the IPL, now covers a variety of different sports like football, badminton, hockey, basketball and baseball. In fact, even kabaddi, carrom and pool fantasy sports games can be played on fantasy sports platforms. Given the passion of Indians for cricket, football and other sports, it’s no surprise that the fantasy sports platforms have millions of users in the country. With the growing number of fantasy sports fans in India, the rules around these games need to be determined carefully in the near future.

 

Update on 8th December 2020:  NITI Aayog suggests self-regulatory body for fantasy sports in India.

 

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