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Emergence of Fantasy Sports vis a vis Online Gambling: An Indian Perspective

Fantasy Sports are often misunderstood with gambling in India but it's not the case, fantasy Sports are a completely different concept than Betting or Gambling. Moreover, the ambit of Gambling is very wide. People often think Betting & Gambling are the same, but it is not the case though. The term 'Fantasy Sport' refers to the type of Online Sport where the player creates or assembles an imaginary team composed of representations of real players of a professional sport such as Kabaddi, Hockey, Soccer, Cricket, etc.

Gambling is making a bet on the outcome of an event or game which can have an uncertain result. In gambling people usually put a specific amount of money on the stake to gain more. Thus, we can say that gambling is an activity that depends upon the luck and choice of the outlet of an individual who placed a bet on an event; whereas Betting is a form of Gambling which is identified as an organized commercial activity between 2 parties where one party predicts the outcome of the event and places the bet and the other party who loses the bet agrees to pay the money to the player.

Evolution of Fantasy Sports
In the United States of America, Fantasy Sports began in the year 1952, however it gained wide popularity in recent years. Fantasy Sports came to India in the year 2001 via ESPN Star Sports, however, after 2 years their game Super Selector was phased out and stopped eventually.

Just a decade ago fantasy sports again started to emerge at a rapid pace with the advancement of the Internet and Technologies. In the year 2016, it was estimated that there are around 2 million users of Fantasy Sports in India. However, this number is increasing day by day in the year 2019, 90 million people[1] were playing Fantasy Sports in India and the number of mobile gamers is expected to reach 368 million[2] by the year 2022 in India.

The most frequently played fantasy sport in India is Cricket, especially the T20 format such as T20 International Leagues or the Indian Premier League; however other forms of sports such as Kabaddi, Football, NBA are also played during the season of the leagues.

In the year 2017, the courts and the High Court's gave the judgments to the complaints made
Regarding the illegality of fantasy sports, the courts held that Fantasy Sports are Game of Skills not a Game of Chance, the reason was that in Fantasy sports participants had to track the player activity consistently, sporting events, previous track records of the players. This clearly states that Fantasy Sports are more than a game of luck, so for playing this one need requisite skills of analysing.

The decision given by the High Court[3] opened a new door for Fantasy Sports providers in the Indian Market which led to the emergence of ventures such as Dream 11, Hala Play, etc. The Indian Gaming industry is still growing at a rapid pace which will be matching the market of the US in just a few years from now. In the year 2020, the valuation of the Indian Gaming Industry was $930 million and in the year 2024, it is expected to be $3750 million[4]. From the data, we can analyze that India is seen as the biggest Fantasy Sports market in the world.

The intersection of Intellectual Property Rights with the Fantasy Sports
Another issue rather than the legality of the Fantasy Sport that surrounds it is the usage of logos, names of the players on the Fantasy Sports Platform. These platforms use the names of the players, the logos of their respective teams so that the participants can choose the players from specific teams. We are very aware of the fact that players have their image rights with them as their Intellectual Property rights.

In fantasy sports, there are commercial arrangements for using the Intellectual Property of these players because Fantasy sports are built around the leagues & tournaments rather than the specific players. The use of the images, names of the players in fantasy sports are only to identify them and the use of their images, names doesn't amount to any kind of endorsements in any form.

How there is a surge in fantasy sports, it becomes essential for the fantasy sports entrepreneurs or companies they are legally bound by a contract with the players, tournaments, leagues whose IP rights they are using for their business, because India has become the biggest market of Fantasy Sports by the year 2020. The usage of identity rights of the sports players leads to complexities in the evolving arena of Intellectual Property Laws. Therefore, it is essential to protect the Intellectual Property Rights of the owners and the judiciary should look into this aspect as well.

Present Status of Fantasy Sports in India
The Legality of the Fantasy Sports in India
For criminalizing public gambling India has its colonial legislation The Public Gambling Act, 1867 which prohibits running public gambling houses in India. However, we have state-specific laws under the Indian Constitution for Gambling & Betting. According to the 7th Schedule of the Indian Constitution,[5] the state government has the authority to formulate the laws on betting & gambling. Fantasy Sports which is considered as the 'Game of Skill' fall in the separate category of Gambling Legislation of the States which exclude game of skill from the scope of gambling. However, we have some exceptions such as Odisha, Telangana & Assam which still considers in the scope of gambling.

The legality of fantasy sports is decided based on classification whether the game is a 'game of chance' or 'game of skill'. Game of Chance is considered under gambling and is restricted by state legislations whereas a game of skill is not considered as gambling as it requires requisite analysing skills and some sort of arithmetical skills as well. Therefore, games of skills are outside the scope of existing gambling statutes in India and they are considered legal.

The most famous case for the legality of the fantasy sports in India is Varun Gumber v. Union Territory of Chandigarh[6] which came before the High Court of Punjab & Haryana in the year 2017 and later on another case came before the High Court of Bombay which was Gurdeep Singh Sachar v. Union of India[7] and was also decided in the year 2017.

These 2 cases are popularly known as Dream 11 Judgements which upheld the legality of fantasy sports in India and are set as precedents for future cases related to the legality of fantasy sports.

It was further specified that Dream 11 is a legitimate business activity and is protected under Article 19 (1) (g) of the Indian Constitution which gives the right to practise any profession and carry on any trade or business subject to reasonable restrictions. In a successive appeal against this decision the Supreme Court of India dismissed the appeal and held that the expression game of mere skill was interpreted[8] by the honourable Court to mean mainly and preponderantly a game of skill.

Top Fantasy Sports Providers in India
In India we have ample amount of options for fantasy sports providers, most prominent one's are Dream 11, Halaplay, Mobile Premier League (MPL) and are endorsed by popular athletes such as Mahendra Singh Dhoni for Dream 11, Hardik Pandya & Krunal Pandya for Halaplay & Virat Kohli for Mobile Premier League. Moreover, other Fantasy Sports platforms are BalleBaazi, Rummy Circle, My Team 11, Zapak, Livepools, Twelfth Man, Ftoss, Paytm First Game, etc.

These are some of the widely used apps in India for fantasy sports and Former Cricketer Yuvraj Singh is the brand ambassador of BalleBaazi, Sachin Tendulkar is the ambassador of Paytm First Game, for My Team 11, Virendra Sehwag is the brand ambassador & Famous Indian Footballer Sunil Chettri is the Brand ambassador of the Twelfth Man which is fantasy sports platform for Football.

The reason why Fantasy Sports is growing at a rapid pace in India is because these celebrities sportsperson have huge number of fan following and have high influencing power and if they endorse a particular app their followers are surely going to try that and also there is advancement in Internet with every passing year and Internet and Smartphones both are becoming cheaper and affordable to public at a large so these are the major reasons behind the booming of E-Sports Industry in India.

Celebrity Endorsing Fantasy Sports
With the increase in popularity of the Fantasy Sport platform, there is also an increase in number of partnership opportunities which come across them for the endorsement. The fantasy sports do partnership with athletes on contractual basis to endorse their platforms so that it becomes more popular among the public. The success of Fantasy Sport platform also depends upon the fan following and influencing capacity of the athlete.

The more influencing the athlete, the better the chances of success of the fantasy sport platform. The best examples for the above-mentioned line is the success of Dream 11 & Mobile Premier League. Former Indian Cricket Team Captain M.S Dhoni is the brand ambassador of Dream 11 platform, he is a great personality as the whole world knows about him, moreover he has 30.9 million followers on his Instagram account and 8.2 million followers on his twitter account, moreover the present captain of Indian Cricket Team Virat Kohli has 104 million followers on Instagram & 41.1 Million followers on Twitter and currently he is the brand ambassador of Mobile Premier League; So, we can clearly acknowledge from their fan bases that how much influence they can have on the audience if they are endorsing any product.

Here is the list of other fantasy sports platforms in India which are endorsed by various athletes:
  • Twelfth Man A fantasy football app whose brand ambassador is Indian Professional Footballer Sunil Chhetri was signed in May 2020
  • My 11 Circle A fantasy cricket app whose brand ambassadors are former International Indian Cricketers Saurav Ganguly & VVS Lakshman and present Afghanistani International Cricketer Rashid Khan & Former Australian Cricketer Shane Watson.
  • Paytm First Games An all in one fantasy games app launched by Paytm whose brand ambassador is Former Indian International Cricketer Sachin Tendulkar.
  • Hala Play - An all in one fantasy games app whose brand ambassadors are Indian International Cricketers Hardik Pandya and Krunal Pandya.
  • BalleBaazi - A fantasy cricket app whose brand ambassador is Former Indian Cricketer and Star Player of 2011 World Cup, Yuvraj Singh.


Legislations & Important Judgements related to Fantasy Sports in India
Judgements
Varun Gumber v. Union Territory of Chandigarh (2017)
This case is a historic case for legality of fantasy sports in India, herein this case the plaintiff was a registered player at Dream 11 platform which was operated by the respondent company (Dream 11 fantasy Pvt. Ltd.). The plaintiff lost the tournament offered by Dream 11 platform and moved to High Court of Punjab and Haryana alleging that the fantasy sports was not based on skill but it was based on chance and the business of Dream 11 comes under the definition of gambling under the legislations applicable to the State of Punjab. The Punjab & Haryana High Court relied on the judgement[9] of supreme court that fantasy sports required same level of skill, judgement & discretion as in the case of horse racing. Moreover, it was argued that:
  • The Respondent party argued in front of court that to achieve success in Dream 11 the users are required to deploy requisite skills, discretion & judgement while making their team on Dream 11.
  • They further argued that users were required to study the rules and regulations for playing the game; for example A user is required to analyse the statistics of the player such as batting average, total runs, economy rate, strike rate, etc. needs to keep in mind before forming the fantasy team.
  • Furthermore, it was computed that success in the game depends on the rational thinking, judgement, statistical analysis, knowledge of the user regarding the game being played.

So, from the above arguments it's clear that playing tournaments on Dream 11 is a game of skill not the game of chance.

Gurdeep Singh Sachar v. Union of India[10] (2019)
The main issue raised in this case was that:
Whether the Respondent[11] was conducting illegal operations of gambling/betting/wagering in the guise of 'online fantasy sports gaming' and consequently, was it levying inadequate GST on such services.

Therefore it was held by the High court of Bombay that the contests happening on Dream 11 platform was not dependent on the real-life result of the match's result i.e. upon a winning or losing of the match, so contesting on Dream 11 platform does not constitutes to gambling; moreover court relied on the judgement of the case of Varun Gumber v. Union Territory of Chandigarh[12] and said that Dream 11 fall under the game of skill not under the game of chance and also relied on the excerpts of the Supreme Court Judgement K.R Lakshmanan v. S/O Tamil Nadu which held that those competitions which requires requisite amount of skills in order to get success would not amount to gambling & as a result of that the claim would fall under the Entry 6 of Schedule 3 under Section 7(2) of the Central Goods & Services Tax Act, 2017 (CGST Act) and therefore GST of 18% will be applicable for the Dream 11, thus it resolves the question regarding the taxation issue.

State of Andhra Pradesh v. K. Satyanarayana[13] & Ors. (1967)
The issue raised in this case was that Whether playing Rummy comes under the ambit of game of skill or game of chance? & It was held by the Supreme Court that while playing rummy one needs to memorize the fall of cards and one also need a practise of discarding and holding of the cards, so rummy cannot be categorised under the game of chance because for playing this game one needs requisite skills, therefore rummy falls under the category of game of skill.

State of Bombay v. R.M.D Chamarbaugwala[14] (1957)
The Issue raised in this case was that Does Gambling qualify as trade, commerce or intercourse? & It was held in this case was that Gambling or doing the business of gambling was extra commercium[15] and therefore it is not included in the ambit of 'trade, commerce or intercourse'.

Legislations
The Public Gambling Act, 1867 is the legislation of central government which is was formed in colonial period in India by the Britishers to regulate and penalise gambling. This legislation prohibits all games of chances except lotteries and games of skills as well. Only the central government has the power to regulate the lotteries organised by the Government of India or by any of the State Government.

Information Technology Rules 2021 Section 4 (1) (b) (ii)
The rules and regulations, privacy policy or user agreement of the intermediary shall inform the user of computer resource not to host, display, upload, modify, publish, transmit, store, update or share any information that is defamatory, obscene, pornographic, paedophilic, invasive of another's privacy, including bodily privacy, insulting or harassing on the basis of gender, libellous, racially or ethnically objectionable, relating or encouraging money laundering or gambling, or otherwise inconsistent with or contrary to the laws of India.

The Constitution of India 7th Schedule [Entries 34 & 62 of the State List]
The Indian Contract Act, 1872 'Agreements[16] by way of wager, void'
Agreements by way of wager are void; and no suit shall be brought for recovering anything alleged to be won on any wager, or entrusted to any person to abide the result of any game or other uncertain event on which any wager is made.

Conclusion
There has always been a tussle between the game of skill and the game of chance. Few people still believe that fantasy sports are a game of chance whereas half of the population has a belief directly or indirectly fantasy sports are a game of skill that requires interpretation, calculation, and analytical skill of an individual to play the sport.

So, it's high time for the judiciary and government to have codified legislation for the regulation of fantasy sports and online gambling in India and for the judiciary to set precedents in our country related to fantasy sports and gambling by giving landmark judgments.

E-Sports is undoubtedly a rewarding sector in India and with the evolution of technology and easy availability of mobile data it is booming in India at a rapid pace, so there is a need to regulate the E-Sport industry by codified legislation which specifically serves this purpose & Fantasy sport is one of the e-sports which is played in India at a massive scale.

End-Notes:
  1. Ikigai Law, Unpacking A Billion Dollar Industry: Digital Games & Sports In India 02 (Ikigai Law & Iamai Report 2021).
  2. Ikigai Law, Unpacking A Billion Dollar Industry: Digital Games & Sports In India 04 (Ikigai Law & Iamai Report 2021)
  3. Varun Gumber v. Union Territory of Chandigarh and Ors. (18.04.2017 - PHHC): MANU/PH/1265/2017
  4. Supra Note 2.
  5. Entries 34 & 62 of List II.
  6. MANU/PH/1265/2017.
  7. Bombay HC, 30 Apr. 2019.
  8. Dr. K.R. Lakshmanan v. State Of Tamil Nadu And Anr, MANU/SC/0309/1996
  9. K.R Lakshmanan v. State of Tamil Nadu, MANU/SC/0309/1996.
  10. MANU/MH/1451/2019.
  11. Surbhi Kejriwal (Partner) and Ayush Nanda (Senior Associate), Bombay HC: Online fantasy sports gaming is legit!, Khaitan & Co., (last visited Mar. 20, 2021, 10.35 PM), https://www.khaitanco.com/thought-leadership/bombay-hc-Online-fantasy-sports-gaming.
  12. MANU/PH/1265/2017.
  13. MANU/SC/0081/1967.
  14. MANU/SC/0020/1957.
  15. Manvee & Joysree, Sports Betting: An analysis with reference to Judicial Aspects, LL.B Mania, (last visited Mar 20, 2021, 11.35 PM), https://llbmania.com/2020/05/21/sports-betting-an-analysis-with-reference-to-judicial-aspects/.
  16. The Indian Contract Act,1872, 30, No. 9, Acts of Parliament, 1872, (India).

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