THE LEGAL STATUS OF FANTASY SPORTS IN INDIA

Introduction

Fantasy sports are prediction-based online entertainment simulators or games that give sports fans an experience where they can create a virtual team of real-life athletes from the sporting leagues and events that they follow. For example, "Fantasy Premier League" is a platform where the fans of the "English Premier League" can create teams with their favorite players that are currently active in the league. On such platforms, fans are assigned the role of a "manager" and are awarded fantasy points that they win after building a team based on the real-life statistics of the selected players. Fantasy sports require players' and teams' knowledge, experience, and perspective. Users that create virtual teams must adhere to a specified set of values and pay an entry fee to participate in the contest. The users are ranked based on the performance of the fictitious teams, which ultimately determines their winnings.



Regulation of Fantasy Sports in India

In India, the Indian Federation of Fantasy Sports (FIFS) regulates fantasy sports platforms independently. The FIFS was brought into power to ensure a likable experience for consumers and also to set industry standards for fantasy sports, ensuring best practice methods. In addition to that, the FIFS issues a Charter for Online Fantasy Sports Sites that outlines the ground rules for its members. To be eligible for confirmation by the Board of Governors at the FIFS, the Operator (platform owners) must receive and request an assessment and opinion from the FIFS Innovation Committee on the proposed competition as a "game of skill" for the online fantasy sports platform (OFSP), upon which they become members of the FIFS. FIFS currently has over 35 members, according to a recent Rajasthan High Court order.



According to the Charter, members must get a legal license and permission to utilize third-party intellectual property rights on their website, such as player photos, movies, logos, and so on. Before claiming any formal relationship with the governing organization, individual, team, or tournament of any sport, members must first get a license and approval. FIFS also followed the Internet & Mobile Association of India (IAMAI) rules for self-regulation of advertising.


On grounds of prohibition, fantasy sports are not considered illegal because they are regarded as "games of skill" under the Public Gaming Act of 1867. "Games of chance" such as gambling and betting are prohibited under the same act. The difference between the two is further elaborated in the next subhead.



Skill-based vs. chance-based games: the legal dilemma

The key challenge in understanding whether fantasy sports are indeed a game of skill is whether selecting a team out of so many available players was something a player did on talent or if it was something a player did on a whim. It is very important for us to understand the difference between games of chance and skill, as it largely dictates the legality of fantasy sports in India. A game of skill is where a player has to largely invest their time in mastering, practicing, and analyzing skills and methods to be successful. In such games, success is determined by how well one understands the rules and common practices as well as how quickly one plays.



The player can become an expert and secure success over time. On the other hand, in a game of chance, luck is the major factor that affects the outcome of the game. Factors that contribute to the outcome of such games are largely incidental, and hence there is no fixed way of determining what would possibly happen in a game of chance. Although in the real world, the line between skill-based and chance-based games is often blurred. This is because most games have an element of both skill and chance. For example, most card games are games of chance with some element of skill as well.



Courts in India have adopted a rather simple rule of thumb to determine whether a game is that of chance or skill. If the game can be mastered over time, then it is a test of skill, and vice versa. Games of skill in India and most countries are legal, whereas games of chance are not. They are often treated as illegal and immoral. The Public Gambling Act of 1867 is the sole central law in India that criminalizes most forms of gambling (Game of Chance). While the Act restricts gambling in the country, it also specifically enables games of "mere skill" to fall under its jurisdiction. As it stands, the Public Gaming Act of 1867 prohibits or bans any game related to wagering, betting, or gambling in every state except Sikkim, Daman, and Goa.



The surge in interest in the legality of fantasy sports has contributed particularly to the dilemma about whether they are considered betting or gambling, or whether they fall under the legally permissible category of "Game of Skill." This legality issue with fantasy sports arises from the fact that, in the majority of cases, these games include real money transactions and have been compared to betting and gambling.


In a number of cases taken into account by various courts in India, it has been established that success in fantasy sports is largely contingent on the considerable ability of an individual, and hence they don't come under the ambit of illegality as per the Public Gambling Act of 1867. Some of those judgements are listed here:



State of Bombay VS RMD CHambarbaugwala

The Public Gambling Act of 1867 bans every game dependent on the factor of chance but legalizes any game dependent on mere skill. In this judgment, the Bombay High Court interpreted "mere skill" to include games that are predominantly dependent on skill but also have some element of chance involved. An appeal under the same case also held that gambling is an extra-commercial activity and hence does not come under the ambit of trade and commerce, which implies that it is not protected as a fundamental right by the Indian Constitution.



Andhra Pradesh VS K Satyanarayana

The court held that the game of “rummy” is majorly dependent on the memorization and judgment skills of an individual. Hence, even though the game is very much dependent on the luck of an individual, there is no way that the influence of luck is larger than that of skill. Hence, “rummy” is not illegal under the Public Gambling Act of 1867.


Head Digital Works Private Limited VS State of Kerala

Similar to the verdict in the previous case, the court held that even though Rummy does not come under the ambit of fantasy sports, it is still legal because, just like Rummy, online Rummy also involves a certain degree of skill, which outweighs the influence of luck. The Court also held that any game that necessitates the player's ability to apply their skills in a variety of ways is a game of skill and is hence legal.



Dr K.R. Lakshmanan v. State of Tamil Nadu

The Supreme Court held that the game of horse riding is dependent on the skill of the horse rider, the training that both the horse and the rider have received, and the pedigree of the animal and how it was bred and raised, the nature of the race that it takes part in with respect to its training, and the current form of both the rider and the horse. Since it is so largely dependent on the various factors of skill, even if it is also reasonably dependent on chance, skill largely dominates the outcome of the sport.



NITI Aayog regulations: resolving the legal dilemma of fantasy sports

NITI Aayog is a government-run think tank that took into account all the judgements and issues related to fantasy sports to come up with three conclusive points:

  1. There is no general or specific method that can fairly determine whether a game is a game of skill or a game of chance. Hence, differentiation should be taken into account while creating such platforms, and hence it is the onus of the developer and not the government.

  2. The variance in regulatory norms with respect to fantasy sports between various states is a burden on platforms as it challenges compliance.

  3. Differential regulation also challenges compliance on the part of consumers, not just the consumers, and hence burdens them in accordance with the law as well.



Hence, to battle such issues, NITI Aayog has recommended establishing a self-regulatory entity for the industry, which would be overseen by an independent monitoring board. This suggested organization would also establish an independent review committee that would be in charge of establishing the game's "skill" level. This might be combined with a light-touch regulatory structure at the national level.



Conclusion

Fantasy sports are a very beneficial way of contributing to a country’s economy. They engage with a large number of people and also provide considerable financial incentives to the consumer, the government, and the developer. Still, money is not enough of a benefit for authorities to not regulate these platforms as they might possibly violate various legislation in place and also might be disrespectful to the modesty of society at large. Such risks need to be taken seriously as they might influence and enable other sorts of acts that are prohibited by the law, and hence developers need to work in strict accordance with governments to make sure that the unregulated use of such acts does not violate the laws in power.



Bibliography

  1. Dr. K.R. Lakshmanan vs State Of Tamil Nadu And Anr [1996] (Supreme Court of India).

  2. Head Digital Works Private Limited VS State of Kerala [2021] (Kerala High Court).

  3. The Legal Amigos, n.d. K.R. Lakshmanan vs State Of Tamil Nadu. Available at: <https://www.thelegalamigos.com/k-r-lakshmanan-vs-state-of-tamil-nadu/> [Accessed 21 June 2022].

  4. Krishnan, A., 2021. Analysis of the ban on online rummy by Kerala High Court. [Blog] IPleaders Intelligent Legal Solutions, Available at: <https://blog.ipleaders.in/analysis-ban-online-rummy-kerala-high-court/> [Accessed 21 June 2022].

  5. Helpline Law Legal Solutions Worldwide, n.d. Legal Status of Online Fantasy Sports in India. Available at: <https://www.helplinelaw.com/business-law/LSOFSI/legal-status-of-online-fantasy-sports-in-india.html> [Accessed 21 June 2022].

  6. Sahoo, S., 2021. Fantasy Sports in India: A Report. [Blog] Khurana and Khurana Advocates and IP Attorneys, Available at: <https://www.khuranaandkhurana.com/2021/09/15/fantasy-sports-in-india-a-report/> [Accessed 21 June 2022].

  7. State Of Andhra Pradesh vs K. Satyanarayana & Ors [1968] (Supreme Court of India).

  8. The State Of Bombay vs R. M. D. Chamarbaugwala [1957] (Supreme Court of India).


This article is written by Partha Singh of Institute of Law, Nirma University.

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