Legality of Online Fantasy Sports League Games

Introduction

Online Fantasy Sport League Game (Fantasy Sport hereinafter) is a game which requires the users to form an imaginary team consisting of players who are scheduled to play a particular live sport (football, cricket, etc.) on a given day. Before forming a team, each participant has to pay a certain amount of fee and the fees of all participants are pooled and shared among the participants depending on the performance of real sport players.

The fantasy sports have become increasingly popular and attracted huge investments. The growth of fantasy sports has raised questions pertaining to its legality, which depends on whether such games come under the category of ‘game of skill’ or ‘game of chance’. Success in a game of chance depends on the luck of the person whereas; success in a game of skill depends primarily upon the knowledge, attention, etc. of the person. Game of chance, which includes lottery, amounts to gambling and is therefore, restricted by the gambling laws. On the other hand, games which involve a significant amount of skill set are legal as they are not within the purview of gambling laws.

The Public Gambling Act, 1867 

The Public Gambling Act, 1867 (Gambling Act hereinafter) prohibits running, being in charge of and visiting gambling houses. However, the Gambling Act does not apply to ‘any games of mere skill’. Since, state legislatures are empowered to enact state specific laws to govern gambling, not every state has adopted the Gambling Act. It is pertinent to note that the states which have their own statues to govern gambling have adopted similar criteria to determine whether a game amounts to gambling. However, states like Assam, Odisha and Telangana do not have an exception for ‘game of skill’ and therefore, playing fantasy sports amounts to gambling in these states.

The Supreme Court has adopted the ‘predominance of skill set’ to determine the legality of games and in light of this, card games such as rummy and betting on horse races are considered as a game of skill. Therefore, the legality of fantasy sports depends on which one of the elements (skill or chance) is the dominant element.

Online Fantasy Sport League Game – Game Of Chance Or Game Of Skill?

The High Courts of Punjab and Haryana, Bombay and Rajasthan have adopted the ‘predominance of skill set’ test and have held that the fantasy sports do not amount to gambling. There are more than 50 fantasy sports platforms in India and it is important to note that the decision of the above mentioned High Courts pertains to the legality of Dream 11, which is one of the world’s leading platforms for online fantasy sports games.

The legality of fantasy sports was first challenged in the Punjab and Haryana High Court in the case of Varun Gumber v. Union Territory of Chandigarh. The petitioner alleged that the operations of Dream 11 are not legitimate as it amounts to gambling under the provisions of the Gambling Act. Dream 11 contented that:

“The success in Dream-11 ‘s fantasy sports games arises out of a user’s exercise of superior knowledge, judgment, attention and adroitness in understanding the Dream-11 rules, acquainting himself with the past performance, physical state and form of athletes available for selection across multiple categories, assessing the relative worth of an athlete and the anticipated statistics arising out of the athlete’s performance in the underlying real-world event and devising an overall strategy in selecting and playing the Dream-11 game. Therefore, the element of skill has a much greater and predominant influence on the outcome of the Dream-11 fantasy sports game than any incidental chance.”

The Punjab and Haryana High Court examined the format of the fantasy sports and held that Dream 11 fantasy sport does not fall within the gambling activities as it involves the substantial skills. Furthermore, it observed that despite there being an element of chance, if a game is preponderantly a game of skill it would nevertheless be a game of “mere skill”.

In 2019, a criminal public interest litigation was filed before the Bombay High Court wherein the petitioner contended that the activities of Dream 11 amounts to violation of the Gambling Act as their activities are “nothing but ‘gambling’/’betting’, and for promoting gambling/betting and for evading payment of Central Goods and Service Tax (CGST)/ Integrated Goods and Service Tax (IGST)”. The Bombay High Court relied on the aforementioned Punjab and Haryana High Court’s case and held that the activities of Dream 11 do not fall within the activities of gambling for the invocation of the Gambling Act and since, there is no gambling/betting involved, there is no evasion of CGST/IGST by Dream 11.

The Rajasthan High Court’s decision in Chandresh Sankhla v. State of Rajasthanis the most recent judgement pertaining to the legality of Dream 11 fantasy sport. The Rajasthan High Court placed reliance on the decision of the Punjab and Haryana High Court and the Bombay High Court in the aforementioned cases and saw no legitimate reason to adopt a contrary view.

A special leave petition was filed by the State of Maharashtra against the decision of the Bombay High Court in the aforementioned case. On 6th March 2020, the Supreme Court took notice of the matter and issued an order staying the effect of the Bombay High Court’s decision.

Conclusion

The order of the Apex Court has created some uncertainty pertaining to the legality of fantasy sports in India. Drafting of a virtual team requires exercising of considerable skill as the participant has to evaluate the relative worth of each sportsperson as against all sportspersons available for selection and make evaluations of the sportsperson’s strengths and weaknesses based on the rules and therefore, there seems no plausible reason why the Supreme Court would adopt a contrary view and hold that Dream 11 fantasy sport is not a ‘game of mere skill’.

If the Supreme Court affirms the legality of Dream 11, it would open the gates for plethora of such fantasy sports platforms to enter the Indian market. Since, the judgement of the Supreme Court might be specific to the legality of Dream 11, it would be wrong to assume the legality of other fantasy sport platforms in light of the Supreme Court’s decision. Therefore, the legality of each fantasy sport platform is to be determined on the basis of the ‘predominance of skill set’.

Hitesh Nagpal, B.A.LL.B. (Hons.) student at Maharashtra National Law University, Mumbai. Views are personal

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