The Legality of Fantasy Sports in India

Industry data shows that the Indian online gaming industry grew 21% during the lockdown months.
The Legality of Fantasy Sports in India
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The ordinance promulgated by the Tamil Nadu government banning all kinds of online gaming in the state and joining the neighboring states like Telangana and Andhra Pradesh has raised a question on vacuum of a national legislation on the same.

Karnataka Government’s interest towards introducing a legislation on the same has given rise to an important question about whether the nation needs a modern law governing online gaming and gambling.

The states are having different opinion about the issue in which some are in favor to make some part of gambling legal with strict regulations on it, while some are in favor to wholly illegalize the act.

The primary legislation which deals with online gaming/gambling is the Public Gambling Act of 1867 (“Act”). After the formation of the Indian Constitution, the Act was made applicable all over the country. Later, the states were given power to frame legislations to govern gambling independently.

Following the footsteps of the neighboring states, the Karnataka government is planning to propose an ordinance relating to ban of online gaming activities in the state. Karnataka’s home minister in his recent statement shared the view of government on the matter.

Home Minister Basavaraja Bommai expressed his concern on increase in complaints from parents and people losing their money because of the addiction to these games.

"Students, kids, boys, girls are involving themselves very much and even elders as well spending a lot of money to play online games, which has become a sort of gambling," the Home Minister reportedly said.

If we take a look at the gambling regulations in the Indian states, it can be found that most of the states are still following the Public Gambling Act of 1867, while a handful of them have formed their state level rules.

The states of Sikkim, West Bengal, Goa and Nagaland have formed their own laws to regulate such acts. Telangana, Tamil Nadu and Andhra Pradesh have banned any type of online games or gambling, while most of the remaining states, based on the jurisprudence laid down by the courts, have excluded the games of skill from any regulations.

It should be noted that the Act does not deliver the precise definition of gambling. The non existence of any dedicated gambling laws in India has made the whole concept of online gaming and gambling debatable to the extent of legality.

The legality of online games has been discussed in various landmark cases, wherein most of the cases relied on bifurcation of the practice on the basis of whether the online game is based on pure luck or skill. The games which consisted even a hint of skill needed to perform in them were held legal in the eyes of law.

Since the Act was made when there was no online gaming or any other platform except physical, it fails to cover the challenges pertaining to online gaming and gambling.

In the landmark judgements of Dr. K.R. Lakshmanan v. State of Tamil Nadu[1] and State of Andhra Pradesh v. K. Satyanarayana,[2] gambling was defined as a payment of price made for a chance to win.

As there is no specific law relating to the issue, most of the jurisprudence comes from the courts. In both the above judgments, it was held that rummy is game of skill i.e. there is some amount of skill required to play it making it a valid and legal game.

It was further elaborated by the court that a game involving some amount of skill will be held legal. On the other hand, in games where the part of chance takes the upper hand would be illegal since it will become a luck-based game.

Another case, Gurdeep Singh Sachar v. Union of India[3] (2019) dealt with the same aspect i.e. legality of the gaming/online gaming and whether Dream 11 fantasy sports violates the Public Gambling Act, 1867 in any manner or not.

The respondent referred to the earlier judgement given by the Punjab and Haryana High Court in Varun Gumber v. Union Territory of Chandigarh[4], where it was held that the Dream 11 fantasy sports game is a game of skill which requires/involves some amount of skill, knowledge and attention. The court held that the game was protected under the Article 19(1)(g) of the Indian Constitution and was a legitimate activity.

In February 2020, the legality of the online gaming platform Dream 11 was again challenged in Chandresh Sankhla v. State of Rajasthan[5]. The court, quoting the previous precedents, ruled that the online fantasy sport game is wholly legal as it involves some amount of skill and knowledge applied on the same.

Since some of the Indian states have made laws to legalize a part of the games, centre found it technically infeasible to block these games. Most of these games are based on foreign companies, which adds a risk of violation of FEMA and tax laws applicable on the gaming company.

Furthermore, these online games involved conversion of points into money, a function which only must be performed by the Reserve Bank of India. A centre backed regulation will not only ensure a uniform pattern of justice in cases of fraud and other issues, but will also act as fallback for the states which do not have any state level law to deal with the same.

Codifying the online gaming and gambling activities through legislation will also help the government get additional revenues.

The need of the hour is a new legislation by the Indian parliament, amendment of the present Act in accordance with the modern world as well as the Supreme Court’s jurisprudence on this issue.

[1] Dr. K.R. Lakshmanan v. State of Tamil Nadu ,1996 SCC (2) 226.

[2] State of Andhra Pradesh v. K. Satyanarayana, 1968 AIR 825.

[3] Gurdeep Singh Sachar v. Union of India, 2004 (3) SLJ 69 CAT.

[4] Varun Gumber v. Union Territory of Chandigarh, CWP No. 7559 of 2017.

[5] Chandresh Sankhla v. State of Rajasthan, 2020 SCC OnLine Raj 264.

(The author is a second-year law student at the Vivekananda Institute of Professional Studies, GGSIPU, Delhi)

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