Legal Status of Online Fantasy Sports in India

When the world becomes more digitalized, people have discovered new ways to gamble. Fantasy sports have become one of these approaches. The concept behind fantasy sports is that it is both a game of skill and a game of chance. But is it legal in India?

Tue Aug 16 2022 | Business Law | Comments (0)

Like

The Indian online gaming industry has grown rapidly in recent years, with forecasts that revenue from the industry could hit INR 118.8 billion by 2023. During the global pandemic, this industry experienced tremendous growth as more people were pressured to go online.

However, in India, the regulation of such games is inconsistent across the region, and there is no uniform law governing online gaming operators. In this article, we examine recent changes in the regulation of such games.

Regulation of Online Fantasy Sports in India

Online games that involve the use of skill, such as skill-based online gaming, are permitted, while games of chance are prohibited under the Public Gambling Act. In a number of cases, Indian courts have ruled that games in which a candidate's success is contingent on the use of "substantial talent" are exempt from Indian gaming laws, even though they are games of chance. Several states have also passed legislation exempting "games of ability" from gambling regulations. Since online gaming is a topic covered by the State List, states are free to enact regulations in this region.

Online gaming can be understood to include three major types of gaming: cash games, cell phone gaming, and e-sports. As the industry grows, there have been concerns that a regulatory framework will be created to deal with the online gaming industry. The Advertising Standard Council of India (ASCI) recently released new guidelines on the promotion of real money games although no formal framing has been established for online gaming.

Fantasy games is one of the most popular kinds of games in India, a subset of real money games. As several players in the industry have sought to clarify the regulations governing such games, NITI Aayog recently proposed directives on the regulation of online fantasy sports in India. The guidelines are a draught only and are currently open to industry stakeholders' reviews and comments.

Definition of Fantasy Sports

Fantasy Sports are online prediction games in which fantasy gamers create a virtual team of real-life athletes from the Indian Premier League (IPL), English Premier League (EPL), National Basketball Association (NBA), and other leagues (people playing the game) "Managers" are gamers who build a team of players in a particular league who win points based on real-life statistics converted into fantasy points. Fantasy points are earned by managers based on the performance of players in real-life sports. Managers contend with one another and with their employees. These executives handle a team's roster by bringing in, trading, and selling players. The majority of fantasy sports was classified into two groups. The first is a season-long draught, and the second is regular fantasy leagues, which players from all over the world participate in.

The daily fantasy edition is commonly seen on Indian fantasy sports sites such as Dream11 and My Circle 11. To enter a contest, managers must pay an entry fee, and the prize money is determined by the network. In cricket, points are awarded based on a batsman's runs, a bowler's wickets, and a fielder's catches/run-outs, among other statistics. From among the 11 players, the managers must choose a captain and vice captain.

Fantasy Sports in India

The Indian Fantasy Sports Federation is the industry's self-regulatory body for fantasy sports in India (FIFS). The FIFS was founded to protect the interests of customers and to provide best practises for the Indian Fantasy Sports industry. In addition, the FIFS publishes a Charter for Online Fantasy Sports Sites, which lays out the ground rules for its members.

The Operator must obtain 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 in order to be eligible for confirmation by the Board of Governors (OFSP). According to a recent Rajasthan High Court ruling, FIFS now has over 35 members.


Members must obtain a legal licence and permission to use third-party intellectual property rights, such as player pictures, videos, logos, and so on, on their website, according to the Charter. Members must first obtain a licence and approval before claiming any official affiliation with the governing body, individual, team, or tournament of any sport. The Internet & Mobile Association of India (IAMAI) guidelines for self-regulation of advertising were also adopted by FIFS.

Skill vs. Chance in Fantasy Sports

The main question in bringing depth to fantasy sports was whether choosing a team of 11 out of 22 players was something a player did on skill or whether the player took a chance by selecting the group of players.

Dream 11 is entirely a skill game, according to the Supreme Court, and gambling does not qualify as fantasy sports. Dream 11 was also accused of engaging in commercial activity, according to the Court, which was protected by Article 19(1)(g) of the Constitution.


Impact of the new Online Gaming Guidelines by NITI Aayog on Fantasy Sports

The guidelines outline India's efforts to recognise online gaming and capitalise on the rapidly rising industry. The advertising guidelines are a much-needed effort by ASCI to protect online gaming customers, especially minors. The rules must be followed by all online gaming companies and operators, as well as private broadcasting networks.

NITI Aayog's guidelines are the first step toward legitimising not only online fantasy sports games, but also online gaming in India. Despite the fact that these guidelines were only proposed to govern online fantasy sports, industry participants are already requesting similar guidelines for online gaming.When the online gaming industry expands, more legislation like this would be needed to protect the rights of both game players and the companies that operate them

Judicial Developments related to Fantasy Sports in India

Two years after the Varun Gumber case, the legality of Fantasy was called into question again in the Bombay High Court in the case of Gurdeep Singh Sachar v. Union of India. The participants do not bet on the outcome of the match and merely play a role similar to that of selectors in selecting the team, the Court said once more, reiterating the previous ruling. The players are awarded points for the whole game, not just a portion of it. The Bombay High Court held an interesting hearing that bolstered Dream 11's case even further. When a PIL alleging that Dream 11 was involved in cricket betting was dismissed by the Rajasthan High Court in 2020, the court gave the app the benefit of the doubt.

Setting up an Online Fantasy Sports Business in India

With the potential for growth in the online gaming industry, there is a movement in India to establish more of these businesses. Here's a quick rundown of what you'll need to start such a business in India:

  • For online gaming, which falls under the Electronic framework, and IT sectors in India, 100 % foreign direct investment is permitted under the automatic path. This means that such investments do not require approval from the relevant ministries.
  • Setting up an internet-based gaming company would necessitate the purchase of critical hardware, software, and networks (server management software).
  • Rather than starting a business from scratch, you should partner with an online gaming company that is looking to expand.
  • For most "skill games," there is no need to acquire a licence. The states of Sikkim and Nagaland, on the other hand, have adopted their own rules for online skill games, and licences under these rules will have to be obtained.
Copyright 2022 – Helpline Law - HLL001

ENQUIRY FORM

You could get in touch with our team to find a suitable lawyer for assistance.
Helplinelaw has been referring lawyers that fit your needs in terms of seniority and experience since 2001

Other Latest Articles