Legality of Fantasy Sports in India
These Frequently Asked Questions (FAQs) seek to provide clarity on legality of Fantasy Sports in India, and to address concerns of Users about the same. In case you have any specific concerns or questions, please feel free to reach out to us at firstname.lastname@example.org, we will try our best to provide you the necessary information.
1. What are Fantasy Sports?
1.1 Fantasy sports are a relatively new genre of online sports games that enable Users to create and virtually manage real players or teams of a professional sport. The unique feature of these online fantasy sports is that they offer an opportunity for fans to play their favourite sport virtually and compete with his/her peers, on the basis of real-time performance of the sportspersons/athletes in an actual, corresponding sporting event.
1.2 Presently, Fantain offer Users an array of fantasy sports games and contests, in various formats, which are based on the sports of Cricket and Kabaddi. Fantain plans to introduce fantasy games for other sports in the future.
2. If a User’s performance in a Fantasy Sport is determined on the basis of selected player’s performance in an actual event (without any control on such player’s performance in the event), aren’t Fantasy Sports based on ‘luck’ and ‘chance’?
2.1 A User’s performance is largely dependent on his understanding of the underlying Sport, Event, players involved, playing conditions, statistics, form, etc. In order to illustrate the point, we would like to draw a parallel with another skill based sport – Poker. A beginner may think that a player’s performance is largely depending on the hand dealt by the dealer, however a seasoned/professional player of the game will tell you that while the cards received by a player do an element of luck, the success of player is not entirely dependent on it, but is largely dependent on the skills of the player, and his reading and understanding of the rules of Poker, the probability of higher hands of his opponents, understanding betting patterns, etc.
2.2 Even though the outcome of a Fantasy Sport is contingent on an uncertain event, we believe the success of a User at Fantasy Sport is predominantly linked to his skill, as he relies on the knowledge of the underlying Sport, teams, players, playing conditions, form and other statistics, all of which require a substantial amount of application of mind.
3. What are the laws governing games of skill in India?
3.1 To understand the concept of Games of Skill, we need to examine the pre-independence gambling legislation enacted in India. The first legislation on gambling was the Public Gambling Act, 1867 (“PGA”) which was enacted “to provide for the punishment of public gambling and the keeping of common gaming-houses”. The PGA provided that it shall not apply to games of ‘mere skill’. Thereafter, most states in India have enacted adaptations of this central act with or without modifications* , and continued to perpetuate this line of thinking.
3.2 However, there are certain exceptions to above rule, as witnessed by Assam Game and Betting Act, 1970, Orissa (Prevention Of) Gambling Act, 1955, and the recently promulgated Telangana State Gaming (Amendment) Ordinance, 2017. These states have enacted these regulations in order to curb the menace of gambling. These legislations tend to either make any activity involving an element of chance illegal or increase the threshold of dependence on skill in determining whether a game is a game of skill or game of chance. In the states of Assam and Orissa however, games of chance are expressly prohibited and the law does not provide an exception for games of mere skill. Therefore, games of mixed chance and skill, regardless of their relative proportions cannot be played for cash in these states.
3.3 In Nagaland, the state government has recently enacted the Nagaland Prohibition of Gambling and Promotion and Regularisation of Online Games of Skill Act, 2016, which requires licensing and regulation of online games of skill offered or accessible in Nagaland. This law requires the licensing of any of skill, which is accessible in Nagaland and provides certain protections and exemptions to licensed entities.
3.4 The Supreme Court of India has interpreted the words “mere skill” to include games which are preponderantly of skill and has laid down that (i) the competitions where success depends on substantial degree of skill will not fall into category of `gambling’; and (ii) 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”**.
3.5 Thus, a game of chance differs from a game of skill, in that, while games of chance are wholly and solely based on a contingent event without any substantial application of mind or effort, games of skill are said to be those games that involve a substantial amount of human skill and application of mind.
4. Apart from the anti-gambling laws, are there any other laws which govern organization of games and contests in India?
4.1 In addition to the central and state legislations mentioned above, certain prize competitions are governed by the Prize Competition Act, 1955 (“PCA”). Under the PCA, a prize competition is defined as any competition offered with a prize where the solution is based around the building up or arrangement of letters or figures, such as a crossword prize competition, a missing-word prize competition or picture prize competition.
4.2 Any prize competition within the purview of the PCA is required to adhere to the restrictions and limitations specified under the PCA. While there is no express exemption of Games of Skill under the PCA, the courts, while examining the provisions of PCA, have extended such exemption under the PCA.
5. Are there any judicial pronouncements on whether Fantasy Sports are games of skill or chance?
5.1 Recently, the High Court of Punjab and Haryana in a matter involving an allegation of betting and gambling against a fantasy sports service provider, discussed the concept of fantasy sports in great detail, and held that the fantasy sports games offered by the service provider are those in which success is based on the user’s knowledge, judgement and attention. Hence, the predominance of the element of skill and judgment in these games outweigh any other elements, and hence are undoubtedly games of skill and not games of chance that would amount to betting and gambling*** .
5.2 It should be noted that, in absence of any express legislation prohibiting Fantasy Sports or a contradictory view taken by a higher court of law, we believe that Fantasy Sports are legal in India.
*These legislations have been enacted in pursuance of State Government’s power under Entry 34 and Entry 62 of List II in the Seventh Schedule of the Indian Constitution. While Entry 34 of List II of the Constitution of India specifies that betting and gambling as a state subject which empowers each state’s legislature with competence to legislate on such matters, and Entry 62 confers power on the states to legislate and impose taxes, inter alia, on betting and gambling.
**State of Bombay v. R.M.D. Chamarbaugwala, AIR 1957 SC 699
***Varun Gumber v. Union Territory of Chandigarh and Ors, CWP No. 7559 of 2017.