The Evolving Landscape of Online Gaming and Fantasy Sports in India: Legality, Skill, and Regulation

In recent years, the gaming industry has undergone a significant transformation due to advancements in technology and the increasing number of internet users. Online gaming has gained immense popularity in India, encompassing a wide range of games such as rummy, poker, and fantasy sports. However, the regulatory landscape concerning fantasy sports and online gaming in the country remains uncertain.

Amidst this ambiguity, the Supreme Court of India has rendered a crucial verdict, affirming that fantasy sports qualify as a game of skill rather than a game of chance. This distinction holds vital implications for their legal standing. Gambling is generally prohibited in most states of India, except in regulated areas like Goa, Daman & Diu, Sikkim, and Nagaland. The Public Gambling Act,1867 explicitly states that games requiring mere skill do not fall within the purview of gambling. The Supreme Court has laid down precedents to define mere skill and established a preponderance of skill test.

Considering these legal developments, the Supreme Court has recognized that games like rummy demand considerable skill, and the element of chance cannot be eliminated. Similarly, the Punjab & High Court of Haryana has acknowledged that fantasy sports involve the application of skills in creating teams, considering various real-world factors like pitch conditions, climate, and player health. Similarly, the Bombay High Court has emphasized that fantasy sports should not be conflated with online gambling or betting.

As the gaming landscape continues to evolve, these legal perspectives on fantasy sports and skill-based games will likely shape the future of online gaming in India.

However, various state laws have been introduced or amended to ban online gaming that can take the form of gambling, including Telangana Gaming (Amendment) Act, 2017, Karnataka Police (Amendment) Act, 2021 etc.

State of Play: Online Gaming and Anti-Gambling Laws in India

The advent of technology and the constantly increasing number of internet users has led to a paradigm shift in how the gaming industry operates. Rummy, poker, fantasy sports, and other games have now found online players and audiences, but much of the regulatory realm on fantasy sports and online gaming in India remains ambiguous.

Online gaming can be divided into three core categories, that is, real money games (such as poker), mobile centric games (that set up pay walls to aid progression), and e-sports (such as FIFA). In recent years, fantasy sports have emerged as a unique format unlike any other online gaming format present in India and has shown great promise and popularity among young working professionals.

With Dream 11, the fantasy sport platform, sponsoring the Indian Premier League 2020, interest in fantasy sport has significantly grown in India. The Online Fantasy Sport Platform (OFSP) includes not just Dream 11, but many other players such as My 11 Circle, My Team 11, Howzat Fantasy, that have gained prominence in recent years. These platforms allow sports fans to build virtual teams containing counterparts of real players from upcoming matches and score points based on their on-field performance.

The legality of fantasy sports has been discussed by courts in India, with most concluding that fantasy sport is a game of skill and not a game of chance. In August 2021, the Supreme Court upheld the Rajasthan High Court’s finding that Dream 11 is a platform that involves skill and does not amount to gambling.

Gambling, as a practice, is illegal in several states except Goa, Daman & Diu, Sikkim, and Nagaland. Games of chance are considered gambling in India and banned in common houses under Entry 34 of List II of the Constitution of India, except in some states like Sikkim and Nagaland, that regulate it.

This is because such games result in the exchange of money based on the outcome of an uncertain future event, and involve limited learning ability, strategy, physical coordination or strength, technical expertise, or specific knowledge. The Public Gambling Act, 1867, states that a game of mere skill does not fall within the scope of gambling.

Precedent on the Subject

In the State of Bombay vs. R.M.D. Chamarbaugwala, the Supreme Court interpreted the term ‘mere skill’ to mean games which predominantly rely on skill. In order to not be classified as a game of chance, a game would have to involve a significant exercise of skill. The Court further clarified in K.R. Lakshmanan vs. State of Tamil Nadu, that even though the element of chance cannot be completely removed, success in a game of skill relies greatly on knowledge, training, attention, experience, etc., laying down the ‘preponderance of skill’ test.

In State of Andhra Pradesh vs. K. Satyanarayana & Ors, while determining whether Rummy was a game of skill or chance, the Supreme Court held that it required players to memorise cards and hold and discard them, indicating the need for considerable skill. The court observed that the game of Rummy is not a game of entire chance. It is mainly and preponderantly a game of skill.

In Shri Varun Gumber vs. Union Territory of Chandigarh & Ors, the Punjab & Haryana High Court held that fantasy sports differ from online gaming and involve the application of skills in the drafting of teams by assessing the relative worth of the players, and take into consideration other crucial real-world factors such as the pitch, climate, health of the players, etc. The decision was appealed before the Supreme Court but was summarily dismissed.

The Bombay High Court relied on this decision of the Supreme Court in Gurdeep Singh Sachar vs. Union of India, wherein it observed that unlike betting, winning, or losing in fantasy sports was not dependent on any team winning or losing in the real world, and Dream 11 could therefore not be found guilty of carrying out gambling or betting in the guise of online fantasy sports gaming. The High Court of Rajasthan came to a similar conclusion in Ravindra Singh Chaudhary vs. Union of India & Ors.

State Laws Relating to Online Gaming

While recommending the exemption of skill-based games from the purview of gambling, no definition for the term game of skill was provided by the 276th Law Commission Report, resulting in varying interpretations of the concept. States such as Tamil Nadu, Telangana, and Karnataka have introduced laws or amended existing laws to ban online gaming that can take the form of gambling.

• Telangana’s Gaming (Amendment) Act, 2017 has expanded the meaning of wagering and betting to include acts that risk money on uncertain events, even if such game is one of skill. This amendment has been challenged in the High Court of Telangana.
• Tamil Nadu passed an ordinance that bans betting or wagering of any kind in cyberspace using any communication devices or computers, through common gaming houses, and electronic transfer of funds to deliver prize money.
• The Karnataka Police (Amendment) Act, 2021, also bans online gaming and betting Lawyers for the petitioners have argued that the state does not possess the competence to legislate on games of skill.
• The Karnataka High Court has reserved its order on a batch of petitions challenging the constitutionality of the law in All India Gaming Federation vs. State of Karnataka. The Andhra Pradesh Gaming (Amendment) Act, 2020 also places restrictions on online games such as rummy, that has been designated as a game of skill.

Need for Regulation

With the COVID-19 pandemic resulting in lockdowns and limited access to the outdoors, a large portion of the population has turned to the internet for entertainment. The accessibility and affordability of smartphones, tablets, and PCs has further played a role in growing participation in online gaming. 

Much remains to be clarified regarding the distinction between skill and chance-based games and the way each state government regulates it. If fantasy sports involve the evaluation of several factors, games like poker that involve math and memory skills, with training and learning to be skilled at it in order to excel may also be categorized as skilled based at a later time.

Any regulation regarding gambling must clearly lay down the outline that distinguish these games from each other, allowing one to be permissible, and the other banned. The absence of intelligible differentia has resulted in gaming and gambling being used interchangeably leading to the prohibition of legitimate businesses.

Having stated thus, a complete ban on gambling may not result in productive outcomes and will likely result in the emergence of new means of gambling. Government can benefit substantially by regulating the sector, particularly through taxation due to the revenue generated by this sector.