Online fantasy sports gaming is booming in India and has in a
short span become a prominent form of online gaming in the country,
despite legal and regulatory challenges. Fantasy sports is
predominantly a prediction game where players assemble a dream team
of real sportspersons active in a variety of sports such as
football, cricket, basketball, kabaddi etc. and thereafter
participate in contests, competitions that mimic and convert the
performance of the sportsman in real life into fantasy points.
Fantasy sports and fantasy sport operators have often been caught
in the cross hairs of gambling legislation in India from a
perspective of whether online fantasy sports gaming would be
considered gambling. In this two-part article, we will analyse two
main legal hurdles that fantasy sports operators have encountered
in India – (i) the impact of gambling legislation in India; and
(ii) the role of intellectual property rights given that fantasy
sports draws from intellectual property (brand names, team names,
players and statistics) to offer users products and services.

In India, gambling is a state subject, which implies that states
have the authority to regulate and legislate on the practice of
gambling in a manner they deem fit. The Public Gambling Act, 1867
(“Act“) is the only act notified by the
Central Government on this subject and is a century old act that
pre-dates online gaming. Most states have however notified this
Act, with respective state derogations. The Act prohibits all
common gaming houses indulging in games of chance, while carving
out an exception for games of mere skill¹.

Games of Chance Vs. Games of Skill

Gambling legislations in India typically differentiate between
games of chance and games of skill. A game of chance is equated to
gambling and prohibited, while a game of skill is typically
distinguished from gambling and is not prohibited, subject to state
legislation. Some exceptions to this general rule can be seen in
the legislations of Assam, Orissa, Sikkim and Nagaland
(both of which require a license to be obtained),
Nagaland, Andhra Pradesh and Telangana, which do not carve out
exceptions for games of skill from the blanket restriction on
gambling.

The Supreme Court of India (“Supreme
Court“), while interpreting the requirement of
‘mere skill’, has reiterated at several places that for a
game to be adjudged a game of skill, there has to be a
preponderance of skill rather than chance. For instance, in the
case of State of Andhra Pradesh Vs. K. Satyanarayana &
Ors.², the Supreme Court debated whether the game
of Rummy was a skill-based game and stated that the game of Rummy
is not a game entirely of chance³ and requires
certain amount of skill. It was held a game of skill would include
all games where there is a preponderance of skill over chance,
including where the skill relates to (i) strategizing the manner of
placing wagers or placing bets, (ii) selection of a team or virtual
stocks based on analysis, or (iii) the manner in which the moves
are made, whether through deployment of physical or mental skill
and acumen. The Supreme Court noted that in a game of Rummy while
there was an element of chance; as is the case with all games in
which cards are shuffled; it was preponderantly a game of
skill. We have in a previous post also written about the petition before
the Bombay High Court regarding the game of Ludo. There have been
other judgements by the Supreme Court with respect to what is
considered a game of skill including some judgments related to
fantasy sports.

Fantasy Sports- Judicial Precedent

The trajectory of fantasy games in India has been dependent on
whether it is considered a ‘Game of Skill’ or a ‘Game
of Chance’. The importance of distinguishing games of skill
from games of chance is essential to determine whether a certain
activity will be permitted under Indian laws. If a game falls into
the category of a ‘game of chance’, it is deemed to be
gambling under the Act, and gambling has been prohibited under the
Act. As mentioned hereinabove, the Act prohibits the operation of
all common gaming houses indulging in games of chance, while
carving out an exception for games of mere skill. Several Indian
courts (specifically the Punjab & Haryana High Court
(confirmed by the Supreme Court in an appeal) and the
Bombay High Court) have ruled that fantasy games cannot be
categorised as games of chance and therefore do not run afowl of
the gambling legislation in India.

Varun Gumber v. Union Territory of Chandigarh
(MANU/PH/1265/2017)

Dream 11 is one of the world’s leading platforms for online
fantasy sports games and offer fantasy cricket, fantasy kabaddi and
fantasy football games in partnership with reputed websites and
social media platforms, with a wide user base. This judgement by
the Punjab and Haryana High Court
(“PHC“) has been the leading judicial
precedent for fantasy sports. This case was concerned with deciding
whether fantasy sports, a multiplayer online game, was skill based
or would be caught by the gambling legislations. The PHC held that
playing fantasy sports required considerable skill, judgment and
discretion and the effective deployment of such skills and
knowledge by the participant also has a definitive effect on the
outcome of the game. In conjunction with the above conclusion, the
PHC also reiterated the Supreme Court’s stand that: (i) the
competitions where success depends upon the substantial degree of
skill is not competition; 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. The decision of the PHC was
appealed before the Hon’ble Supreme Court of India. However,
the appeal was summarily dismissed.

Gurdeep Singh Sachar v. Union of India
(MANU/MH/1451/2019

The Bombay High Court was next to rule on whether Dream11’s
online fantasy sports indulged in activities considered to be
gambling/ betting/ wagering. A public interest litigation was filed
before the Bombay High Court in this case and the Bombay High Court
observed that unlike betting, winning or losing in fantasy sports
was not dependent on any team winning or losing in the real
world.

The Bombay High Court held that “the case of the
Petitioner is wholly untenable, misconceived and without any merit.
It can be seen that success in Dream 11’s fantasy sports
depends upon user’s exercise of skill based on superior
knowledge, judgment and attention, and the result thereof is not
dependent on the winning or losing of a particular team in the
real-world game on any particular day. It is undoubtedly a game of
skill and not a game of chance. The attempt to reopen the issues
decided by the Punjab and Haryana High Court in respect of the same
online gaming activities, which are backed by a judgment of the
three judges bench of the Apex Court in K.R. Lakshmanan (supra),
that too, after dismissal of SLP by the Apex Court is wholly
misconceived.”

Ravindra Singh Chaudhary Vs. Union of India & Ors.
(MANU/RH/0499/2020)

Another public interest litigation was filed with respect to
Dream11’s fantasy sports games before The High Court of
Rajasthan (Jaipur Bench). The Court reiterated the position by the
PHC, Bombay High Court and the Supreme Court and held that fantasy
games involved substantial skills and therefore does not amounting
to gambling.

A stay order in 2020, by the Supreme Court against the order of
Bombay High Court ruling fantasy sports games as a game of skill,
opened the debate once again. Though the matter is still pending
before the Supreme Court, the Supreme Court in August 2021, upheld
the legality of fantasy sports in an appeal made against the
abovementioned order by the Rajasthan High Court order. It is
evident from the available case law that a game of skill would not
be considered as gambling and that fantasy sports would not be
considered a game of chance.

Recent State Law Amendments

Tamil Nadu

Recently, the Tamil Nadu government passed the Tamil Nadu Gaming
and Police Laws (Amendment) Act of 2021 (“TN
Act“), banning online wagering or betting. It also
extended this prohibition explicitly to games of skill as well. The
Madras High Court vide an order (Junglee Games & Ors. Vs.
State of Tamil Nadu struck down the TN Act. The Court was of
the view that imposing a blanket ban fell afoul of Article 19(1)
(g) of the Constitution of India (Right to Practise
any Profession, or to Carry on any Occupation, Trade or
Business) and quashed the TN Act. The Court instead
specifically stated that it is necessary to regulate online gaming
rather than a blanket ban.

Karnataka

In a similar move, the Karnataka government has promulgated an
amendment to the Karnataka Police Act, 1963
(“Karnataka Act“) which
received the Governor’s assent on October 4, 2021. The
Karnataka Act banned all forms of gambling in the state in
connection with a game of chance (with the exception of horse races
and lotteries), including online gambling. The Karnataka Act also
stated that “any act of risking money or otherwise on the
unknown result of an event including on a game of skill” will
be an offence. The Karnataka Act also expanded on the definition of
gaming including in its gambit all” online games,
involving all forms of wagering or betting, including in the form
of tokens valued in terms of money paid before or after issue of
it, or electronic means and virtual currency, electronic transfer
of funds in connection with any game of chance…”.

Shortly after, the operators of Dream11 suspended its operations
in Karnataka while simultaneously issuing the following statement:
“Following the recent media coverage, our Karnataka users
have expressed deep concerns and anxiety on their safety and
security. In order to allay our users’ concerns, we have
decided to suspend operations in Karnataka. This decision is
without prejudice to our rights and contentions under
law.”

Conclusion

While fantasy sports operators may have overcome the hurdle of
gambling legislation in most states barring a few hiccups, there is
still a strong need to harmonise the various legislations impacting
such games. Furthermore, this is not the end of the tunnel for
fantasy sports operators who still need to focus on intellectual
property rights and personality rights aspects of fantasy games
(covered in Part 2 of our article series).

Footnotes

1 Section 12, The Public Gambling Act,
1857.

2 AIR 1968 SC 825

3 Paragraph 15, AIR 1968 SC 825

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.