Multiplayer online games

Fantastic sports: fantasy or reality? Impact of legislation on gambling

Online fantasy sports games are booming in India and have quickly become an important form of online gambling in the country, despite legal and regulatory challenges. Fantasy sports is mainly a prediction game where players assemble a dream team of real sportsmen active in a variety of sports such as football, cricket, basketball, kabaddi, etc. and then participate in contests, competitions that mimic and convert the athlete’s performance in real life into fantastic points. Operators of fantasy sports and fantasy sports have often been caught in the sights of gambling laws in India from the perspective of whether online fantasy sports games would be considered gambling . In this two-part article, we will analyze two main legal obstacles that fantasy sports operators have encountered in India – (i) the impact of gambling laws in India; and (ii) the role of intellectual property rights as fantasy sports rely on intellectual property (brand names, team names, players and statistics) to provide users with products and services.

In India gambling is a state matter, which implies that states have the power to regulate and legislate the practice of gambling in a manner they deem appropriate. The Law on Public Games, 1867 (“Act“) is the only act notified by the central government on this subject and is a century-old act that predates online gaming. Most states, however, have notified this law, with respective national exemptions. The law prohibits all houses common games to engage in games of chance, while providing an exception for games of skill1.

Games of chance against. Skill games

The gambling laws in India generally distinguish between games of chance and games of skill. A game of chance is equated with gambling and prohibited, while a game of skill is generally distinguished from gambling and is not prohibited, subject to state law. Some exceptions to this general rule can be observed in the laws of Assam, Orissa, Sikkim and Nagaland (the two for which a license is required), Nagaland, Andhra Pradesh and Telangana, which do not provide exceptions for skill games to the general gambling restriction.

The Supreme Court of India (“Supreme Court“), While interpreting the requirement of“ simple skill ”, reiterated on several occasions that for a game to be considered a game of skill, there must be a preponderance of skill rather than chance. For example, in the case of State of Andhra Pradesh versus. K. Satyanrayana & Ors.2, the Supreme Court debated whether the game of rummy was a game of skill and declared that the game of rummy is not an entirely game of chance3 and requires a certain amount of skill. It was held that 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 on how to place betting or placing bets, (ii) selection of a team or virtual actions based on analysis, or (iii) the manner in which movements are performed, whether through the display of physical skills or mental and insight. The Supreme Court noted that in a game of rummy when there was an element of chance; as is the case with all games in which the cards are shuffled; it was above all a game of skill. We have in a precedent Publish also wrote on the petition to the Bombay High Court regarding Ludo’s gambling. There have been other Supreme Court rulings regarding what is considered a game of skill, including some rulings related to fantasy sports.

Fantastic sports – legal precedent

The trajectory of fantasy games in India depends on whether they are considered a “game of skill” or a “game of chance”. The importance of distinguishing between games of skill and games of chance is essential in determining whether a certain activity will be permitted under Indian laws. If a game falls under the category of “games of chance”, it is deemed to be a game under the Act, and gambling has been prohibited under the Act. As mentioned above, the law prohibits the operation of all regular gambling halls engaged in games of chance, while providing an exception for games of skill. Several Indian courts (in particular the High Court of Punjab and Haryana (confirmed by the Supreme Court on appeal) and Bombay High Court) have ruled that fantasy games cannot be categorized as gambling and therefore are not subject to Indian gambling laws.

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

Dream 11 is one of the world’s leading platforms for online fantasy sports games and offers fantasy cricket, fantasy kabaddi and fantasy football games in partnership with reputable websites and social media platforms, with a large user base. This judgment of the High Court of Punjab and Haryana (“SSP“) Has been the main legal precedent for fantasy sports. This case was to decide whether fantasy sports, a multiplayer online game, was skill-based or would be covered by gambling legislation. The PHC felt that playing fantasy sports requires considerable skill, judgment and discretion and that the effective deployment of these skills and knowledge by the participant also has a definitive effect on the outcome of the game. Above, the PHC also reiterated the position of the Supreme Court that: (i) competitions where success depends on the substantial degree of skill is not a competition; and (ii) although there is an element of chance, if a game is primarily a game of skill, it would nonetheless be a simple game of skill. The PHC’s decision has been appealed to the Supreme Court of India. However, the appeal was summarily dismissed.

Gurdeep Singh Sachar v. Indian Union (MANU / MH / 1451/2019)

The Bombay High Court then ruled on whether Dream11’s online fantasy sports engaged in activities considered to be gambling / betting / betting. A public interest dispute was brought before the Bombay High Court in this case and the Bombay High Court observed that unlike betting, winning or losing in fantasy sports does not depend on winning or losing. a team in the real world.

The Bombay High Court ruled that “the applicant’s case is utterly unsustainable, ill-conceived and without any foundation. It can be seen that the success in fantasy sports of Dream 11 depends on the exercise of the user’s skills based on superior knowledge, judgment and attention, and the result of it does not depend on victory or of the defeat of a particular team in the real world game on any particular day. This is undoubtedly a game of skill and not a game of chance. The attempt to reopen the issues decided by the High Court of Punjab and Haryana regarding the same online gambling activities, which are supported by a judgment of the three Apex Court judges of KR Lakshmanan (supra), that too, after the rejection of SLP by the Apex Court is totally wrong. “

Ravindra Singh Chaudhary versus. Union of India and the Golds. (MANU / RH / 0499/2020)

Another public interest dispute has been filed regarding Dream11’s fantasy sports games in the High Court of Rajasthan (Jaipur Bench). The Court reiterated the position of the PHC, the Bombay High Court and the Supreme Court and found that fantasy games involved substantial skill and therefore did not constitute gambling.

A 2020 suspension order, issued by the Supreme Court against the Bombay High Court order ruling fantasy sports games as a game of skill, has once again opened the debate. Although the case is still pending before the Supreme Court, the Supreme Court confirmed in August 2021 the legality of fantasy sports in an appeal against the aforementioned order by the order of the High Court of Rajasthan. It is clear from the available case law that a game of skill would not be considered a game and that fantasy sports would not be considered a game of chance.

Recent changes in state law

Tamil Nadu

Recently, the government of Tamil Nadu passed the Tamil Nadu Gaming and Police Laws (Amendment) Act of 2021 (“TN law“), banning online betting or betting. It also explicitly extended this ban to games of skill. The Madras High Court has issued an order (Junglee Games & Golds. Vs. State of Tamil Nadu annulled the TN law. The Court held that the imposition of a blanket ban was contrary to Article 19 (1) (g) of the Constitution of India (Law exercise a profession or exercise a profession, trade or business) and annulled the TN law. Instead, the court specifically said there was a need to regulate online gaming rather than a blanket ban.

Karnataka

Similarly, the government of Karnataka enacted an amendment to the Karnataka Police Act 1963 (“Karnataka Act“) which received the approval of the Governor on October 4, 2021. The Karnataka Law prohibited all forms of gambling in the State in connection with a game of chance (except horse racing and lotteries), including online gambling. The Karnataka Law also stated that “any act of risking money or otherwise on the unknown outcome of an event, including on a gambling of address “, will constitute an offense. The law on Karnataka has also widened the definition of the game, including in its gambit all” online games, involving all forms of betting or betting, including in the form of tokens valued in money paid before or after issuance thereof, or electronic means and virtual money, 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 recent media coverage, our Karnataka users have expressed deep concerns and concerns for their safety and security. In order to allay the concerns of our users, we have decided to suspend operations in Karnataka. This decision is without prejudice to our rights and claims under the law.. “

Conclusion

While fantastic sports operators may have overcome the hurdle of gambling laws in most states, with the exception of a few hiccups, there is still a strong need to harmonize different laws. impacting these games. Additionally, this is not the end of the tunnel for fantasy sports operators who have yet to focus on the intellectual property rights and personality rights of fantasy games (covered in part 2 of our article series).


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