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Indian laws on fantasy sports business you need to know for 2017

Are you considering to build a fantasy sports business in 2017?
Here’s all you need to know about Indian laws.

As the debate for sports betting heats up across the globe, several leading sports/entertainment companies in India prepare to charm their audience by introducing fantasy sports platforms in 2017. Fantasy sports is called ‘game of skill’ which is outside the purview of gambling. Considering that Indian laws have made a clear distinction between fantasy sports (skill games) and gambling, fantasy sports should have ideally thrived here.

There may be several start-ups and entrepreneurs who have reservations about fantasy sports businesses simply due to lack of knowledge about some laws. In this blog, we bring these laws within a layman’s understanding for you.

Do we have any law that separates gambling and fantasy sports?

Yes. There’s the Central Government Act(The Public Gambling Act, 1867).This act comprises on 18 Sections. In Section 12 (Act not to apply to certain games), it clearly states that – “Nothing in the provisions of this Act contained shall be held to apply to any game of mere skill wherever played.” That means fantasy sports that are part of skill-based games are excluded.

Are there separate gambling/betting/games laws across states?

Under the Constitution of India, the state legislatures have been given the power to frame state specific laws on ‘betting and gambling’. The public gambling act 1867 has been adopted by certain states. The other states in India have enacted their own legislation to regulate gaming / gambling activities within its territory.

What about online gambling laws?

The State of Sikkim is the only state in India which has enacted a law for online gambling and sports betting. It’s called the Sikkim Online Gaming (Regulation) Act, 2008.

The Sikkim State Government on August 19, 2015, amended the Sikkim Online Gaming (Regulation) Act restricting the offering of “online games and sports games” under the licences issued under the said Act to physical premises of gaming parlours within the geographical boundaries of the state of Sikkim through intranet gaming terminals.

What does Supreme Court mean by ‘mere skill’?

The Supreme Court of India (“SC”) has interpreted the words “mere skill” to include games which are preponderantly of skill and have 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”. Whether a game is of chance or skill is a question of fact to be decided on the facts and circumstances of each case.

Example: The case of State of Andhra Pradesh v. K. Satyanarayana & Ors.

The SC specifically tested the game of rummy on the principle of skill versus chance and held that Rummy was not a game entirely based on chance like the ‘three-card’ game (i.e. ‘flush’, ‘brag’ etc.) which were games of pure chance. It was held that Rummy was a game involving a preponderance of skill rather than chance. In this judgment the SC has also passingly observed that bridge is a game of skill.

Presently, there has been no case in India where card games (apart from Rummy) have been tested against the principle of skill versus chance. Games such as Rummy, Chess, Carrom and Wagering on Horse Races have been recognised by the courts in India as games of skill.

Is there any Indian state that has issued online gaming licenses for skill games (including fantasy sports)?

The State of Nagaland has recently passed The Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2016 (“Act”). The Act contemplates issuance of online gaming licenses for skill games(including fantasy sports).

The Act allows a licensee to offer “games of skill” in other Indian States, where such games are not classified as gambling. The Act acknowledges the power of each State to regulate the gaming activity within its jurisdiction. If any State is of the opinion that the licensee was offering its games in that State in violation of the Act or local laws of the relevant State, it may inform the Nagaland Government of such violation.

Assam and Odisha

With regard to Assam and Odisha, the laws in these states are unclear as to whether games of skill may be played for a fee.

What was the aftermath of IPL’s spot fixing in 2013?

After spot fixing in 2013 IPL, two panels were appointed by Supreme Court to look into the matter (one headed by Justice Mukul Mudgal and another as the Lodha panel). Both have suggested that sports betting should be legalized in India. The Supreme Court in July 2016 asked the Law Commission of India to examine the matter and make their recommendations to the government.

Way ahead

Taking into consideration the challenging legal landscape in India, obtaining a licence under the Act may provide an added level of protection for an operator.

If you are considering to start a fantasy sports platform, you have a clearer way ahead as long as you are aware of the above laws. With the exception of Assam and Odisha, such a business can thrive anywhere in India.

For more details: Visit Indian Kanoon and Indian gaming laws

IN A NUTSHELL
  • Gambling and fantasy sports are two different domains in India
  • Gambling laws differ with each state
  • Sikkim is the only state to enact a law for online gambling and sports betting
  • Games of ‘mere skill’ are not counted under gambling

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