India's Supreme Court Affirms The Legality Of Dream11's Online Fantasy Sports
Amrit Mehta and Prerna Seerwani
20 Sep 2021 8:04 AM GMT
Online fantasy sports ("OFS") have seen a major surge in India in the last few years. This has resulted in questions being raised on the legality of OFS platforms (i.e., OFS platforms encourage pure gambling and are not "games of skill") before different High Courts in India. On July 30, 2021, India's Supreme Court (the "SC") dismissed a special leave petition challenging the legality of Dream11's OFS gaming platform.
Dream11, a flagship brand of Sporta Technologies Private Limited, is one of India's leading OFS platform for fantasy cricket, football, kabaddi, basketball, hockey, volleyball, baseball and handball. It has been alleged that the games offered by Dream11 fall under the ambit of "gambling." In this update, we have discussed different rulings on the OFS gaming platform of Dream11 and their implications on the online gaming sector in India.
Current legal framework in India
The Public Gambling Act, 1867, which is applicable throughout the country, prohibits public gambling and operation of common gaming houses. However, under the Constitution of India, "gambling" is a State subject, and therefore, regulation of gambling is the responsibility of State governments. In this regard, a few Indian States have enacted specific legislations to regulate gaming and gambling activities, examples being the Assam Game and Betting Act, 1970, the Orissa Prevention of Gambling Act, 1955, the Telangana Gaming Act, 1974, the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2015, and the Sikkim Online Gaming (Regulation) Act, 2008.
The Public Gambling Act, 1867 as well as most State legislations, inter alia, exempt a "game of skill" where there is a preponderance of skill over chance, from the purview of gambling and betting.
Previous rulings on Dream11's OFS games
Interestingly, the legality of Dream11's OFS game format has been probed under different judgments previously, which are discussed below.
In 2017, in the matter of Varun Gumber v. Union Territory of Chandigarh and Others, the Punjab and Haryana High Court (the "Punjab HC") assessed the OFS game format of Dream11 and concluded that the OFS games of Dream11 do not fall within gambling activities as:
- any competition where success depends on a substantial degree of skill is not gambling;
- despite there being an element of chance, if a game is preponderantly a game of skill, it will nevertheless be a game of mere skill; and
- while playing the game, the user has to create a virtual team, which involves assessing the relative worth of each player against all the players available for selection, after studying the rules and regulations of strengths and weaknesses of each player; and that, all of these factors determine the result of the game. Therefore, success in Dream11's OFS game arises out of the user's exercise of superior knowledge, judgement and attention.
Similarly, in 2019, the Bombay High Court (the "Bombay HC") held that the OFS games offered by Dream11 are a game of skill and not a game of chance and made the following observations:
- only if the result of the game or contest is determined merely by chance or accident, any money put on stake with consciousness of risk and hope to gain, would be "gambling" or "betting"; and
- the result of the fantasy game is not dependent on performance of any particular team in the real world game. Therefore, there is no betting or gambling involved in fantasy games.
Special leave petition filed before India's SC
In 2020, the Rajasthan High Court (the "Rajasthan HC"), noting the rulings of the Punjab HC and the Bombay HC in relation to the Dream11 OFS gaming platform, concluded that the issue of treating the OFS gaming platform of Dream11 as having any element of betting or gambling is no more res integra. On this basis, the Rajasthan HC dismissed the matter and upheld the legality of the OFS gaming platform of Dream11. Subsequently, the special leave petition filed before the SC was also dismissed.
The dismissal of the special leave petition by the SC implies that the SC does not consider this issue to be a contentious legal matter, and the legal principles emanating from the earlier rulings will form the law on fantasy sports in India.
It must be noted that the earlier rulings have specifically opined on the current format of OFS offered by Dream11. Therefore, it cannot be inferred with certainty that all the OFS games ever developed will be games of skill and that no OFS game will involve gambling or betting. This is because the question whether a particular game is a game of skill is to be determined on the particular facts. That said, these rulings provide significant guidance for OFS platforms.
Overall, with its recent judgements, the Indian judiciary seems to be in favour of the online gaming and fantasy sports sector. Gambling and betting are prohibited sectors for foreign investment. Therefore, a ruling from the SC holding that a portal like Dream11 in its current format is not a gambling and betting platform has cleared the air for foreign investors looking to invest in and capitalize from the fast-moving sector of online gaming and fantasy sports.
The authors, Amrit Mehta is Partner, and Prerna Seerwani is Associate at Majmudar & Partners, India. Views are personal.