Author: Shreya (Foreign attorney: India )
The fantasy gaming industry, a relatively new industry, is rapidly flourishing in India, with the growth in digital infrastructure, increasing penetration of internet and number of smartphone users.
KPMG India in its, July 2020 report, stated that the industry gained a gross revenue of around USD 340.47 million in 2020, three times increase from revenue in 2019 (USD 131.64 million), with over 100 million users. Over the last few years, India has received investments over US$ 112 million into the sports fantasy industry.
Few of the most popular online gaming platforms in India are Dream 11, Mobile Premier League, MyTeam11, Junglee Games, Howzat etc. are creating their footprints globally.
‘Dream11’company, in 2019, became the first online gaming company in India to be a part of the coveted ‘unicorn club’, of startups valued at more than USD 1 billion.
What is Fantasy Sport?
Fantasy game is a form of skill-based online game where participants playing the game creates their own team of real sports players scheduled to play a live sport on a given day. These online teams earn points based on the scoring sheet and performance of their selected players in the real match and winners are revealed accordingly. While cricket game dominates among fantasy sports in India, other sports such as football, kabaddi basketball, volleyball and baseball have also started gaining popularity in the recent times.
In the recent years, multiple e-sports start-ups, namely, JetSynthesys, Fan Mojo, Cobx Gaming, Nodwin Gaming and Playtonia have joined the industry, proving it to be a great investment opportunity for foreign firms which can largely benefit from the unprecedented growth of the sector and its increasing vast user-base.
This Online gaming industry is expected to be worth US$ 3.7 billion by 2024, as per a recent report ‘Business of Fantasy Sports’ published by the Federation of Indian Fantasy Sports (FIFS) and KPMG.
Legal Position
The main contention in all the legal challenges regarding the validity of Online fantasy sports lies in whether the game qualifies as a ‘game of chance’ or a ‘game of skill’. Under the Public Gambling Act, 1867, ‘Games of chance’ fall under the ambit of gambling and thus is strictly prohibited under the Indian laws. However, games that involves considerable and substantial degree of skill (more than 50%, mathematically) fall outside the scope of gambling laws and hence are legal in India.
The Supreme Court of India, has clarified through many case laws that the fantasy sports include an element of ‘skill’ that predominantly affects the outcome of the games and therefore, are considered as commercial activities. India follows the US system by applying the “dominant factor” test under which factors of ‘skill’ and ‘chance’ are put together to see which outweighs the other.
Despite the overwhelming growth potential of fantasy sports games in India, there still exists a lot of ambiguity and legal issues surrounding the distinction between the two categories, ‘skill’ and ‘chance’.
To bring in some more clarity and certainty to this extremely profitable business industry, the Indian government think-tank Nit Aayog drafted a paper titled ‘Guiding Principles for the Uniform National-level Regulation of Online Fantasy Sports Platforms in India’ discussing the rules and principles that need to guide Fantasy Sports and recognizing the massive upswing of digital games in India.
Future of Digital games in India
With the launch of Digital India ‘Aatma Nirbhar Bharat Innovate Challenge by the Ministry of Electronics and Information Technology (MeitY)’, the Indian government is focusing on creating an App Building Ecosystem in India.
The government is working on creating appropriate policy framework to establish a conducive ecosystem for the Indian game developers and enhance the fantasy sports industry, which is slated to be the attract major investments in the foreseeable future.
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Reference:
https://www.lexology.com/library/detail.aspx?g=556d4dc9-6fb0-43bb-acae-8dd10ea16d2a
https://www.conventuslaw.com/report/online-fantasy-sports-in-india-a-shift-towards/
https://www.mondaq.com/india/social-media/1042080/online-fantasy-sports-the-changing-landscape
https://www.ibef.org/blogs/india-has-a-huge-potential-for-fantasy-sports
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