FANTASY SPORTS ARE LEGAL, WANNA BET?
Updated: Dec 16, 2020
The post has been authored by Sharath Chandupatla.
Sharath is a final-year law student at the National University of Advanced Legal Studies, Kochi. He is currently a Senior Editor of the NUALS Law Journal and the Managing Editor of the NUALS Law Journal Blog.
Even a casual viewer of the immensely popular cricket T20 League Indian Premier League (IPL) would have come across an advertisement by Dream11. It is made even more prominent because it is endorsed by MS Dhoni. Dream11 is an online fantasy sport, and it currently holds 90% of the market share in India today. Fantasy sport has developed into a big industry, and potential growth is tremendous. Currently, the industry is worth Rs. 4380 crores and is expected to reach Rs. 11880 crores by FY23. Dream11 is also the official fantasy game for IPL, International Cricket Council (ICC), NBA, Indian Super League (ISL), Pro Kabaddi, etc.
The self-regulatory body IFSG defines “online fantasy sports service/contest” as any fantasy sports game, offered online or offline, in which participants (including members of the public) are invited to pay money to play the game, i.e., the game’s aggregate monetary winnings are contributed to by all the participating users, thereby giving the user access to build and act as owners of online teams (consisting of real players or teams) that compete against online teams of other users with results tabulated on the basis of statistics generated by the real individual sportspersons in certain designated professional sporting matches. There is a wide range of areas in which these leagues are being held. For example, elections, box office collections of movies, Oscars, economic analysis, etc.
These leagues can be played for free and money as well. The law kicks in when it is played for money because gambling is prohibited in India unless it is proven that it is a “game of skill”.[i] So there arises a question if fantasy sport is a game of skill or a game of chance?
GAMBLING LAWS IN INDIA
Gambling Laws in India are predominantly dealt with by two statutes namely, Public Gaming Act, 1867 (“PGA”) and the Prize Competitions Act, 1955 (“PCA”). PGA prohibits any acts of gambling. However, there is a distinction between a game of skill and a game of chance. Though this distinction has not been expressly provided in PGA, the Supreme Court on various occasions, while examining the legislative history and the intent of PGA, has excluded games which are predominantly based on skill from the regulation and penalizing terms of PGA.[ii]
Betting and Gambling is an entry in List II of the Seventh Schedule of the Constitution.[iii] While all the states are on the same page regarding the game of chance, that it should not be allowed, there is a difference in law when it comes to a game of skill. While most of the states allow a game of skill, currently, Orissa, Assam and Telangana, have even banned the games of skill. These states allow only free games of skill but not paid games. The determination of game of skill lies with the courts as they interpret it on a case-to-case basis. However, over time, the jurisprudence has evolved in this regard is an attempt to lay down a test to determine the same.
FANTASY SPORTS AND GAMBLING LAWS
In 2015, Nagaland has enacted Nagaland Prohibition of Gambling and Promotion and Regularization of Online Games of Skill Act, 2015. This is the first legislation in the country which recognized fantasy sports as “game of skill”. It expressly recognized “virtual sports fantasy league games” and “virtual team selection games” as skill games. One of the cases which have dealt with the validity of fantasy sports is Shri Varun Gumber v. Union Territory of Chandigarh. The Punjab & Haryana High Court (“P&H HC”) in this case held that fantasy sport is a game predominantly based on skill. The Plaintiff, Varun Gumber, registered with Dream11.com and lost Rs. 50000 of his money because he lost his games. He approached the High Court alleging that Dream11 is carrying on a business which is considered to be gambling and hence it is prohibited. The High Court held that it is a game of skill while noting the rules of the game organized by Dream11. A user, while drafting his fantasy team on Dream11, was required to:
● Pick a team consisting of at least as many players as required to constitute a real-world team to score points for the duration of at least one entire real-world match;
● Assess all the players available to make a team and evaluate the worth of a player against the other players keeping aside bias for an individual or a team;
● Based on knowledge and awareness of a player’s performance, evaluate a player’s statistics;
● Adhere to an upper limit of spend to draft a team while ensuring that the team did not entirely/substantially consist of players from a single real-world team. This pre-condition also ensures that a user does not create a situation resembling the act of betting on the performance of a single team;
● Analyze the conditions of the other factors pertaining to the game, pitch, form of players, etc;
● Constantly monitor the scores of players drafted by a user.
The P&H HC observed that playing fantasy sports games required the same level of skill, judgment and discretion as in case of horse racing. Regarding the commission charged by Dream11, according to the terms and conditions of Dream11, it is just charging an amount as administrative charges and hence is allowed. Recently, the Bombay High Court also held that fantasy sport is a game of skill.
BEYOND SKILL AND CHANCE
The Courts, in both cases, have only discussed the gambling aspect of fantasy sports. But they failed to address other important issues such as IPR issues. A number of IPR issues arise in a fantasy sport. The following are some impediments that fantasy sports can be challenged, however, it can still not be held illegal.
One of the grounds can be the usage of statistics.[iv] However, the current laws hold that there can be no copyright protection for facts and statistics.[v] Hence, ideally, according to the current laws, it should be declared valid, if challenged on this ground.
Secondly, the player’s names and publicity rights. The players have a right of publicity in using their identity as they are protected under publicity rights.[vi] There have been multiple cases where the celebrities were granted publicity rights.[vii] However, in the case of fantasy sports, the players’ names are only used for nominative use i.e. in furtherance of use of facts. Unless they are using their names to lure people for commercial purposes, say advertisements, it cannot be challenged on the basis of publicity rights. The courts in other jurisdictions held in a similar way.[viii]
Thirdly, usage of names and logos can be challenged under trademark laws. But again, this ground would be dismissed because for trademark infringement to be proved, there should be a deception done to the public indicative of the same being trademark of the registered proprietor.[ix] In general, the mere usage of a trademark by a third party would not, ipso facto, amount to infringement if such person uses the trademark in relation to an entirely different set of goods or services.[x]
Hence, fantasy sports shall still be held legal and valid even if it is challenged on these grounds.
THE UNIDENTIFIED CONCERNS
Regulation as an online game- The Fantasy Sports have, till now, been seen as any other sports for the purpose of regulation. The Courts applied the current laws which are applicable to other conventional sports to fantasy sports but they are played online. This is called the ‘principle of functional equivalence’.[xi] However, this poses a problem as there are inherent limitations while regulating online acts. Physical conduct and personal identification form a part of such a problem.
For example, a minor can lie about his age and enter an online fantasy sport to play a game. It is very easy to overcome the prohibition in the states of Orissa, Assam and Telangana by simply choosing another state. There is also a lack of assurance of equal treatment of participants when the game is online.[xii] It is very difficult to keep track of such things and regulate them if the principle of functional equivalence is applied. There should be a special regulation for the same.
Player as a consumer? - Another important and interesting question is whether a player can be considered a ‘consumer’ under the Consumer Protection Act. This is worth discussing in the light of the new Consumer Protection Act, 2019 which primarily aims to protect the interests of the e-consumers and make intermediaries also liable for any defect in a good or service. If the platform denies the prize money to a player, can he approach a consumer forum for the same?
The courts have clearly held fantasy sports to be “games of skill”. They also do not violate any of the current laws as discussed above. However, there is a need for strong regulation in this area. There is no proper redressal forum for any grievances that arise to a player. Considering the advent of the internet boom in the country, there are a lot of aspects to be addressed by the legislature, fantasy sports being one. The self-regulation by IFSG, in my opinion, holds good, but not enough. It gives autonomy to sports from the State like all other sports. But in my opinion, the legislature has to come up with a comprehensive law, for the issues discussed above to be addressed by clarifying its status on IPR rights, the applicability of consumer protection laws, etc.
The author can be reached for comments on his email at firstname.lastname@example.org
Cite as: Sharath C., Fantasy Sports are Legal, Wanna Bet?, Extra-Cover: The Sports Law Blog of India (26th Feb 2020), Accessed at https://www.extra-cover.org/post/fantasy-sports-are-legal-wanna-bet [Date of Access].
[i] K.R. Lakshmanan v. State of Tamil Nadu, AIR 1996 SC 1153 (India). [ii] State of Andhra Pradesh v. K Satyanarayana, AIR 1968 SC 825; K.R. Lakshmanan v. State of Tamil Nadu, AIR 1996 SC 1153. [iii] INDIA CONST. sch 7, entry 34. [iv] Akuate Internet Services Private Limited v. Star India Private Limited., 2013 SCC Online Del 3344. [v] Star India Private Limited v. Piyush Agarwal, 2013 SCC Online Del 1030. [vi] ICC Development v. Arvee Enterprises, (2003) 26 PTC 245 (Del.) [vii] Mr Shivaji Rao Gaikwad (aka Rajinikanth) v. M/s. Varsha Productions, 2015 (62) PTC 351 (Madras); ICC Development (International) Ltd. v. Arvee Enterprises, 2003 (26) PTC 245; Titan Industries v. M/s Ramkumar Jewellers, 2012 (50) PTC 486 (Del). [viii] Daniels et al. v. Fanduel, Inc., et al., Case No. 16CV01230(TWP-DKL), 2017 U.S. [ix] Hawkins Cooker Ltd v. Murugan Enterprises, (2008) ILR 2 (Del.) 137. [x] Rana Steels v. Ran India Steels Pvt. Ltd., 2008 (102) DRJ 503 (Del.). [xi] See Recommendation 22, Global Information Networks: Realising Potential, European Ministerial Conference, Switzerland, (Jul. 6-8, 1997) at 10. [xii] Gaussian Networks v. Ms Monica Lakhanpal, Suit No. 32 of 2012, Delhi District Court (India).