Gamification of the Indian Premier League: is it time to place your ‘bets’?

Cricket is as close to a religion in India as it is possible to get, with its 1.3 billion-strong population ‘worshipping’ it. With the onset of Covid-19 in 2020, live sports took a backseat globally and the Indian Premier League (IPL) was no exception, with many delays affecting its intended schedule. However, when IPL 2020, (sponsored by Dream 11, a prominent Indian fantasy sport operator) finally got out of the blocks in September last year, it witnessed the highest television viewership of any previous IPL. Home-bound viewers welcomed the return of live sports and stayed glued to their screens. And, in a boost to the sponsors, viewer engagement in fantasy sport also boomed.

As in many other markets, the new generation of Indian sports fans are no longer content with passive consumption of content. This was thus fertile ground for Daily Fantasy Sports (DFS) which gave an Indian audience a breath of fresh air and active cognitive engagement.

The fantasy sports Industry in India had a user base of almost 90 million users as of 2019 be worth US$ 3.7 billion by 2024. This year, with series 14 of the Indian Premier League, and with more than half a million active smartphone users, the market looks set to start to reach its staggering potential. However, the elephant in the room which must be addressed is the legality of the game formats based on sports events. So, is the offering of sports betting and fantasy sport legal in India? Would foreign investments in the industry be permitted? Do you need a license to offer these game formats ? We will aim to answer these questions, and more, in this article. But first, a quick look at the legal framework governing the gaming industry in India to set it in context.

Snapshot of Applicable Indian Law

Each State in India has its own anti-gambling law, as under the Indian Constitution, the power to make laws on ‘gambling and betting’ is given to the States. Most state-level anti-gambling laws carve out an exemption for ‘games of skill,’ i.e., games where there is a preponderance of skill over chance. The Supreme Court of India ruled as long ago as 1957 that games of skill do not fall within the definition of ‘gambling’ under the State anti-gambling laws, and offering games of skill are protected as legitimate business activities under freedom of business guarantees under the Constitution of India. The relevant foreign exchange laws in India prohibit foreign investment in ‘gambling and betting, including casinos,’ however it can be argued, based on these cases, that investment into skill-gaming businesses should not attract this prohibition.

Legality of Sports Betting in India

The question of whether or not sports betting is a game of skill (and therefore exempt under most State anti-gambling laws) is pending before the Supreme Court in the matter of Geeta Rani v Union of India. Previously, the Supreme Court had recognized that betting on horse racing was a game of skill in the case of K R Lakshmanan vs. State of Tamil Nadu, and the principles from this case may support arguments that sports betting too, is a game of skill.

On the legislative front, the State of Meghalaya recently introduced the Meghalaya Regulation of Gaming Ordinance, 2021 which classifies games involving the ‘prediction of the results of the sporting events and placing a bet on the outcome, in part or in whole, of sports or sporting events, such as football, cricket, lawn tennis, chess, golf, horse race and such other sport games’ as games of skill. This is the first Indian State legislation which has recognized that sports betting is a game of skill. News reports also suggest that the State of Maharashtra is mulling over a proposal to legalize sports betting in the State. In 2018 the Law Commission of India had also outlined the way forward for legalizing sports betting in India, however its proposals have not been implemented so far, although the report has certainly created an active buzz and debate on the subject. While sports betting is pending a country-wide recognition as a game of skill, fantasy sport games provide a lucrative opportunity for operators interested in capitalizing on the sports gaming market in India.

Legality of Fantasy Sport in India

The High Courts of Punjab and Haryana, Rajasthan, and Bombay have recognized that the fantasy sport game offered by Dream 11, a prominent fantasy sports operator in India, is a game of skill. Certain special leave petitions were dismissed against these judgments by the Supreme Court, too. However, while hearing a special leave petition against the judgment of the High Court of Bombay, the Supreme Court imposed a stay on the judgment of the High Court. Accordingly, the issue is pending consideration by the Supreme Court. However, in the interim, the judgments of the courts of Punjab and Haryana and Rajasthan have not been stayed/overturned and continue to hold good.

The States of Meghalaya and Nagaland have also classified ‘virtual sports fantasy league games’ and ‘virtual team selection games’ as games of skill, under the Meghalaya Regulation of Gaming Ordinance, 2021, and Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2016, respectively.

The Future for Sports Betting and Fantasy Sport in India: Key Takeaways

With respect to fantasy sport, the Niti Aayog, a policy think tank of the Government of India, has recently provided recognition and acknowledgment as to the legitimacy of the fantasy sport industry in India. It has released the Guiding Principles for the Uniform National-Level Regulation of Online Fantasy Sports Platforms in India, which recommends creating a national-level safe harbor for fantasy sports as a game of skill. This proposal appears to be the introduction of a legislative exemption for fantasy sports games akin to the exemption under the US’ Unlawful Internet Gambling Enforcement Act (UIGEA). The industry has seized on this suggestion and is itself pushing for the Government to recognize fantasy sport as a ‘sport’ rather than a ‘gaming’ activity.

However, with respect to sports betting, despite certain States like Meghalaya recognizing it as a game of skill, and Maharashtra contemplating legalization, the sentiment still held by many is that it is a gambling activity.

To erode State-level uncertainties, there is a strong need for central legislation to identify and regulate online games of skill by bringing them within a licensing regime. While the introduction of such a law may be far off for the moment, in the interim investing in the more stable fantasy sports market in India could be a lucrative opportunity for foreign investors looking to tap into the Indian gaming market.