The term online gaming can be divided into 3 categories namely E-Sports, Casual Gaming, and Fantasy sports for better understanding.
Betting and Gambling are illegal in India and it is a matter of state government to make laws and regulations on the issue. However, there is an inconsistency in the laws and regulations due to the emergence of the Internet as it overtook the jurisdiction of the state laws. Due to the lack of national laws on the subject matter, it overlaps the regulation of games of skill with the game of chance.
The game of skill is nowhere to be recognized as gambling or betting under the gambling laws. There is no specific criterion or procedure to determine gaming as a game of skill and there itself the conflict arose over the point on considerably of Gaming as a Game of skill. This leads to confusion and puts the industry in a dilemma on determining the category of game (whether Skill-based or Chance-based).
By far there are two regulatory models in India, one where almost 14 states and UT have adopted the Public Gambling Act of 1867 and the rest have adopted their specific State Gambling laws. As per the Public gambling Act 1867, the game of skill is explicitly excluded from the legal ambit of the Act. However, the Games of Mere skill or, Gaming, or Gambling is nowhere defined but Hon’ble SC in many instances has interpreted that “games of Mere Skill” are games where more than 50% probability of success is based on skills of the user/ player.
Another issue arose when the state laws under their respective Gambling Laws use inconsistent and interchangeable terms which open up confusion. The term “Common gaming house” is used Under Public Gambling Act while “Betting” is used under Assam Game and Betting Act and Orissa uses “Gambling” & “gaming” to recognize the game of chance.
The encouragement of the government makes India leading from the front in Developing industry-oriented skills, Researches, Creativity & Innovations thus, it maximizes the country's potential and economic growth by providing certain reliefs and exemptions in whatever way possible. One of such industries noticing exponential growth in the user base is the Online Fantasy Sports offered by Online fantasy Sports Platforms (“OFSP”). This industry in very limited time acquired a large market of Indian Sports fans over the digital infrastructure using technology and innovative minds.
KPMG India in its report (a year of script, 2020) mentioned that the user base of the industry has grown at 212% from 2 million users to 90 million users in just 3 years. In the next 2-3 years the industry has the potential to provide 5000+ direct and 7000+ indirect jobs.
It has been estimated that the industry will also attract a heap of FDI of more than INR 10,000 Crore by the year in less than 2 years and will contribute a GST revenue of INR 3,000 crore to INR 3,500 crore over the next 5 years. The OFSP operators paying income tax on winning and corporate tax, are expected to contribute between INR 7,000 crore to INR 10,000 crore over the next 5 years.
The classification of fantasy sports as a "game of skill" or a "game of chance" determines whether they are legal or not because games of chance fall under the category of gambling, they are prohibited. On the other hand, games that require a substantial degree of skill, are exempted from gambling restrictions and are legal. The modalities of a fantasy sport determine whether it is a game of chance or a game of skill. While gambling is banned in India as a whole, only a few Indian states, such as Sikkim and Nagaland, have attempted to regulate such platforms, leaving others unregulated. Even these laws are extremely restricted in scope, for example, Sikkim's legislation only covers gambling through internet cafes situated within the state, leaving platforms based outside of Indian jurisdiction free to operate. The Electronic Sports Federation of India (ESFI) is India's official governing organization for all esports, with the mission of promoting, organizing, educating, and regulating them. There is currently no such regulatory body for fantasy gaming, and it is crucial to establish one that controls and educates people about the game.
There is currently a lack of clarity on the existing laws and norms that regulate the operation of online fantasy platforms in India, as well as which Ministry or Department is responsible for their administration.
Courts on many instances in different matters try to make clear demarcation between Game of Skill and game of chance. Let us discuss some of the case laws:
M/s Gaussian Networks Private Limited v. State of NCT & Monica Lakhanpal ( Suit No 32/2012, Delhi District Court, 2012) In the instant case the bench is of the opinion that in case of possibility for manipulation of results / outcomes by cheating and plotting in online gambling, the degree of chance in the game would also increase.
RMD Chamarbaugwala v. Union of India (AIR 1957 SC 628), the Apex court relied on the ‘skill test’ to decide whether an activity is gambling or not. The court held that sports and games which involve skills are not gambling activities but are commercial activities, protected under constitution. SC in another case held that Gambling only covers chance-based activities and specifically excluded games of skill.
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