SURVIVAL OF FANTASY SPORTS PLATFORMS AMIDST COVID-19

August 14, 2020

Introduction 

COVID-19 has adversely affected many sectors such as hospitality, media, etc. but it has provided the right push to the video gaming industry. With people being homebound, online games have emerged as one of the means to entertain one. However, there’s one segment of the online gaming that has been majorly disrupted i.e. the fantasy sports game.  Fantasy sports are games that involve users drafting fantasy teams based on certain conditions from a list of players scheduled to play live games on a given day. For users to participate in fantasy sports, it is of the utmost importance that there is a live match taking place. But due to COVID-19, all major matches and tournaments have either been cancelled or postponed thereby, forcing platforms to think of new ways to generate revenues.  Through this article, the author discusses the legal battle fought to decide an important question of law i.e. whether the fantasy sports are “game of skill” or “game of chance” and highlights the steps taken by fantasy sports platforms to continue operations in a pandemic. 

Online Fantasy Sports: Game of Skill or Game of Chance?

The gaming field in India is governed by two central legislation- Public Gambling Act, 1867, and Prize Competition Act, 1955. The law differentiates a game based on the presence of the element of skill and chance. All games whose winning/ outcomes are based, entirely or in part, by mere luck are ‘games of chance’ which are prohibited by law. The law in India only permits ‘games of skill’ which has been interpreted by courts to mean “preponderantly of skill”. It is to be borne in mind that laws on betting and gambling are part of the state list under the Constitution of India and therefore, the central acts shall not be applicable in those states which have adopted their respective gambling laws. 

Fantasy sports have gained popularity only in the last few years with the widespread use of the internet. The courts in India while deciding on the legal status of any sports, whether it is a “game of skill” or “game of chance”, follow the dominant factor test or the predominance test. This test was adopted by the courts in the US and requires them to assess and decide whether chance or skill is the dominant factor in determining the outcome of the game. The same test was adopted by the courts in India while deciding the classification of fantasy sports as a game of skill or game of chance. Before applying the test, it is important to understand how fantasy sports are played. In fantasy sports, each participant has to draft his virtual team from the athletes that would be playing a respective match based on his/her knowledge of the game and assessment of the skill of the athlete. A participant shall earn or lose points depending on the actual performance of the athlete during the match. Lastly, a participant may change his team until the official match begins to incorporate any last-minute changes that may have been introduced by the official teams playing the match. 

The success of fantasy sports in India comes as no surprise considering the numerous sports enthusiasts. Dream11 is one such fantasy sports platform offering users to play fantasy sports such as cricket, football, baseball, and basketball. In 2019, Dream11 became India’s first gaming company to enter the Unicorn Club and have over 50 million users. The legal status of Dream11 has been challenged multiple times in recent months. Litigation first began in the case of Varun Gumber v. Union Territory of Chandigarh where the plaintiff moved to the Punjab & Haryana High Court alleging that Dream11 is conducting an illegal business of gambling and that fantasy sports are a game of chance. The Punjab & Haryana High Court applied the dominant principle test and held Dream11 as a ‘game of skill’ as it requires the use of superior knowledge, attention, and skill of the user. The Supreme Court of India dismissed an appeal challenging the decision of the Punjab & High Court of India. The same question of law was once again raised before the Bombay High Court in the case of Gurdeep Singh Sachar v. Union of India. The Bombay High Court chose not to take a contrary view to the Punjab and Haryana High Court’s decision in Varun Gumber case and held that fantasy sports involve substantial skill and in no circumstances, the result/ outcome of the fantasy sports  is depended on winning or losing of any particular team in the real-world game. The challenge to Gurdeep Singh Sachar’s case was dismissed by the Supreme Court of India. Another matter was filed before the Rajasthan High Court wherein the Court followed the decision of the Punjab & Haryana High Court and the Bombay High Court and put an end to the debate of whether fantasy sports in India fall within the scope of “game of skill”. However, a new twist of events unfolded on March 06, 2020, when the Supreme Court of India put a stay on the operation of the judgment of the Bombay High Court in the Gurdeep Singh Sanchar’s case and issued notices to all the parties to hear the arguments afresh. This order of the Supreme Court has once again cast a shadow of doubt over the legal status of the fantasy sports in India. It is pertinent that the Supreme Court looks into the reasoning extended by the High Courts in all the above-mentioned cases as well as the precedents for the dominant factor test while deciding on the issue. 

Besides the judgments pronounced by the honourable courts in India, some states have individually dealt with this question of law. The State of Nagaland introduced the Nagaland Gambling and Promotion and Regularisation of Online Games of Skill Act, 2015 (‘Act’) which recognised “virtual Sports fantasy league games” as a “game of skill” on a license regime basis. In other states such as Telangana, Odisha, Assam, and Sikkim, participating in a fantasy sports game when played for a fee is prohibited. 

Impact of COVID-19 on Fantasy Sport Games

The pandemic and nationwide lockdown have caused a change in consumer behaviour all over the world. The surge in the number of online gaming users is uncanny. Applications such as Houseparty, Psych, and Ludo have gained much popularity amongst the Indians. The other end of this industry is the fantasy sports platforms that have faced the brunt of this pandemic. With major sports tournaments being cancelled or postponed, fantasy sports platforms have lost a large portion of their revenue. However, the platforms have bounced back and found ways to keep their users engaged. Dream11 has exposed its users to other tournaments such as Super Basketball League which is the first tier semi-professional basketball league played in Taiwan. Moreover, a few football tournaments have begun such as La Liga and European Premium League which are being played without a stadium audience. The Fantasy Sports Platforms are providing football fans in India an alternative means to enjoy these matches from within their homes. These platforms are also keeping daily contests to test the knowledge of their sport enthusiast users to keep them engaged. 

Concluding Remarks

Currently, the fantasy sports platforms are facing two very important battles for their survival in the Indian market, one with the Covid-19 pandemic, and other of their legal status in the Supreme Court of India. Looking at how quickly the platforms have adopted new ways of user engagement; it can be said that they may be able to survive through this pandemic. However, one cannot predict the ultimate decision of the Supreme Court. But in the view of the author, fantasy sports involve a predominant level of skill and knowledge. In no circumstances can a user earn points just based on luck. It is the user’s analytical assessment of the previous performance of the athlete which enables the user to choose him and this indicates the dominance of the skill element in the game. Till the final judgment is delivered by the Supreme Court, the fantasy sports platforms may continue their operations in light of the judgments of the Punjab & Haryana High Court and the Rajasthan High Court.  

Bhavna Hemrajani

Via Lex Jura Law Journal

 

REFERENCES:

 

 

Leave a Reply

Your email address will not be published. Required fields are marked *

© 2020 Samacharline – Blog. | Design & Developed by Eway IT Solutions Pvt Ltd.