A Game of Blatant Luck? – An Analysis of ‘Skill’ Element in Fantasy Sports Games in India

By: Sudipto Hambir


INTRODUCTION

In July 2018, the Law Commission of India Report No. 276[1] recommended that sports betting, where the outcome majorly depends upon the skill of the participants, should be legalised. Fantasy sports have evolved with the emergence of Daily Fantasy Sports (hereinafter ‘DFS’) games in the recent times. The future of sports betting in India relies vastly on how the nation reacts to the gaming industry. In the United States and the United Kingdom, fantasy sports have become a sensation in the past two decades. The rapid growth of Fantasy Sports websites in India is the evidence that the DFS industry in India will be on target of various Fantasy sports operator.

In Part II of this article, I have made an attempt to define fantasy sports. In Part III, I have addressed the debate between the game of skill and game of chance. Part IV of the article deals with general gambling law and the Indian state laws that are specifically related to online gambling and gaming. In Part V, I have discussed some Indian case laws which are highly significant in defining the regulation and future prospects of fantasy sports in India.

WHAT ARE THE FANTASY SPORTS?

Fantasy sports are the games which allow the users to draft a fantasy sports team and manage the same. The users choose from the pool of real-life players scheduled to play on certain dates for a particular league or sporting events.[2] The players are chosen based on their on-field performance statistics gathered through systematic research and by applying knowledge and expertise of that specific sport. The users are essentially expected to do the job of a manager, as they are able to pick players, transfer, make changes and substitute in his/ her virtual fantasy team. The users compete against their fellow participants and are ranked based on the cumulative points acquired by the selected sportspersons in real-life matches throughout the tournament or the sporting event.[3]

GAME OF SKILL VERSUS GAME OF CHANCE: A GLOBAL PERSPECTIVE

While addressing the debate of ‘skill’ element in fantasy sports games, legislators and the Courts around the world have adopted the ‘Dominant factor test’ or ‘Predominance test’ approach.[4] This, essentially, is the test to determine which one among ‘chance’ and ‘skill’ determines the outcome of the game significantly.[5] Most of the oldest leading cases in this area of law are from the United States.

U.S. courts closely follow the law laid down in the case of Humphrey vs Viacom[6], where the plaintiff had claimed that the participants paying for registration amounts to ‘wager’. It was argued that the points scored by the players are dominantly based on the chance factor, as the results of the game could be impacted due to various unforeseeable factors such as players’ injuries, untimely substitution etc. The district court rejected this argument by applying the Predominance factor test. The Court stated that fantasy sports are ‘game of skill’ as the winning of the participants predominantly depends upon participants’ abilities to pick players efficiently without crossing the expense limit and timely transferring and substituting them[7].

In the expert report[8] prepared by Prof. Zvi Gilula, it was evident that in the fantasy sports games offered by Draft Kings and Fanduel[9], the win rates of “top scoring performers” were supremely higher than the “average scoring performers”. It was observed that the high win rate cannot be dependent on the chance factor alone. A simulation exercise conducted for the purpose indicated that the difference in win rate of top performers and average performers, who take part in at least 10 games a week, is a staggering 28%[10].

In layman’s term, when a skilled participant with higher knowledge of the game competes against an unskilled participant, the skilled fantasy player is likely to come out victorious most of the times

STATE LEGISLATIONS RELATED TO ONLINE FANTASY SPORTS GAMES IN INDIA

Gaming in India is mainly governed by Public Gambling Act, 1867 (hereinafter ‘PGA’). While it talks about regulating offline gaming, it has failed to address online gaming activities. Only Nagaland[11], Sikkim[12], and Telengana[13] have come up with legislation regarding online gaming. Thus, the industry of online gaming, including fantasy sports are regulated by the version modified from adopted principles of offline gaming of PGA.[14]

  1. Nagaland

The first instance of fantasy sporting games to be acknowledged as a “game of skill” in any Indian legislation was when Nagaland Prohibition of Gambling and Promotion and Regularisation of Online Games of Skill Act, 2015 (hereinafter ‘Nagaland Gaming Act’) was introduced. Nagaland Gaming Act announced “virtual sports fantasy league games” and “virtual team selection games” to be a game of skill, subject to passing the predominance test.[15]

      2. Sikkim

The Sikkim Online Gaming (Regulation) Act, 2008[16] (hereinafter ‘Sikkim Gaming Act’) was amended in the year 2015. Through the amendment, the license for “online games and sports games” was restricted to the geographical territory of Sikkim. The amendment was brought in to avoid the hassle in terms and conditions licenses issued and wordings of the Sikkim Gaming Act.[17]

     3. Telangana

In June 2017, State of Telangana promulgated two ordinances which outlawed the prevalence of skill games. The Telangana State Gaming (Amendment) Ordinance, 2017 (hereinafter ‘Ordinance I’)[18] clearly stated that a game cannot be held as a ‘game of skill’ where a part of chance is present in the outcome[19] which was challenged by the Rummy operators of the state in the High court of Hyderabad[20].

Ordinance II was promulgated just four days prior to the next hearing of the case. It completely removed the skill game feature but brought in a new amendment. Following the decision laid down in the case of State of Andhra Pradesh v. K. Satyanarayana[21] (hereinafter ‘Satyanarayana Case’), Ordinance II declared that gaming for stakes amounted to gambling.[22] On December 1, 2017, Telangana Gaming (Amendment) Act, 2017 received the assent from the Governor of Telangana[23] which faced a vehement objection from the online gaming community and the operators

INDIAN CASE LAWS RELATED TO ‘SKILL’ ELEMENT IN GAMBLING & GAMING

R.M.D. Chamarbaugwala Case– Supreme Court’s interpretation of “Mere Skill”

In the case of State of Bombay v. R.M.D. Chamarbaugwala[24], a crossword lottery prize competition was in dispute. While deciding the case, the Supreme Court of India had referred to “mere skill” to include games which are predominantly of skill and have laid down that (a) the competitions where the outcome depends on substantial degree of skill will not amount to ‘gambling’; and (b) despite there being an element of chance, if a game is preponderantly a game of skill, it would nevertheless be a game of “mere skill”.[25]

Satyanarayana Case – Rummy

The Supreme Court, in Satyanarayana case[26], held that Rummy is a skill based game as it requires a substantial amount of skill and intelligence in order to succeed. Memorising the fall of cards and releasing the right card are the essential skills for winning a game of Rummy.

Lakshmanan Case – Horse Racing

Section 30 of the Indian Contract Act, 1872 (hereinafter ‘ICA’) states that wagering contracts are non-enforceable in the court of law.[27] But, it also includes an exception according to which the prizes to be awarded to the winners of horse-race would not be affected by this section. In K.R. Lakshmanan v State of Tamil Nadu[28] (hereinafter ‘Lakshmanan Case’), the Supreme Court observed that betting on Horse racing is a game of skill as the ability of the horse and jockey need to be assessed by the person placing the bet.[29]

Varun Gumber Case

It is the first and only Indian judgment regarding Online Fantasy Sports. In 2017, the High Court of Punjab & Haryana in Shri Varun Gumber v Union Territory of Chandigarh and Ors[30], The plaintiff, a registered player of the respondent company, Dream 11 Private Limited (hereinafter ‘Dream 11’) suffered a loss of INR 50,000 while participating in a game offered by the respondent. The plaintiff filed a petition in Punjab & Haryana High court alleging that Dream 11 was operating the fantasy sports games in a way which amounted to ‘betting’ under gambling laws of Punjab.

The court rejected the petition on the contention that fantasy sports games needed a considerable amount of skill and therefore, ruled that online fantasy sports games are predominantly “game of skill. While determining the skill element in games offered by Dream 11, the court had looked into the rules of the game such as the appointment of a captain and a vice-captain whose points are multiplied by double and 1.5 fold, restricting changes an hour before the start of the game. The court also referred to the decision of Lakshmanan case[31], where horse racing was recognised as a skill-game based on the above-mentioned contention. It was held by the High Court that the fantasy sports games offered by Dream11 did not amount to wagering and the business activities of the company were protected under Article 19(1)(g) of the Constitution.[32] This was for the first time in India where online fantasy sports had been recognised as skill-game.

CONCLUSION

Based on various studies and researches, it can be concluded that success in Fantasy sports depends substantially on participants’ judgment and application of knowledge based on sports. But, the application of the predominance test for fantasy sports games must also be taken into account on a case to case basis.[33] Participant’s ability to pick over-performing players on a limited budget needs a considerable amount of skill and research. Plenty of Indian and foreign case laws suggest towards the fact that participants must keep in mind various factors, such as the restriction on the maximum number of players from one team, using limited opportunities of different advantage cards available at the right time, etc. Considering the above-mentioned skillsets it is the author’s submission that fantasy sports do not amount to wager and rather the outcome is predominantly dependent on participants’ ability. Thus, fantasy sports do not fall under the ambit of section 30 of ICA[34]. The author also thinks in the same line as the Law Commission report[35] and suggests that predominantly skill-based games must be legalised and acknowledged by legislation.

[1] Law Commission of India, Two Hundred Seventy-Sixth Report on Legal Framework: Gambling and Sports Betting including in Cricket in India, 2018, 129.

[2] Aaron Kamath, Ranjana Adhikari, Gowree Gokhale ‘Fantasy Sports: Your ‘Suitable Bet’ in India’ (American Gaming lawyer, Spring 2016) <www.imgl.org/sites/default/files/media/publications/fantasysports-suitablebetinindia_kamath_adhikari_gokhale_agl_spring_2016.pdf > accessed 30 July 2018.

[3] Gowree Gokhale, Rishabh Sharma, ‘The ‘Skill’ Element in Fantasy Sports Games’ (The Sports Law & Policy Centre, Bangaluru, February 2018) <www.ifsg.in/wp-content/uploads/2018/03/FantasySportsPublication.pdf> accessed 30 July 2018.

[4] ibid (n 3).

[5] Nandan Kamath, R Sheshank Shekar, ‘Paid Fantasy Sports Games – Recent Developments under Indian Law’ (The Sports Law & Policy Centre, Bengaluru, February 2018) <www.ifsg.in/wp-content/uploads/2018/03/FantasySportsPublication.pdf > accessed 30 July 2018.

[6] Humphrey v Viacom 2007 BL 38423 (DNJ 2007).

[7] ibid.

[8] ibid (n 3).

[9] Most prominent companies who offer fantasy sports in the US.

[10] FanDuel v Schneiderman, NY Supp Ct 161691/2015.

[11] Nagaland Prohibition of Gambling and Promotion and Regularisation of Online Games of Skill Act 2015.

[12] The Sikkim Online Gaming (Regulation) Act 2008.

[13] Telangana Gaming (Amendment) Act 2017.

[14] ibid (n 5).

[15] ibid (n 3).

[16] ibid (n 12).

[17] Gowree Gokhale, Ranjana Adhikari and Aaron Kamath, ‘India: Legal Update’ (2015) 95 November/December iGamingBusiness <www.nishithdesai.com/fileadmin/user_upload/pdfs/Research%20Articles/Indian_Gaming_Laws_-_November_2015.pdf> accessed 30 July 2018.

[18] SS Rana & Co Advocates, ‘India: Clipping the Wings of Gaming: The Telengana State Gaming (Amendment) Ordinance 2017’ (Mondaq,31 October 2017) <www.mondaq.com/india/x/641468/Gaming/Clipping+The+Wings+Of+Gaming+The+Telangana+State+Gaming+Amendment+Ordinance+2017> accessed July 30 2018.

[19] ibid (n 1).

[20] Auth Rep Head Infotech (India) Pvt Ltd Hyderabad & Anr v Chief Secy State of Telangana Hyderabad & Ors WPMP 24819/2017.

[21] State of Andhra Pradesh v K Satyanarayana AIR 1968 SC 825.

[22] Ranjana Adhikari and Tanisha Khanna, ‘A Tale of Two States: Skill Games on India’s Radar’ (2017) 106 September/October iGamingBusiness <www.nishithdesai.com/fileadmin/user_upload/pdfs/NDA%20In%20The%20Media/News%20Articles/170913_A_A-Tale-of-Two-States_iGB.pdf>

[23] Nishtih Desai Associates, ‘The Gaming Laws of India’ (2018) February The Curious Case of Indian Gaming Laws – Legal Issues Demystified’ <www.nishithdesai.com/fileadmin/user_upload/pdfs/Research%20Papers/The_Curious_Case_of_the_Indian_Gaming_Laws.pdf.> accessed 30 July 2018.

[24] State of Bombay v RMD Chamarbaugwala AIR 1957 SC 699.

[25] ibid (n 22).

[26] ibid (n 22).

[27] Indian Contract Act 1872, s 30.

[28] Dr KR Lakshmanan v State of Tamil Nadu AIR 1996 SC 1153.

[29] ibid.

[30] CWP No. 7559 of 2017.

[31] ibid (n 25).

[32] ibid (n 3).

[33] Manoranjithan Manamyil Mandram v State of Tamil Nadu AIR 2005 Mad 261.

[34] ibid (n 25).

[35] ibid (n 1).


(Sudipto is currently a student at West Bengal National University of Juridical Sciences, Kolkata.)

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