From being a taboo to attaining mainstream recognition, the online fantasy gaming industry in India is growing at an exponential rate every year.
The world during the COVID-19 pandemic has witnessed substantial changes in the overall technological setup. The modes of entertainment have expanded their wings to the virtual space, entering several domains that were earlier untouched.
Gaming is one of the most engaging activities amongst others and has drawn people’s interest, excitement and enthusiasm. Thanks to ready accessibility and a colossal community, the world of gaming has managed to woo all age groups and classes.
At a time when other industries have been severely hit by the pandemic, the online fantasy gaming business is one of the very few trends that has gained immense growth momentum.
The ecosystem created by the synergy of gamers, game developers, designers, investors and marketers have given rise to the latest cutting edge games, concepts and offers for players. With a population notching over 1.39 billion and a majority being obsessed with sports, India is one of the top gaming markets amongst emerging global economies.
The major law that caters to premium fantasy sports in India is the Public Gambling Act, 1867. An act, which now is over 150 years old, criminalises gambling in any public forum in India. However, while doing so, it clearly distinguishes between betting on a game of skill and that on a game of chance.
While games like Teen Patti, Roulette, Flush, are all based on pure luck or chance, where the outcome is largely influenced by the application of instruments which include but not limited to the roll of a dice, spinning wheels, picking cards, chits etc.
Fantasy sports have been defined by the Apex Court as a game that involves “mere skill” or the preponderance of skill in such a way that the element of skill outweighs that of chance.
According to the Supreme Court, games of skill do not count as gambling and thus can be considered as commercial activities. However, since “Betting” and “Gambling” is both a subject matter of List II of the Constitution’s 7th schedule, State Governments are empowered to legislate upon their fate.
Hence, states like Assam, Odisha, and Telangana, have chosen to keep even skill-based fantasy games out of their States, making them illegal.
With a user-base crossing over 90 million in 2019 alone, the Fantasy Gaming Industry is not only one of the top emerging industries in India, but also a golden investment opportunity for foreign firms that can largely benefit from the unprecedented growth of the Indian Fantasy Gaming Industry and its vast user-base.
Fantasy Sports as an industry has managed to attract substantial amounts of Foreign Direct Investment in India over the years.
In 2018 and 2019 alone, the industry attracted an approximate FDI worth Rs.1,500 Crores with exponential growth each year.
As per NITI Ayog’s report in “Guiding Principles for the Uniform National-Level Regulation of Online Fantasy Sports Platforms in India1”, the Fantasy Gaming Industry holds the potential to attract FDI of more than INR 10,000 Crores over the next few years, with a generation of over 1.5 billion online transactions by the year 2023.
There is no doubt that fantasy sports business has reached an unprecedented high in recent years, however, the legal challenges that the Fantasy Gaming Businesses face can also not be ignored. The following are the legal concerns that any Fantasy Gaming venture must take into consideration:
Even though the Public Gaming Act, 1867 is a central legislation, state legislatures have been given the power to frame state-specific laws on betting and gambling.
This means that while Fantasy Sports can very well work in one state, it may legally fail in another. Moreover, unlike other business and industries, the Fantasy Gaming Industry is under-regulated with no governmental authority to control Fantasy Sports in India.
The only associated body that “self-regulates” Fantasy Sports in India is the Federation of Indian Fantasy Sports (FIFS) which is a private organization that lacks governmental recognition.
Probably one of the most pressing legal hurdles faced by fantasy gaming companies in India is to build a platform that relies on a game of “skill” and not that of “chance”. While various countries have different approaches to defining what accounts for “chance and skill”.
India has followed the US model by applying the “dominant factor” test under which factors of skill and chance are pitched against each other to see which outweighs the other.
The path of success for any Fantasy Gaming business thus leads from the road of “skill” which can only be achieved via careful planning and platform designing backed by a strong legal perspective.
Fantasy Sports Games in India are largely based on popular sports such as cricket, football, hockey etc. To attract a generous user base and to replicate a real-world sports experience, these games use player names, team logos, league information etc. in their platform.
Since Intellectual Property laws allow the players to have certain Intellectual Property rights including image rights etc., the use of team logos, player names, league information become a crucial legal aspect which the business must take into consideration.
When established around leagues/tournaments and the users therein, fantasy games can break free from specific players and their IP rights.
Additionally, with legal commercial arrangements between fantasy platform providers and the leagues itself, individual IP of players can be legally used. As far as the use of player names, a logo etc. is done mainly to identify with those players and/or the teams, fantasy gaming is legally secure. But weighing “fair use” with unlawful IP violations is still a major challenge that Fantasy Gaming businesses must cater to.
Business entities aiming to dive into the promising world of Fantasy Gaming need to start with a strong legal base, understanding the finer nuances and loopholes to guide their model legally in establishing themselves as dominant players in this Industry.
Entrepreneurs who wish to enter the world of Fantasy Gaming must carefully develop their platform to strike a perfect balance between “Skills” and “Chances” legally weighed in light of present-day laws as well a futuristic approach. Only when the skill used outweighs the luck involved, a fantasy gaming business can truly thrive.
Intellectual Property must also be catered to by building platforms based on “Fair-Usage” of Intellectual Property of both players as well as the leagues.
Efforts must be taken to seek legal advice to ensure Intellectual Properties are being used in such a way that leagues are the centre of attraction and not individual players.
Agreements and Contract relating to Intellectual Property use, revenue division, promotion, publicity, etc. when carefully drafted in the light of saws, can pave way for high-yielding collaborations, growth, revenue and popularity free from legal encumbrances
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