This article has been written by Sai Manoj Reddy. L, pursuing the Certificate Course in Advanced Civil Litigation: Practice, Procedure and Drafting from LawSikho.
Online fantasy sports and gambling is a very interesting topic to read about because there is a lot of grey area ungoverned by any statute till recently. All the legislations in India date back to the colonial era where the concept of online betting/gambling was non-existent and consequently there is no provision in any of the gambling laws to deal with online betting/gambling today. The rapid development of technology, internet connectivity, and the use of smartphones for basically every single thing in one’s life has made the online gaming industry grow in an exponential manner. The concept of online fantasy sport is also one such development. It initially started without financial elements, but during the past 6-7 years, the financial element was introduced and this industry has become a billion-dollar industry now. Naturally, when any business becomes highly profitable, all eyes fall on it and thus people have started filing lawsuits on the online fantasy sports platforms and online gambling platforms as well.
In this article, we will dive deep into the legal framework of gambling-related laws in India, analyse what happened in the Ludo Supreme case and how Dream 11 escaped from falling into the category of gambling.
Legal framework on gambling and betting in India
The legal framework and statutes related to gambling in India is a very interesting topic to read about. We all know that gambling has been a part of Indian culture since historic times. The most popularly known instance in Indian history relating to gambling is the story of Pandavas losing all their wealth to Kauravas in a game of dice in the Mahabharata.
Gambling in India began to be legally governed when it became a British colony. The British came up with legislation called the Public Gaming Act, 1867 (from here on referred to as “PGA”) with a view to providing for “the punishment for public gambling and the keeping of common gaming-houses in the United Provinces, East Punjab, Delhi, and the Central Provinces.” PGA is a general statute that governs gambling in India and it is a Central Act. However, PGA is not the only statute that governs gambling in India, many states have their own state-specific gambling laws. The Constitution under List II of Schedule 7 empowers the states to enact laws related to gambling in the states. At the same time, not all the states have specific laws related to gambling in India, some states have adopted PGA as their legislation and other states have enacted their own legislation to regulate and govern gaming/gambling activities within their territory.
It is very interesting to note that most of the gambling legislations that are in force in India have been enacted prior to the advent of virtual or online gambling and there have been no amendments to these legislations to include online gambling and betting which is a multi-billion dollar industry in itself. These so-called gambling legislations still deal only with in-person gambling and have no provisions about online gambling anywhere.
States that have adopted the central legislation are Bihar, Chhattisgarh, Chandigarh, Haryana, Himachal Pradesh, Jharkhand, Manipur, Madhya Pradesh, Punjab, Uttarakhand, etc.; many states enacted new statutes to govern betting and gambling in their states, including but not limited to:
- The Andhra Pradesh Gaming Act, 1974;
- The Assam Game and Betting Act, 1970;
- The Goa, Daman, and Diu Public Gambling Act, 1976;
- The Gujarat Prevention of Gambling Act, 1887;
- The Kerala Gaming Act, 1960;
- The Bombay Prevention of Gambling Act, 1887; and
- The Rajasthan Public Gaming Ordinance, 1949.
In general, gambling is an illegal activity in India in most of the states. Even though its popularity has been mounting and huge revenue is being generated by gambling and betting in India, lawmakers and the judiciary have always been averse to legalising any type of gambling. The only exceptions in India are the states of Goa and Sikkim which have allowed some types of gambling in their state-specific legislation. India still continues to enforce the pre-independent gambling legislation enacted during the British era, but it is very interesting to note that the UK has changed its gambling laws by allowing almost all forms of gambling in light of the changing societal norms of their country. In the UK, sports betting is a multi-billion dollar industry and most of the professional football teams are sponsored by such betting companies.
Based on the above legal framework, it is clear that there are extensive restrictions on gambling activity in India and the legislations are also haywire and different in many states. Some states allow certain categories of gambling and some allow none. There is no uniform legal stand-in India regarding gambling. However, it is pertinent to note that all the gambling legislation in India has excluded something called ‘game of skill’ from the purview of gambling activities in India. We will discuss what a ‘game of skill’ is further in this article as there have been numerous debates all over the world regarding what can be considered as a ‘game of skill.’
Game of chance vs. game of skill
A chance is generally dependent on probability and complete luck and if a game is based on complete luck it can be called a ‘Game of Chance’ and where a game needs the skill of the player to succeed then it can be called a ‘Game of Skill.’ This is just a simple explanation but the line between the two is very thin. As subtly put in a Mondaq Article the main points of difference between the two can be explained as below:
Game of chance
Game of skill
The outcome is strongly influenced by some randomizing device, such as dice, spinning tops, playing cards, roulette wheels, or numbered balls drawn from a container.
The outcome is mainly determined by mental or physical skill, rather than chance.
It may have some skill element to it, but chance generally plays a greater role in determining its outcome.
It may have elements of chance, but skill plays a greater role in determining its outcome.
Based on the element of luck, coupled with the skill to a certain extent.
Based on one’s knowledge and expertise of the subject.
One where success primarily depends on chance but is not altogether devoid of skill.
One in which success primarily depends on the superior knowledge, training, attention, experience, and adroitness of the player.
The element of chance predominates over the element of skill.
The element of skill predominates over the element of chance.
Based on the above explanation we can see that no game is completely based on either ‘skill’ or ‘chance’. Hence, it is safe to say that a game where skill predominates, can be called a ‘game of skill’ and a game where chance predominates can be called a ‘game of chance.’
The Supreme Court in the case of Dr. K.R. Lakshmanan v. State of Tamil Nadu, has defined the game of skill as “one in which success depends principally upon the superior knowledge, training, attention, experience, and adortiness of the player.” In the same case, the Supreme Court has held that the game of horse racing is a game of skill as betting on the horses in a race involves evaluative skills and various other factors like skill and management of the jockey/rider of a particular horse.
In the modern age after the invention of the internet and smartphones, technology has advanced so much that online gaming/gambling/betting has become a huge business by itself. In the current world, everyone is connected through high-speed internet and a person sitting in India can indulge in an online gambling/betting event happening on the other end of the world through a foreign betting website. The best example is the English Premier League (Football league) which has a huge fan base in India. Many people bet on the football matches happening in the UK and other parts of Europe through numerous foreign betting websites that have servers outside India. Even though betting is illegal in most parts of India, this cannot be curtailed as the act is not technically happening in the territory of India.
At this point in India, only Sikkim has a specialised legislation called Sikkim Online Gaming (Regulation) Act, 2008 for controlling and regulating online gambling/betting and imposing taxes on the same. More recently the State of Telangana also amended its gaming statute and included online gambling as a part of the statute that falls within the definition of gambling. Except for these two instances, there is no law in India as of now to regulate online gambling and it is a grey area.
Case of Ludo Supreme
LUDO is a very popular board game in India and has historic roots dating back to the depictions of it on the walls of Ajantha-Ellora caves as well as in the epic of Mahabharata. LUDO was limited to physical board games played by a family or friends sitting together before the advent of the internet and smartphones. In the 21st century, with the advancement of gaming technology and internet connectivity LUDO has become an online game that can be played by people competing with each other across the globe online. The greatest benefit of the online version of LUDO is that it allows everyone to play the game with their friends and other players sitting in front of a mobile or computer screen in different corners of the world.
Ever since LUDO was created, many app developers have created various versions of it and made it available on the Google Play store or the Apple app store where people can download the game and play it. It is interesting to note that even though the game became so popular 99% of the LUDO games online do not involve any financial stakes or money to be put as a stake to play the game. This was not the case with the “LUDO Supreme App” where this version of LUDO was made by a private company called Cashgrail Private Limited and it involved financial stakes.
A petition was filed against the LUDO Supreme before the Bombay High Court by a person known as Keshav Ramesh Muley (from here on referred to as ‘Petitioner’). In this case, the Petitioner has stated that he came across a few youngsters in their teens playing the game and enquired to them about it. The youngsters told him they could earn money easily by playing this game. The Petitioner had further researched about this and found many videos on streaming websites saying that money can be easily won in LUDO Supreme. The Petitioner further went on and downloaded the game and found out that you can actually link your bank account to the game and play it using real money as an entry fee and the winner will get most of the money pooled by all four players playing the game and some of the money goes to the company as hosting fees.
Based on the above facts and circumstances, the Petitioner argued that the prize money was not a notional or fictional currency but it was real money of value. He further argued that since the makers of the game are retaining a certain amount from this game, it shows that the company is making profits from the game and there is no scope of skill involved in the game and is purely based on the chance of you getting the right numbers on the dice rolled. The Bombay high court has sought a reply from the Government of Maharashtra in deciding whether LUDO supreme is a game of chance or skill.
How Dream 11 escaped from being categorized as an online gambling platform?
Online fantasy sports have gained a great number of participants in the past 10 years. Initially, these online fantasy sports had started in the US and Europe in the sports of baseball, basketball, and football. In a fantasy sport, the format typically involves the participants playing the role of a coach/manager of the team having a limited budget and power to buy and sell players before each game week. Basically, fantasy sports emulate real-life sports and the participants are given points based on the performances of real-life players on the ground/pitch. This craze for fantasy sports has slowly seeped into India by the introduction of fantasy IPL which is the cricket version of fantasy sport. Initially, there were no financial stakes, and participants used to play the fantasy sport just for bragging rights among friends and for the love of their sport. But in the past 6-7 years, fantasy sports with financial stakes like Dream 11, My Circle 11, etc., have started becoming famous. It is estimated that the Indian gaming market value was around USD 300 million in 2016 which increased to 1 billion dollars in 2021.
Dream 11 is the market leader in India and naturally, all eyes are on them. When they started making huge profits and cases were filed against them. The first case was filed in Punjab High Court, Varun Gumber v. Union Territory of Chandigarh and others, where the Petitioner had moved to the court stating that the Dream 11 is a game of chance and falls under the category of gambling. The Petitioner contended that he had downloaded the app and played the games on it and lost almost 50,000/- rupees.
The counsel appearing for the Dream 11 explained the whole process of how the fantasy sports in Dream 11 works. He explained that participants will select among different sports available on the app like cricket, football, kabaddi, etc., and if it is cricket a participant has to select a match and then select 11 players from the two teams that are going to play the match. After selecting the players the participants enter into a contest with lots of other similar participants. The points that the participants get depends on the real-life performance of the players in that particular match and after the end of the match, the participant with the highest score will get a major chunk of the prize money. The counsel also explained that participants need to have a lot of knowledge about the sport and the attributes of the players and conditions of the pitch, type of match, etc. in order to succeed in this fantasy sport. There is a very tiny portion of chance and a major portion of skill involved in this game and hence it does not fall under the category of the game of chance/gambling.
The Punjab High Court after hearing both parties has made the following observations regarding the functioning of Dream 11 where a user while participating was required to:
- Use a considerable amount of skill, judgment, and knowledge while picking his team/players.
- Assess the relative worth and form of a player in comparison to other players available to draft.
- Abide by the rules while evaluating a player’s statistics as well as the strengths and weaknesses of such players.
- Make sure that his draft does not contain a significant amount of players from a single real-world team.
- Evaluate and analyse many other factors like climate conditions, type of match, type of pitch, the form of players, geographical location of the match played, etc.
After observing all the above points the Punjab High Court also relied on the landmark judgment of Supreme Court, K.R. Lakshmanan v. State of Tamil Nadu; where the apex court had observed that horse racing is a game of skill because betting on the horses in a race involves evaluative skills and various other factors like skill and management of the jockey/rider of a particular horse. In a similar manner, the court held that Dream 11 also includes utilisation of users’ skill and knowledge of the game to be successful and not mere chance or luck, hence it does not fall under the category of gambling. The petitioner had preferred a special leave appeal to the supreme court which was also dismissed summarily upholding the judgment of the Punjab High Court.
In conclusion, firstly, we can all agree without a doubt that the laws related to gambling in India need a complete revamp as soon as possible to include all the latest developments in the gambling industry. Secondly, with the development of technology, the borders between the states and countries have vanished and people online are interacting and gambling with people across the country and the world. Hence, there is a need for a uniform law related to gambling as the current situation is completely haywire and each state has different legislations giving permissions for different kinds of gambling. Finally, coming to the case of Dream 11, it is established that only a tiny part of the entire game involves luck or chance and most of it depends on the skill, knowledge, and analysing the ability of the users and the same has been confirmed by the apex court as well so until someone proves otherwise; this is the current position of law and the Dream11 platform will not be considered as a gambling platform under the Indian laws.
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