Legality

Innovative Play International Pvt Ltd owns and operates the platform ‘Apne11’ through which it offers its registered users an opportunity to participate in tournaments of fantasy sport skill games for real money and product prizes. The platform shall be available on a dedicated app, website and/or other medium and the Users/Players may access the platform through any compatible device.

The concept of ‘Apne11’ is to provide the registered Users/Players an opportunity to participate in tournaments consisting of fantasy sport-based skill games by registering and creating an account on the Apne11 website and/or app (“Apne11 platform”), participating in real money tournaments and winning real money or prizes in the tournaments on the platform.

The owner and operator have gone to every extent to ensure that the platform remains legal and the fantasy sport games offered on the platform strictly comply with the Central and State legislations to protect the users from any legal risk. The fantasy sport tournaments offered on the platform, which is our intellectual property, are structured in such a way so as to comply with legislations and be in conformity with the judicial pronouncements prevailing in India. The fantasy sport games we offer on the platform are games of skill and hence, legal.

Is it legal to play Fantasy Sport in India?

Fantasy Sport skill-based games offered on the Apne11 platform are games in which success pre-dominantly depends on skill over chance and as a result can be classified as a ‘game of skill’ and are therefore, legal in India. Legality of any game is judged on it being a game of 'skill' as opposed to it being a game of 'chance'.

Games can be broadly classified into the following two categories:

  • Games of chance, where the winner is determined entirely by mere luck, the result is wholly uncertain and doubtful and a human being cannot apply his/her mind to estimate the result or his/her efforts to influence the result. Generally, such games are illegal as constituting gambling.
  • Games of skill, where, skill plays the dominant role and the result depends primarily upon the relative knowledge, training, attention, experience, and/or adroitness of the players. Such games are not deemed to constitute ‘gambling’ and hence are not prohibited under gambling laws. For a game to be considered a ‘game of skill’ under Indian law, the element of skill must pre-dominate the element of chance in affecting the results of the game. Thus, the extent to which skill is involved in the game is the key factor in the determination of the nature and legality of the game under Indian law.

The Hon’ble Supreme Court of India in the case of State of Andhra Pradesh v. K Satyanarayana, AIR 1968 SC 825 noted that game of skill would be where "success depends principally upon the superior knowledge, training, attention, experience and adroitness of the player". Such games are not deemed to constitute 'gambling' and hence are not prohibited under gambling laws. Element of skill must pre-dominate the element of chance in affecting the results of the game.

The principal legislation governing gambling in India was the Public Gambling Act, 1867 (“PGA”). The PGA criminalised the acts of ‘public gambling’ and keeping of a ‘common gaming house’. The PGA, however, created an important exception in favour of games of skill, by stating that the provisions of the PGA shall not apply to any ‘game of mere skill’ wherever played. Therefore, games of skill had been excluded from the ambit of ‘public gambling’ by the PGA.

After the promulgation of the Constitution of India, Article 246 divided the power of the Union Government and the State Government to legislate on certain issues/entries enumerated in Schedule VII of the Constitution. The entry pertaining to ‘betting and gambling’ is Entry 34 in List II which is the State List. Therefore, the primary responsibility of regulating physical premises-based betting and gambling is with the States in India.

Subsequent to the promulgation of the Constitution; various states have adopted provisions of the PGA to formulate their own state betting and gambling acts whereby games of skill have been exempted from the purview of gambling except states like Assam, Orissa and Telangana. Where a State law on the subject exists, it takes precedence over the PGA as gaming and gambling is State subject under the Constitution of India.

Pertinently, under the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act 2016, ‘Games of Skill’ has been defined under Section 2 (3) as follows:

“Games of skill- shall include all such games where there is preponderance of skill over chance, including where the skill relates to strategising the manner of placing wagers or placing bets or where the skill lies in team selection or selection of virtual stocks based on analyses or where the skill relates to the manner in which the moves are made, whether through deployment of physical or mental skill and acumen.

Explanation: For the purposes of this Act:-

All Games provided in Schedule A of this Act shall fall under the category of “Games of Skill”.

‘Games’ which have been declared or determined to be ‘games of skill’ by Indian or international courts or other statutes, or games where there are domestic and international competitions and tournaments, or games which can be determined to be ‘games of skill’ shall further be entitled to be included in Schedule A.”

Games of skill may be (a) Card based and (b) action / virtual sports / adventure / mystery and (c) calculation / strategy / quiz based.”

Also, the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act 2015 (Act No. 3 of 2016) has classified ‘Virtual Team Selection Games’ to be a ‘game of skill’ under Schedule A of the Act of 2016.

The Assam [Assam Game and Betting Act, 1970] and Odisha (Orissa) [Orissa Prevention of Gambling Act, 1955] legislations pertaining to gambling do not have any exception for games of skill.

The Telangana Gaming Act, 1974 amended vide the Telangana Gaming (Amendment) Act, 2017 dated 07.11.2017 prohibits the residents of Telangana to organise, provide, participate and play games of skill (including online games of skill) for stakes in and from the State.

Judicial Decisions

The Indian courts have adopted the standard that a game of skill is one in which the element of skill predominates over the element of chance. The cases of State of Andhra Pradesh v. K. Satyanarayana, AIR 1968 SC 825 (the “Satyanarayana” case) and Dr. K.R. Lakshmanan v. State of Tamil Nadu, AIR 1996 SC 1153 (the “Lakshmanan” case) are the two important cases in this regard.

The Hon’ble Supreme Court of India in the K.R. Lakshmanan, Satyanarayanan and a catena of other judgments has consistently held that a ‘game of mere skill’ shall mean a game “in which, although the element of chance necessarily cannot be entirely eliminated, success depends principally upon the superior knowledge, training, attention, experience and adroitness of the player.” Therefore, the Hon’ble Supreme Court laid down a basic principle for classification of games; a ‘game of chance’ is one in which the element of chance predominates over the element of skill and a ‘game of skill’ is one in which the element of skill predominates over the element of chance. It is therefore the dominant element of either ‘skill’ or ‘chance’ which shall determine the character of the game.

In the Satyanarayana case, the Hon’ble Supreme Court of India defined a ‘game of mere skill’ to mean a game “in which, although the element of chance necessarily cannot be entirely eliminated, success depends principally upon the superior knowledge, training, attention, experience and adroitness of the player.” By application of this definition, the Hon’ble Supreme Court held that the game of rummy was a game of skill and did not amount to gambling under the PGA. While upholding the levy of a nominal service charge for provision of a physical space, cards, etc., to play a game of rummy, the Court reasoned:

"15.....Rummy.....requires certain amount of skill because the fall of the cards has to be memorised and the building up of Rummy requires considerable skill in holding and discarding cards. We cannot, therefore, say that the game of Rummy is a game of entire chance. It is mainly and preponderantly a game of skill."

In the Lakshmanan case, the Hon’ble Supreme Court of India held that betting on horse races was a game of skill. It rationalised that in a horse race the winner is not determined by chance alone, as the condition, speed and endurance of the horse and the skill and management of the rider are factors affecting the result of the race. The person betting has the opportunity to exercise his judgment and discretion in determining the horse on which to bet.

“29. We have no hesitation in reaching the conclusion that the horse-racing is a sport which primarily depends on the special ability acquired by training. It is the speed and stamina of the horse, acquired by training, which matters. Jockeys are experts in the art of riding. Between two equally fast horses, a better trained jockey can touch the winning-post.

30. In view of the discussion and the authorities referred to by us, we hold that the horse-racing is a game where the winning depends substantially and preponderantly on skill.

32. Gaming is the act or practice of gambling on a game of chance. It is staking on chance where chance is the controlling factor. 'Gaming' in the two Acts would, therefore, mean wagering or betting on games of chance. It would not include games of skill like horse-racing. In any case, Section 49 of the Police Act and Section 11 of the Gaming Act specifically save the games or mere skill from the penal provisions of the two Acts. We, therefore, hold that wagering or betting on horseracing - a game of skill-does not come within the definition of gaming' under the two Acts.”

The question as to whether games of skill can be offered as legitimate business activities was dealt with by the Hon’ble Supreme Court of India in R.M.D Chamarbaugwala judgment where it has observed that games of skill are business activities and shall be afforded the protection under Article 19(1)(g). Therefore, since the skill-based games offered by Apne11 are likely to be classified as games of skill, they shall in all likelihood be allowed to be operated as legitimate business activities.

Fantasy Sports has been adjudicated as a game of skill by the Hon’ble Punjab & Haryana High Court in the case of Varun Gumber vs. Union Territory of Chandigarh and Ors., CWP No. 7559 of 2017. Justice Amit Rawal observed and held in the captioned case as stated below:

“I am of the further view that the element of skill and predominant influence on the outcome of the Dream11 fantasy than any other incidents are and therefore, I do not have any hesitation in holding the any sports game to constitute the game of “mere skill” and not falling within the activity of gambling for the invocation of 1867 Act and thus, the respondent company is therefore, exempt from the application of provisions, including the penal provisions, in view of Section 18 of 1867 Act. Equally so, before I conclude, I must express that gambling is not a trade and thus, is not protected by Article 19(1)(g) of Constitution of India and thus, the fantasy games of the respondent -company cannot said to be falling within the gambling activities as the same involves the substantial skills which is nothing but is a business activity with due registration and paying the service tax and income tax, thus, they have protection granted by Article 19(1)(g) of Constitution of India.”

The Punjab & Haryana High Court stated that the law laid down by the Supreme Court of India with respect to game of skill/chance in a catena of judgments also applies to playing fantasy games and therefore, playing fantasy sports is a game of skill as it requires considerable skill, judgment, adroitness and discretion. Ld. Justice Amit Rawal observed and held the following important principles vis-à-vis fantasy sports:

  1. That the competitions where success depends upon a substantial degree of skill are not gambling and 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”.
  2. That the law laid down in the Supreme Court judgments applies to playing fantasy games and therefore, playing fantasy sports is a game of skill as it requires considerable skill, judgment and discretion.
  3. Therefore, the activity/business of fantasy sports does not fall under the category of “gambling” and shall have the protection granted by Article 19 (1) (g) of Constitution of India on account of it being a legitimate business activity.

The decision of the Punjab & Haryana High Court was appealed vide a Special Leave Petition (SLP) before the Hon’ble Supreme Court of India in the case of Varun Gumber vs Union territory of Chandigarh and Ors., Diary No. 27511/2017. The Supreme Court vide order dated 15.09.2017 in the above stated captioned appeal dismissed the SLP in limine non-speaking order i.e. the Supreme Court dismissed the case without going into the merits and without giving any reasons for the said dismissal. Therefore, the judgment of the Punjab & Haryana High Court is likely to stand as a binding legal precedent.

Recently, the Division Benches of High Courts in the States of Kerala (Kerala HC) and Tamil Nadu (Madras HC), vide their decisions in the Ramachandran.K vs. Circle Inspector of Police Mallapuram District [WP(C). No. 35535 of 2018 decided on 24.01.2019] and The Director General of Police & Ors. vs. S. Dillibabu [2018CriLJ 1842] have held that playing rummy (which has been held to be a game of skill by the Supreme Court of India) ‘for stakes’ amounts to gambling and is illegal.

While these judgments are applicable specifically to rummy, the basic principle of these decisions, wherein a game of skill activity ‘for stakes’ has been held to be ‘gambling’, may be applied to other game of skill activities for stakes including other skill-based offerings such as Fantasy Sports. Therefore, there exists some degree of risk in offering skill-based gaming for stakes in the States of Kerala and Tamil Nadu.

Legality of the Apne11 Platform

In order to achieve success at the Apne11 game/tournament, a User/Player must have the aforementioned knowledge, attention, experience and adroitness. The Users/Players are subject to several carefully structured constraints and limitations in the game rules which minimize the instance of chance dictating the outcome and are required to engage in a qualitative assessment of the challenges and their execution in light of the scoring criteria used by Apne11.

Pertinently, in the case of Fantasy Sports, the elements of skill involved may include:

  1. A Fantasy Sport player must be knowledgeable of the player statistics and must execute some strategy in selecting the best players for their fantasy team.
  2. A Fantasy Sport player must follow the game regularly to take into account the current form of players as most fantasy sports are played for a short duration.
  3. A Fantasy Sport player must have a game theory in place which is based entirely on facts and his understanding of the game.
  4. The results are entirely based on the performance of real sports persons and not some computer-generated players.
  5. All real – life sporting events in most cases are conducted impartially and monitored for events like match-fixing.
  6. That the Supreme Court in the Dr. KR Lakshmanan v. State of Tamil Nadu has clearly laid down that ‘sports’ are a game of skill.
  7. Outcome and/or success in a fantasy sport game depends predominantly on skill of the player.

Therefore, while there exists a certain element of chance in Fantasy Sports based on the uncertainty of performance of a player in a particular sport event, skill like in the case of horse racing, plays a greater role in determining the outcome of the Fantasy Sport game. There exists no distinction between the performance of the player in real life and that in Fantasy Sport. Thus, Fantasy Sports should and likely to be classified as a ‘game of skill’ according to Central and most State legislations.

While the State of Nagaland (Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act 2016), as has been stated above, exempts games of skill from the purview of ‘gambling’, persons intending to run the business of providing skill-based gaming platforms require a license from the respective State Government of Nagaland before offering online games. Similarly, the Sikkim Online Gaming (Regulation) Act, 2008 restricts the offering of “online games and sports games” under the licenses issued under the said Act to physical premises of gaming parlours within the geographical boundaries of the state of Sikkim through intranet gaming terminals.

Pertinently, while the PGA and most State statutes exempt games of 'mere skill’ from their purview, certain Indian states classify all games of mixed skill and chance as gambling regardless of whether skill is the predominant factor. In the states of Assam, Odisha (Orissa) and Telangana, games of mixed chance and skill cannot be played for any monetary consideration.

Therefore, we do not offer the Apne11 platform to the residents in the states of Assam, Odisha (Orissa), Telanagana, Nagaland and Sikkim.

Skill-based games for stakes may be offered in the States of Kerala and Tamil Nadu however, there exists some degree of risk that the basic principle of the High Court decisions, wherein a game of skill activity (rummy) ‘for stakes’ has been held to be ‘gambling’, may also be applied to such skill-based fantasy sport gaming offerings.

Accordingly, the Fantasy Sports games played at Apne11 would not amount to ‘gambling’ under Central and most State gambling statutes except in the States of Assam, Telangana and Odisha. Furthermore, in the States of Sikkim and Nagaland a license is required to offer such skill-based games.