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India: Fantasy sports games as ‘games of skill’

September 6, 2018

Source:www.highcourtchd.gov.in

Brief overview:
In a landmark judgment, the High Court of Punjab and Haryana in the case of Shri Varun Gumber v. Union Territory of Chandigarh and others[1] held that fantasy sports games that require considerable skill, judgment and discretion are ‘games of skill’ and do not amount to gambling. Further, an appeal against this judgment was subsequently dismissed by the Supreme Court.

Facts of the case in brief:

  1. Mr. Varun Gumber (hereinafter referred to as the ‘Petitioner’) transferred an amount of INR 50,000 (USD 699 approx.) by his credit card to his own account opened on the Dream 11 website https://fantasycricket.dream11.com.in for participating in various leagues created on the said website.
  2. The Petitioner created a virtual team of a Cricket match between Ireland and Afghanistan by choosing 11 out of the total players who were to play for the two countries.
  3.  After forming a virtual team of 11 players as per his own selection, knowledge and judgment, the Petitioner joined various leagues selected by him and from the available deposit of INR 50,000 (USD 699 approx.) the Petitioner used INR 24,000 (USD 335 approx.) for playing in the leagues which he lost entirely at the end of the Cricket match.
  4. Further, the Petitioner made a similar virtual team for a football match between Manchester City and Middlesbrough wherein he used the rest of the deposit amount [INR 26,000 (USD 363 approx.)] to play in the leagues of his choice and similarly lost the rest of the deposit amount.
  5. The Petitioner then filed the petition claiming that he has been a victim of illegal gambling.

Salient points from the High Court’s Judgment:

  1. Playing of fantasy sports game by any participant/ user involves making a virtual team by him which would certainly require a considerable skill, judgment and discretion.
  2. The participant/ user has to assess the relative worth of each athlete/ sportsperson as against all athletes/ sportspersons available for selection.
  3. The participant/ user is required to study the rules and regulations as well as the strengths and weaknesses of athletes/ sportspersons.
  4. The success in Dream 11’s fantasy sports basically arises out of the users exercising superior knowledge, judgment and attention.
  5. There is an element of skill and its predominant influence on the outcome of the Dream11 fantasy game.
  6. Fantasy sports games will not fall within the activity of gambling for the invocation of the Public Gambling Act, 1867, and thus, the Respondent company is exempt from the application of provisions, including the penal provisions, under the Public Gambling Act, 1867.
  7. 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 be 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.

Appeal against the High Court decision:

An appeal against the Punjab & Haryana High Court’s decision was filed in respect of which the Supreme Court passed an order dismissing the appeal on September 15, 2017.[2]

Remarks:

It is pertinent to note that dismissal of appeal by the Supreme Court means that the format of fantasy sports game evaluated and commented upon by the High Court of Punjab and Haryana holds good in law. However, this
does not mean that all the fantasy games ever developed would be games of skill. Further, it is worth mentioning that despite the dismissal of this appeal, the Supreme Court can in future take up the issue of whether a particular fantasy sports game is a ‘games of skill’ or not.

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[1]Shri Varun Gumber v. Union Territory of Chandigarh and others, CWP No.7559 of 2017 decided on April 18, 2017.
[2]Diary No(s). 27511/2017 (Arising out of impugned final judgment and order dated 18-04-2017 in CWP No. 7559/2017 passed by the High Court Of Punjab & Haryana At Chandigarh).

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