By Harsh Vardhan Bhojak
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Citation: CRIMINAL PUBLIC INTEREST LITIGATION STAMP NO.22 OF 2019
Act: Public Gambling Act 1867
Principle: Online fantasy sports gaming held to be legal and not amounting to gambling
Introduction
Online Fantasy Sports Gaming has increased manifold in India where Dream11 (a fantasy sports platform) became the 1st Indian gaming company to enter the ‘Unicorn Club’. India saw a surge in the number of these gaming platforms which are attracting millions of users. When the popularity of Online Fantasy Sports is growing manifold there are questions regarding the legitimacy and legality of these online platforms in absence of clear guidelines and framework, these fantasy sports platforms attracted several litigations in courts which alleged the conduction of gambling/betting/wagering in the guise of Online Fantasy Sports Gaming. One of the latest cases is Gurdeep Singh Sachar v UOI in which the Bombay High Court held that Online Fantasy Sports Gaming is legal and doesn’t amount to gambling.
Facts
A criminal public
interest litigation was filed by advocate Gurdeep Singh Sacher (Petitioner)
before Bombay High Court against Dream11 Fantasy Pvt. Ltd. (Respondent) to
initiate criminal proceedings against Respondent, firstly for conducting
illegal operations of gambling/betting/wagering in the guise of Online Fantasy Sports
Gaming which he alleged is in violation of the Public Gambling Act 1867, and
secondly for evasion of Goods and Service Tax by violating provisions of the
GST Act and rule 31A(3) of the CGST Rules 2018.
Respondent in
response submitted that the issues involved in the case have already been
decided by the Hon’ble Punjab and Haryana High Court in the case of Varun
Gumber v. U.T., Chandigarh in which it held that Dream11 and other
fantasy games are exempted from the Public Gambling Act, in view of section 18
of the said act as the playing of fantasy games requires exercise knowledge,
attention, and judgment which is a matter of skill and not of mere chance. The
court also held that Dream11 has protection under article 19(1)(g) of the
Constitution of India. Special Leave Petition (SLP) against this decision of
P&H HC was dismissed by the Supreme Court of India.
Issues
After considering
the arguments, the court formed two issues for consideration:
- Whether the activities of
the Respondent amount to Gambling \ Betting?
- Whether there is any merit
in the allegation of violation of Rule 31A(3) of the CGST Rules 2018 and
erroneous classification?
Analysis
In this judgment,
the Bombay High Court relied on the judgment of the Varun Gumber case instead of
taking a different view. In that case, the P&H court held that activities
carried out by Dream11 do not amount to gambling as these are games of skill
and not games of chance. The Bombay HC also considered the Supreme Court
judgment in K.R. Lakshmanan v. State of T.N. which decided whether
horse racing is a game of chance or a game involving substantial skill and
relied on the case of Andhra Pradesh v. K. Satyanarayana which
considered the legality of Rummy and held that games and competition where
success depends substantially on skills are not gambling. They further held that even if there is an element of chance, when the
game is preponderantly a game of skill, it would nevertheless be a game of
‘mere skill’. Relying on this judgment, the Supreme Court held that horse
racing was a game of ‘mere skill’ even though there is an element of chance in
the Lakshmanan case.
Relying on these
judgments, the Bombay High Court held that Online Fantasy Sports Gaming carried
out by Respondent is not illegal and does not amount to
gambling/betting/wagering in the guise of online fantasy sports. They observed
that the online game does not depend on the real world result of matches and
participants, through the use of their skill, create virtual teams of players
comprising members of both teams, and therefore winning or losing in these
games is not a matter of chance but ‘skill’.
The court said that
an allegation of GST evasion relies on the premise of the first issue and that only
if Online Fantasy Sports Gaming is ‘gambling/batting’, there is a possibility
of tax evasion.
Decision
The Bombay HC, in
the case of Gurdeep Singh Sachar, held that activities carried out by Dream11
are not illegal and don’t amount to gambling/betting/wagering in the guise of
Online Fantasy Sports Gaming. It reiterated that, if the game is preponderantly
a game of skill, even if there is an element of chance, it will not render it
akin to gambling/betting but it would be a game of ‘mere skill’.
Critical Analysis
Online fantasy sports
gaming platforms are having a dream run while various rulings of different High
Courts have solidified the legality of online fantasy sports in the absence or
ignorance of the Supreme Court ruling on the issue. Even though the Supreme Court,
in its order dated 6 March 2020, stayed the operation of the Bombay HC judgment
in the case of Gurdeep Singh Sachar, it only resulted in uncertainty regarding
the legality of online fantasy sports gaming, while the judgments of other HCs
continue to be in operation.
It remains to be seen who is going to define this gaming sector – the legislature or judiciary.
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Harsh Vardhan Bhojak is a 2nd year Law student at National Law University Delhi. A meditator who is trying to know the reason behind his existence. He is not sure what to do next but is eager to learn something new every time where the law helps him in making rational choices.
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