Legality of Fantasy Sports Games in India

Syllabus: GS2/ Government Policies & Interventions

In Context

• In India, fantasy gaming is causing addiction and financial damage.

Gaming in India

• India mainly puts the games into two broad categories to differentiate them.
  • The two categories are that the game is either a Game of Chance or a Game of Skill.
  • Game of chance (Gambling): Games of chance are all those games that are played randomly. These games are based on luck. A person can play these games without prior knowledge or understanding. For instance, dice games, picking a number, etc. Such games are considered illegal in India.
  • Game of skill (Gaming): Games of skill are all those games that are played based on a person’s prior knowledge or experience of the game. A person will require skills such as analytical decision-making, logical thinking, capability, etc. Some games might also require some initial training to win. Such games are considered legal by most of the Indian states.

About Fantasy gaming

• About:
  • Fantasy gaming apps allow users to deposit money in-app to build a virtual team or teams of players, and pit them against others. 
  • Users may win different amounts, depending on players’ actual on-ground performance. 
  • Those who top the leaderboard win the maximum cash, with a few others also reaping in some benefit. 
  • Many simply lose their money; some get back just what they had put in.
• Legality:
  • As per Article 19(1)(g) of the Indian Constitution, a game of skill where players must use their expertise, talent, knowledge, and strategies to analyze, think, and develop techniques to win is a legal activity.
  • The Supreme Court in its judgment has upheld the legality of fantasy sports as it requires considerable skill and judgment.
  • Fantasy sports are a legitimate business in India and do not fall under the Public Gambling Act, of 1867.
• Increasing user participation:
  • The KPMG India report, the Business of Fantasy Sports: It noted that the number of users participating in online fantasy sports in India has grown at a compounded annual growth rate of 212%, increasing to 90 million users in December 2019, from 2 million users in June 2016. 
• Drivers of growth:
  • Low data costs and increasing smartphone penetration have played an essential role in pushing the accessibility of fantasy sports.

Significance of the Online Fantasy Sports Platforms (OFSPs)

• India’s potential as a global hub for fantasy sports:
  • With a large market of Indian sports fans and availability of digital infrastructure and engineering talent in India, India can be an engine for growth and innovation in fantasy sports across the world and become a global hub for fantasy sports and increase its influence in international sports development and commerce.
• Generation of opportunities:
  • Fantasy sports benefit a number of stakeholders while also generating direct and indirect employment opportunities, driving investment, innovation in technology, entertainment and sports development. 
• Contributing to the Country’s economy:
  • Considering its potential contribution to the Indian economy, and India’s emergence as a hub for OFSPs, the fantasy sports industry has the potential to be a significant driver of economic and technological growth in India.

Concerns & challenges of Online Gaming

• Financial risks:
  • Much like mutual funds and stock market investment firms do with all advertising, companies in the real-money gaming app space declare the cash people put in as “financially risky”. 
  • States have been worried about the rise in people landing in financial trouble, and worse, taking their lives from the trauma of losing lakhs of rupees when they play real-money games online.
• Behavioural addiction and Health concerns :
  • The World Health Organization, on May 25, 2019, officially voted to include ‘gaming disorder’ as a behavioural addiction under the International Classification of Diseases. 
  • Often online gamers face the ‘Passivity Phenomena’ where their behaviour is controlled by external factors and if they are stopped from playing these online games, they become aggressive.
  • Severe cases of addiction to online gaming are pushing many into a debt trap and, as a result, to suicides as well. 
  • As per the data published in the Indian Journal of Community Medicine and Public Health 2020, about 3.5 per cent Indian adolescents suffer from Internet Gaming Disorder (IGD). 
  • The rate is 0.5 percent higher than the global average. 
• Absence of framework:
  • There is currently no regulatory framework to govern various aspects of online gaming companies such as:
    • Having a grievance redressal mechanism, 
    • Implementing player protection measures, 
    • Protection of data and intellectual property rights, and 
    • Prohibiting misleading advertisements.

Suggestions & Way ahead

• Awareness Generation:
  • Creating awareness on addiction and financial risks due to online gaming particularly amongst adolescents and professionals is one of the probable solutions to the social problem of gaming addiction.
  • Parents and teachers must also participate by helping adolescents set healthy recreational limits and channelise the potential of India’s youth in the right direction.
• Licensing and Regulation:
  • Regulation of online games may be a better and proportionate solution rather than an outright ban.
  • One could look at licensing and regulating the industry with various checks and balances such as,
    • diligent KYC and anti-money laundering processes, 
    • barring minors from accessing real money games, 
    • placing weekly or monthly limits on the money that can be staked or time that can be spent, 
    • counselling for addictive players and allowing self-exclusion of such players etc.
• Multi sectoral participation: 
  • Realising the potential of the online gaming sector, the State and the Union Governments should work together in consultation with industry stakeholders to draw out detailed guidelines.

Mains Practise Question 

[Q] What is the significance & potential of Online Fantasy Sports Platforms (OFSPs) in India? Examine the challenges posed by these Fantasy games.