Why it is important to rein in Fantasy Games

The self-development programme of India-Aatmanirbhar, is an initiative to develop Bharat in all the possible sectors, including software and application development. The potential of India’s gaming Industry, Indian innovators and application developers is applauded globally, and recently Aatmanirbhar App challenge encouraged the development of indigenous applications.

The Online Fantasy Gaming is a fashion among people and equally the cause of misery. One of the most powerful and widely recognised factors to influence human behaviour is economic gain. The urge to make money allows humans to get engage in diverse nature of trade, occupation, to earn as much as possible. Gambling, in any form, is still unacceptable to a large section of Indian society and is not considered a legitimate source of income, both socially and legally.

Like Mahabharata, there are various instances where gambling and betting are part of history. However, most of them have either resulted in war or crumbled empires. After lotteries and casinos, a paradigm shift has taken place in the field of gambling and betting. Dream 11, Rummy Circle, Blue Whale Challenge and many other online gaming applications have been developed these days and found acceptance amongst the younger generation of our society.

The KPMG and Indian Federation of Sports Gaming point out that online gaming market in India has seen tremendous growth of late, driven, in part, by the surge in digital usage. The revenues have nearly doubled over a period of four years, reaching Rs 43.8 billion in FY18 and are expected to grow further at a Cumulative Annual Growth Rate of 22.1 per cent from FY18-23, expected to reach INR118.8 billion.

Gambling, in any form, is still unacceptable to a large section of Indian society and is not considered a legitimate source of income, both socially and legally

According to the KPMG India Report, the fantasy sports industry is estimated to have paid GST to the tune of Rs 166 crore, which is estimated to increase to Rs 445 crore by 2023. The PWC India Report estimates that the fantasy sports industry has the potential to contribute GST revenue of Rs 3,000 crore to Rs 3,500 crore over the next five years. Additionally, income tax on winnings and corporate tax paid by OFSP operators is expected to contribute significant revenue to the exchequer, with the combined industry contribution estimated to be between Rs 7,000 crores and Rs 10,000 crore over the next five years.

Therefore, monetary growth in online fantasy sports is evident, however, the crime rates and IT offences have also proportionately increased in the country, especially among children.

Law and Fantasy Sports

The present position of gambling law is that the states can form their own regulation subject to parliamentary approval. The other facet that has to be seen is the legislative debate and intent at the time of framing the existing law.

It was during the time when the Constituent Assembly Debates were going on, and the subjects for governing the particular field whether to be granted to the Centre or to the state, were being decided. During this time, on September 02, 1949, the discussion began to add currently existing Entry 34, then introduced as Entry 45, which dealt with gambling and betting in sports in the seventh schedule. There were eminent lawmakers like Hukam Singh, Shri Sahu, and Prof. Shibban Lal Saxena who opposed such moves and cited gambling as a crime and hence both betting and gambling shall be disallowed.

According to the KPMG India Report, the fantasy sports industry is estimated to have paid GST to the tune of INR 166 crore, which is estimated to increase to INR 445 crore by 2023

The Constitution of India provides division in the legislative powers among the Centre and States. On reading Entry 40 of List 1, it is clear that the Parliament has the power to make laws regarding the lotteries that are organized/issued by the State Government.

As far as online games are concerned, the only state in India that has enacted a statute to regulate online gaming is the state of Sikkim through the Sikkim Online Gaming (Regulation) Act, 2008. As per the Sikkim Act of 2008, the person who wants to conduct online games from the list of Black-jack, Bingo, Casino Brag, Roulette, Poker, Poker dice, Pontoon, Keno, Baccarat, Super Pan 9, Chemin de for, as mentioned is required to take a ‘license’ for the purpose of conducting these games. Meghalaya and Nagaland have specific laws relating to regulation of poker and casino games.

THE SPORTS BILL, 2018

With the objective that the sports industry is a major source of commerce and revenue for many entities, especially in the field of betting or gaming in connection with sporting events, the Bill No. 259 of 2018 was introduced by Dr Shashi Tharoor. The Bill completely ignores various aspects, including morality, corruption and the framework to implement the Bill.

“Even a skilled player in a game of mere skill may be lucky or unlucky, so that even in a game of mere skill, chance must play its part”

The Sports (Online Gaming and Prevention of Fraud) Bill, 2018, aims to maintain the integrity of sports in India by curbing fraudulent activities and regulating the commercial nature of sporting events. The Bill lays down the procedure for renewal and suspension of such licenses that have been obtained under the Bill. Significantly, Section 20 of the Bill establishes delegated legislation to establish an Online Sports Gaming Commission to keep check on the activities of Online Gaming websites; b) tracking illegal activities and suggesting suitable measures to curb illegal functioning of Online Gaming websites; c) to monitor suspicious betting trends of the user including the Licensees; d) coordination with State and Central law agencies to limit illegal transactions; e) to prepare special reports pertaining to Online gaming for the Central Government; f) to grant, revoke and suspend licenses and to decide fees for renewal and other applications. Here, the Bill fails to provide legitimacy or restriction to the children who may be in conflict with law.

It is to be noted that Section 14 of the Bill sets out the ambit of Online Sports Gaming. It states that no person shall engage in any online gaming activity except through an Online Gaming Website formulated under the Bill, and no person shall host any Online Gaming Server or Website without a prior License obtained under the Bill.

Consequently, the provisions of the Bill address the major concerns of functioning and governance of betting and gambling that have never been discussed in the past.

However, the Bill suffers from certain irregularities as it does not particularly state the name of the games that can be declared as skill or chance-based games. Furthermore, the element of solving a dispute within a reasonable time arising between different stakeholders is also missing in the proposed draft. It is also important that the role of all stakeholders, including the service platforms and the governmental agencies, must also be clearly determined to avoid overlapping and unnecessary interference.

The elementary question of whether the children who engage themselves in the Online Fantasy Game are in contractual terms or not remained unanswered. With respect to the criminalization of betting in sports, we must bear in mind that criminal legislation will only be involved in the event of a breach. A gambling or betting agreement between two parties results in one party winning, and the other losing, and such an arrangement is unlikely to be public harm or a danger to society’s morality.

VIOLENT AND INDECENT ONLINE GAMES BILL, 2017

The Bill was introduced by Dr. Shrikant E. Shinde as Bill No. 253 of 2017. Keeping in view the tools for play and entertainment are online games, many of which are violent and indecent, like Blue Whale, Pokemon Go, San Andreas, Duke Nankeen, Max Payne, Elite Warriors, Hitman, Commandos, Dooms, etc, all of which are war or killing games which children are exposed to from their tender age of three years and above. These games are highly engaging and interactive, unlike watching television programmes. Similarly, children are exposed to online fantasy games for betting and gambling, and even when they are not skilled, they put money at stake without realizing the consequences thereof. One such instance was a teenage boy in Punjab who lost nearly Rs 16 lakh from his parents’ bank accounts on the popular battle game- PlayerUnknown’s Battlegrounds, better known as PUBG. A 15-year-old boy in Punjab’s Mohali is said to have spent over Rs 2 lakh, which belonged to his grandfather, on this game. Apart from economic crimes, there are socially disturbing trends that have been noticed– a 16-year-old boy, who allegedly shot dead his mother for scolding him for playing the online game PUBG is one such example.

In 2022, three young players of the PUBG game died by committing suicide, and the police in its reports, declared PUBG as the reason behind the deaths. It is important to note that the World Health Organisation (WHO) has officially included gaming disorder as a disease in the International Classification of Diseases.

Presently, there exists no country-wide legislation in India to control online gaming activities to prevent criminal activities and ensure the safety of the citizens. It is the peak time to decide and frame law regarding betting, gambling and all online sports and games that involves money as a consideration.

Judicial Pronouncements

The Calcutta High Court in the case of Guru Prasad Biswas & Anr. v. State of West Bengal & Ors. has brought the intense relationship of Article 21 i.e. Right to Life and morality. The court said that gambling activities have a harmful effect on people’s morality.

The term “immorality” was explained by the Supreme Court in the case of Gherulal Parakh v. Mahadeodas Maiya & Ors. where the court observed that immorality is the conduct or an act by which there is a deviation from the standard norms of life.

For the first time, the test of morality and obscenity was laid down in the case of Regina v. Hickling where it was laid down that:

“That those acts which have the tendency to corrupt the minds that are open to affect the influence are obscene acts.”

In India, the case deciding the meaning of obscenity is Ranjeet B. Udheshi v. State of Maharashtra, the Supreme Court decided on the grounds of the Hickling test that the acts should be taken in the separate form which have the tendency to corrupt the minds and affect or influence the people.

Keeping in view the above observation on morality and obscenity, online fantasy games can be declared to be problematic. The most celebrated case for gambling and betting is the State of Bombay v. RMD Chamarbaugwala. In this case, the Supreme Court remarked that it encourages the spirit of recklessness as it is for making gains by luck, which may amount to loss of money and may result in indebtness and finally lead to the loss of peace and happiness of the home of a person.

Rather pondering over the fact of vulnerability of children to be in conflict of law and possibility of risking lives and economic structure of the families, the Courts have restricted themselves to decide the distinction between game of skill and game of chance.

In India, judicial pronouncements have created a distinction between ‘games of skill’ and gambling, which is categorized as a game of chance. To differentiate between the concept of skill and betting related to sports in India, the Indian judiciary introduced the words’ mere skill’ to identify games of skill preponderantly, where success in the game depends on the skill and does not classify it to be ‘gambling’. Despite the involvement of an element of chance or luck where skill predominates the game, it would be considered a ‘mere skill’ game.

In the State of Bombay v. R.M.D Chamarbaugwala the court has declared that games which involve competition that is based on a substantial degree of skill in its functioning do not fall within the category of gambling. Despite there being an element of chance, if it is predominantly a game of skill, it would still be a game of ‘mere skill’.

In the case of State of Andhra Pradesh V. K. Satyanarayana the Apex court held that playing rummy is not a gambling activity. The court explained that— ‘Rummy requires certain amount of skill because the fall of the cards has to be memorized 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 M.J. Sivani v. State of Karnataka, the apex court held that— ‘Even a skilled player in a game of mere skill may be lucky or unlucky, so that even in a game of mere skill chance must play its part. But it is not necessary to decide in terms of mathematical precision the relative proportion of chance or skill when deciding whether a game is a game of mere skill. When in a game the element of chance strongly preponderates, it cannot be game of mere skill. Therefore, it is not practicable to decide whether particular video game is a game of skill or of mixed skill and chance. It depends upon the facts, in each case.’

In Dr. K.R. Lakshmanan v. State of Tamil Nadu, while defining what constitutes as a game of skill, the  court said that— ‘Games may be of chance, or of skill or of skill and chance combined. A game of chance is determined entirely or in part by lot or mere luck. The throw of the dice, the turning of the wheel, the shuffling of the cards, are all modes of chance. In these games the result is wholly uncertain and doubtful. No human mind knows or can know what it will be until the dice is thrown, the wheel stops its revolution or the dealer has dealt with the cards. A game of skill, on the other hand – althoughthe element of chance necessarily cannot be entirely eliminated – is one in whichsuccess depends principally upon the superior knowledge, training, attention, experience and adroitness of the player. Golf, chess and even Rummy are considered to be games of skill. The courts have reasoned that there are few games, if any, which consist purely of chance or skill, and as such 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 the dominant element – “skill” or “chance” – which determines the character of the game.’

Therefore, the courts have restricted their interpretation to skill and chance only and have not made any observation on inchoate offences. Similarly, the Legislators have focused on economic gains rather on predominant criminal activities. It can be seen that IT offences, evasion of tax, corruption, breach of contracts and ill effect of these games on minors are glaring flaws in the implementation of any gambling and betting laws. Unlike, smoking and drinking laws, there is no bar on the age of participation even in games involving skill. The legislative intent behind the tax slab is not included anywhere in any of the Bills introduced to curb the menace of gambling and game of skills.

The above examples of loss of human lives and property and the lack of clarity with regard to human safety, financial security and children’s wellbeing, show that society is not yet ready to habituate gambling and fantasy sports as of now. The lawmakers of our country need to deliberate more to ensure the laws passed by them adhere to societal and moral standards.