Online fantasy sports game in gambling grey zone is IPL partner

Mihir Vasavda
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Dream11 has also partnered seven IPL franchises, with Chennai Super Kings captain M S Dhoni as its brand ambassador. (Photo: Twitter screengrab)

A high-stakes online sports game, which is prohibited in five states, has led to differing court verdicts over its legality and is considered a form of gambling in several countries, is an official partner of the BCCI's IPL. It has also partnered seven IPL franchises, with Chennai Super Kings captain M S Dhoni as its brand ambassador.

Dream11's three-year deal with IPL, worth Rs 120 crore, promotes a business that is legal but is similar to sports gambling, which is banned in India, in many ways because contestants can make money by predicting players' performances.

The Indian Express has learnt that a top BCCI office-bearer and an IPL franchise official had raised the red flag when Dream11, a daily fantasy game that started operations in 2008, proposed the tie-up in 2018. However, their concerns over lack of clear regulations were overruled after the board and the franchises were "convinced of the game's legality" by its founders.

Dream11 co-founder Bhavit Sheth said that a Punjab and Haryana High Court judgment in 2017, which went in their favour, has allayed fears over the game. The game, on its website and mobile app, also asserts that the Supreme Court, in 2017, dismissed a challenge to the High Court decision.

However, sport and gaming lawyer Vidushpat Singhania, who was the secretary to the Justice Mudgal-led IPL match-fixing probe committee, said: "While it is correct the Hon'ble Supreme Court has dismissed the appeal, it was in limine through a non-speaking order. This means the Supreme Court has not gone into the merits of the issue and thus does not lay down a binding principle for the High Courts under Article 141 of the Constitution of India."

Dream11 requires its customers to select a playing XI of professional players and compete against each other using statistics from a live match. The website charges a fee for entering a team, and the contestants - who have to submit their PAN card and bank details - win or lose money based on real-life performances of players. For instance, contestants can pay Rs 49 to enter a contest that has a total prize pool of Rs 10 crore and win upto Rs 30 lakh if they top the leaderboard.

There are about 70 fantasy sports operators in India but Dream11 is the biggest. According to Sheth, when the IPL started on March 23, Dream11 had a customer base of approximately 5 crore. A fortnight ago, the number had reached 6.5 crore. The company's target is to touch the 8-crore mark by the time the cricket World Cup ends in July.

However, residents of Assam, Odisha, Telangana, Nagaland and Sikkim are not allowed to participate in the game due to the strict gambling laws in those states. Dream11's partnership proposal was described by a BCCI member as "proxy betting" while an IPL franchise official advised his management to "be very careful" with the deal.

Nandan Kamath, a sports and gaming lawyer who is Dream11's counsel, said the criterion employed to determine the legality is that it's skill more than chance that determines the outcome. However, he also warned: "As the courts have held, carefully designed fantasy sports games can indeed be games of predominant skill. This is, however, not a safe harbour for all games claiming to be 'fantasy sports games' because, if not structured appropriately, some formats can very much emulate sports betting."

Fantasy sports that require their customers to pay to enter a contest and hand out an award meet two of the three traditional elements of gambling: consideration (entry fee) and prize. In order to avoid gambling prohibitions, the promoters argue that the third element is skill in their case, not chance.

In India, the Public Gambling Act of 1867 criminalises gambling in a public forum although it exempts "games of skill" - the Act does not define "games of skill". "The difference with us is you pick 11 players who you feel will perform the best in that match. You have to look at a players' history, form, the ground conditions, the bowlers they are playing against," said Sheth.

Yet, there is an element of chance in Dream11. For instance, contestants often choose a non-traditional captain and vice-captain for extra points that come their way if proved right. "But there is a skill involved in selecting such players. Chance plays a small role but skill is a dominant factor," said Sheth.

In April 2017, the Punjab & Haryana High Court ruled that daily fantasy sports do not amount to gambling since they involve a substantial degree of skill. But there are differing judgments from other courts, too:

  • The Delhi District Court opined in 2012 that "online games of skill are outside the scope of trade and commerce and thus do not have the protection offered under Article 19(1)(g) of the constitution, which guarantees freedom of trade, profession and business".
  • In 2017, a single-judge bench of the Gujarat High Court held that "a game of skill… played with stakes may be considered as gambling". The verdict has been appealed before a pision bench.
  • This January, the Kerala High Court ruled that "games of skills played for stakes amounts of offence of gambling".

In the US, lawyer Behnam Dayanim wrote in 'Gambling Law Review' that a number of state attorney generals have asserted that fantasy games were "illegal gambling under state laws". Their operations in New York were briefly stopped in 2016 but are now regulated after sports betting was legalised in the US last year.

In Australia, fantasy sports are treated by regulators as a form of bookmaking while the French Online Gambling Regulation Authority regards it as "elementary bets under pool betting". In the UK, too, these games are regulated by the gambling commission.