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In fantasy games surge, policy plays catch-up with reality

In a draft paper last month, Niti Aayog, the government’s policy think tank, proposed “uniform national-level regulation” of Online Fantasy Sports Platforms (OFSPs) with a set of initiatives: “legislative safe harbour,” “light-touch regulatory framework,” and “self-regulation.”

Written by Mihir Vasavda | Mumbai |
Updated: January 4, 2021 10:35:00 am
fantasy games online, Dream 11 fantasy game, online fantasy games, sports betting, Sports news, Indian express newsDream 11 is the Indian Premier League’s main sponsor. (File photo)

As different courts and state governments debate its legality, there is a growing body of opinion in the official establishment in favour of a unified regulatory apparatus that allows online fantasy games — and looks at opening some doors to legalising sports betting.

In a draft paper last month, Niti Aayog, the government’s policy think tank, proposed “uniform national-level regulation” of Online Fantasy Sports Platforms (OFSPs) with a set of initiatives: “legislative safe harbour,” “light-touch regulatory framework,” and “self-regulation.”

Inviting stakeholder comments until January 18, Niti Aayog, citing a KPMG India report, flagged the sharp surge in the sector: 2 million users in June 2016 to 90 million December 2019; number of OFSPs up from 10 in 2016 to more than 140 in 2019; a tripling of revenue growth, from Rs 920 crore in 2018-19 to Rs 2,470 crore in 2019-20 and the potential of 12,000 jobs in the next couple of years.

Key barriers to this growth, Niti Aayog said, were the lack of a “definable test” or “regulatory guideline or forum” to assess and determine if a game is one of skill or chance; and fragmented regulation.

“While OFSPs operate through online media on a pan-India basis, their regulation proceeds under varied State-wise regulatory regimes. This could impact fantasy sports users’ interests of transparency, OFSP operator integrity, and fairness may vary from state to state,” said the draft.

Niti Aayog’s paper comes a month after Minister of State for Finance Anurag Thakur was quoted by PTI that his “suggestion will be to legalise betting and gambling activities.” Minister of Sports and Youth Affairs Kiren Rijiju said online fantasy games are “very instrumental in revolutionising” sports watching.

The paper also red-flags “unscrupulous operators who lure users with games of questionable legality in the guise of fantasy sports.” This amid scrutiny at several levels showing how policy plays catch-up.

Consider:

# In the last 18 months, at least six petitions seeking a ban on online gambling and fantasy sports have been filed in different High Courts.

# In March last year, the Supreme Court stayed the operation of a Bombay High Court judgment dated April 30, 2019, upholding the legality of fantasy sports, which bear a close resemblance to gambling, an illegal activity.

# In September, Andhra Pradesh joined Telangana, Assam, Odisha, Nagaland and Sikkim in banning online fantasy games played for money.

# In November, the Madurai bench of the Madras High Court issued notices to India captain Virat Kohli and cricket board president Sourav Ganguly, among others, for endorsing online fantasy games.

And yet, industry-watchers underline, growth is the irreversible force.

According to a Financial Times estimate, venture capital into gaming start-ups in India has skyrocketed from a mere $25 million in 2015 to $337 million last year. In September alone, Dream Sports — the parent company of Dream11, the biggest daily fantasy sports operator — raised $225 million from USA-based Tiger Global and others. Days later, Mobile Premier League (MPL) raised $90 million in funding, led by Hong Kong-based SIG.

A substantial chunk of this investment is used to sponsor players, teams and tournaments in different sports – from cricket to kabaddi, football to hockey.

“This is one way to increase their user base, which in turn helps them generate revenue since every user has to pay a fee to enter a competition,” said a consultant to one of the platforms.

The scramble to attract eye-balls has seen intense competition. While Dream XI is the Indian Premier League’s main sponsor, the logo of the MPL, a brand endorsed by India captain Virat Kohli, is on the Team India jersey.

Virtually every popular cricketer, present or retired, promotes a fantasy league – this list includes the BCCI president and former India skipper Sourav Ganguly and Bharat Ratna Sachin Tendulkar.

Of late, international betting companies, despite sports gambling being illegal in India, have slipped into the country’s sporting ecosystem by advertising directly and through surrogate ways accepting online bets from Indian users through Indian banking systems.

The Niti Aayog draft stays away from the online betting debate but says that fantasy sports “should not be legally classified as gambling” since skill, not chance, is a predominant factor. It has cited the example of the regulatory systems in the United States — where fantasy sports are allowed in 43 states out of 50 – to advocate a “safe harbour.”

Former US-based fantasy sports writer and podcaster Gabriel Harber said fantasy games continue to be regulated through state legislation, which makes operators accountable. “All the states have their own separate laws for daily fantasy sports. A large number of states had banned it outright but brought them back by passing legislation. Some of them never even made it legal,” Harber said. “Since it’s regulated on a state-to-state basis, the gaming commissions have to ensure fairness and correctly label their products.”

Pushing for self-regulation, Niti Aayog has said a “self-regulatory organisation,” should communicate with all states and request “them to consider granting to OFSPs immunity from criminal prosecution or sanction in respect of such formats of fantasy sports contests that are compliant with these guiding principles.”

Said Sai Srinivas, co-founder and CEO of MPL, one of Indian cricket team’s kit sponsors: “We strongly believe that the self-regulatory body proposed by NITI Aayog should be set up on principles of fairness, transparency and independence, so it can help spur further innovation and ensure a level-playing field for all platforms.”

But more safeguards may be needed, experts said. “Self-regulation is for select professions…But this is a different arena. These are not just games. There is an incursion into vulnerable sections of society, like minors with access to mobile phones. And wherever the section cannot protect itself, you will need state intervention,” said Bengaluru-based lawyer Sridhar Prabhu.

Prabhu, who represents petitioner Sharada DR in a PIL filed in the Karnataka High Court, seeking a ban on online gambling, said a regulator like SEBI, which monitors the stock markets, may be needed for fantasy gaming to protect users’ interests. “These are mammoth organisations with huge money power and reach. People who play cricket multiplied by four is the number of people who play and participate in these games. So it needs regulation, particularly because minors have access to it through mobile phones,” Prabhu said.

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