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Thursday, January 28, 2021

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A unified regulatory framework with strong checks and balances for the online fantasy sports sector is needed

By: Editorial | New Delhi | Updated: January 5, 2021 8:05:47 am
online fantasy sports, gaming platforms, online gambling, online betting, Indian express editorialVenture capital funding in the sector has also skyrocketed — from $25 million in 2015 to $337 million last year.

India is emerging as a hub for online fantasy sports. According to a report by KPMG, the number of users in the country participating in online fantasy gaming platforms has grown from a mere 2 million in June 2016 to a staggering 90 million by December 2019, overtaking the US as the largest online fantasy sports market. This exponential rise in the user base has led to a near tripling of the industry’s revenues — from Rs 920 crore in 2018-19 to Rs 2,470 crore in 2019-20. Venture capital funding in the sector has also skyrocketed — from $25 million in 2015 to $337 million last year. However, notwithstanding this striking growth, and because of it, some contentious issues need to be addressed.

First, different courts and state governments are in the midst of debating its legality but careful regulation, not a sweeping ban, is the right answer. At least six petitions have been filed in courts seeking a ban on online gambling and fantasy sports and some states prohibit any gaming activity for money. Attempts to curb the growth of this sector, however, by making it illegal or classifying it as gambling are misdirected. Various court judgments have likened online fantasy sports platforms to games of “skill”, not gambling. A draft paper by Niti Aayog also argues that, “skill, not chance, is a predominant factor” in the online gaming ecosystem. Second, the absence of a unified regulatory regime has meant that different states have differing regulations regarding online gaming. Companies thus have to engage with each state differently, despite operating on a pan-India basis through the online platform. This ends up increasing business uncertainty, and goes against the principle of ease of doing business. This, as the Niti Aayog paper also notes, leads to consumers having “differential rights”, and can result in “forum/jurisdiction shopping”. There is also a greater possibility of conflict of interest. For instance, BCCI officials or players could endorse rival platforms, giving rise to such concerns.

There is a need to put in place a unified regulatory architecture, bringing an end to the multiplicity of regimes. Such a framework, with strong checks and balances, would usher in greater accountability and transparency, improve the ease of doing business while also keeping errant players in check.

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