In a recent judgment passed by the Rajasthan High Court on October 16, 2020, it has been held that Dream11’s online fantasy sports games do not construe betting/gambling.

In this matter, a Public Interest Litigation was filed alleging that Dream 11 Private Limited Company provides a platform for the users to bet on the cricket team. Further, it was also alleged that online fantasy sports games are games of chance, thereby constituting illegal act of gambling/ betting. Additionally, the petitioner also accused Dream 11 of evading taxes under Goods and Services Tax (GST).

Thus the two issues before the court were:

  1. Whether online fantasy sports games offered by Dream11 amounts to gambling/betting?
  2. Whether classification of the online fantasy sports games offered by Dream11 for payment of taxes justified?

Let us first understand what does fantasy game mean? Fantasy sports games are games which involve users drafting fantasy teams based on certain conditions from a list of players scheduled to play live games on a given day. In simple terms, Fantasy sports involves selecting the players who you think are going to perform the best in a match. It is a common practice globally for cricket, football, baseball, etc.

Based on this understanding, the Hon’ble High Court, in the first issue, was of the opinion that the result of the fantasy games offered by the Respondent is not determined merely by chance or accident, but rather it is the skill of the participant that determines the result of the game having predominant influence on the outcome of the fantasy game.

Whether any particular team in the real world match wins or loses, is also immaterial as the selection of virtual team by the participant involves choosing players from both the teams playing in the real world. Thus, it was clear that the offering of the fantasy games of Dream-11, that involves substantial skills, is a business activity that is protected under Article 19(1)(g) of the Constitution which guarantees freedom to practice any profession, or to carry on any occupation, trade or business.

It was submitted on affidavit by Dream 11 that they are subject to self-regulation by the industry body known as “Federation of Indian Fantasy Sports” (“FIFS”) founded in 2017, of which they are a member. The said industry body has issued a Charter for Online Fantasy Sports Platforms wherein rules and regulations are contained to ensure that the games run by its members are ‘games of skill’ and are not in the form of any gambling/betting. The Court also observed that additional safeguards to ensure proper advertising and transparency are also well observed by Dream 11.

The second issue in this matter was left for the consideration of the GST authorities in accordance with the law.

Earlier in 2017, the Punjab & Haryana High Court, in Shri Varun Gumber v. Union Territory of Chandigarh and Ors., CWP No. 7559 of 2017, became the first Court in the country to rule a fantasy sports game to be predominantly based on skill.

Sources: Taxguru, Business Standard, Money Control 

 

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