Riding the IPL wave, many fantasy gaming platforms have caught the people's imagination in recent years. Their popularity can be ascertained from the fact that one of these apps — Dream11 — has achieved the unicorn status (its valuation has crossed $1 billion). My11Circle, MPL, BalleBaazi, MyTeam11 are some of the other popular fantasy sports apps in India.
These apps might have been around for years now but there is still ambiguity regarding their legality. The nature of their business model, which seems similar to betting and gambling, has not gone down well with some in the legal circles, leading to them being dragged to courts every now and then. Even Apple and Google have barred them from their AppStore and PlayStore, respectively.
It is likely that some of your clients may also be participating in tournaments hosted on these platforms. As these contests involve real money, it’s important that you keep them informed about the financial and legal implications of getting involved in these games.
How much financial risk do they carry?
Ads by fantasy games themselves make it clear that they carry financial risks. You would have noticed that their ads end with one common line: "This game involves an element of financial risk and may be addictive, so please play responsibly and at your own risk".
The degree of risk varies from app to app. But in most platforms, one can lose the whole entry fee.
Some fantasy sports platforms do not host very high entry fee tournaments to limit losses for participants. However, those addicted to the games can find new ways to put in high amounts. Participation in multiple tournaments and through multiple accounts is one such way around.
What is the legal position of these apps?
In India, the legality of fantasy sports has been in question since their inception. These apps have been dragged to various courts on various occasions.
Indian laws decide if a game is legal or not through a skill-chance metric. While games that require skills to win fall in the legal category, those based purely on chance are termed illegal.
Let's take an example to make things clearer. Suppose, five players pool Rs 100 each for a winner-takes-all quiz. Will the contest fall in the illegal category? No, because it is a game of skill. Only the one who knows the most number of answers wins.
On the other hand, there are certain card and dice games that are purely based on luck. Playing these games using money is prohibited by law.
Fantasy sports games have been found to be a mix of both — skill and luck. It is this skill factor that has saved them from facing legal action.
"These apps argue that since cricket, or any other sport, is a game of skill, predicting outcomes or selecting a team also involves a substantial level of skill. They say that someone who is not aware of the game or the performance of players cannot select the right team," said Salman Waris, a senior lawyer at TechLegis.
Courts have found merit in their argument and have refrained from imposing bans. Bombay and Rajasthan High Courts have upheld the legality of Dream11.
If any app is found illegal, can participants also face action?
Courts have upheld the legality of only a few apps. There are hundreds of such apps that haven't faced the legal test. It's possible that some of them would be in violation of the law.
If legal action were to happen on these apps, participants will also suffer.
"If these games are considered illegal then both the service providers as well as the participants shall be held liable. If people are found gambling in a physical location, not only the owners of the property but everyone inside is arrested and held liable," Waris said.
