Legal & Regulatory

SC Issues Notice, Stays Bombay HC Order in Dream11 Betting & GST Evasion Case

A three-judge bench of the Supreme Court, comprising of Chief Justice SA Bobde and Justices BR Gavai and Surya Kant issued notice to Dream11, Union of India and social activist Gurdeep Singh Sachar in an appeal filed by the state of Maharashtra as per a report in ETPrime today.

While hearing the Special Leave Petition (SLP) filed by the Maharashtra government on 6th March, 2020, the 3-judge bench of the apex court noted that the High Court decision ruling Dream11 to be a game of skill and dismissing claims of GST evasion against it was given without hearing the central or state government or issuing notice to any of the parties to the matter.

Justice Gavai, on behalf of the bench, expressed displeasure at the haste and manner in which the judgment of the Bombay High Court was given, within a span of less than three working days, without hearing any of the other parties.

The bench also dismissed the argument of Senior Counsel and former Attorney General of India, Mukul Rohatgi, who stated that a lawyer had appeared on behalf of the state government on 30th April, 2019 in the Bombay High Court.

The 3-judge bench of the apex court will likely hear the matter in April 2020 and delve into the merits of twin issues of whether Dream11 is a game of skill or amounts to gambling/betting and whether the fantasy sports website has been paying GST in a correct manner or indulging in evasion by not paying tax at the rate of 28% on entry fees.

It may be noted that Mumbai-based lawyer and social activist Gurdeep Singh Sachar had filed a Public Interest Litigation in April, 2019 asking for a ban on Dream11 and probe against it for GST evasion.

On 30th April, 2019, a division bench of the court comprising of Justices Ranjit More and Bharati Dangre ruled that Dream11 and fantasy sports games involved use of skill and judgment and was consequently outside the ambit of anti-gambling legislation. It also stated that Dream11 correctly paid GST on the platform fee retained by it as against the entry fee of every contest that was claimed by the petitioner.

A Supreme Court division bench headed by Justice Rohinton Nariman had earlier dismissed all appeals and a clarification application against the Bombay High Court order filed by Advocate Varun Gumber, Sachar as well as the Union of India, while allowing the central government to file a limited review petition in the Bombay High Court on the issue of allegations of GST evasion against Dream11.

The 3-judge bench of the Supreme Court has however, while hearing the Maharashtra government’s plea, implicitly set aside the orders of the Justice Nariman-led division bench and is likely to give a decisive verdict on the legality of daily fantasy sports and online gaming in the country.

Gaming Legal & Regulatory

Andhra Pradesh MLA calls for banning online rummy

After Chief Minister YS Jaganmohan Reddy’s assertion last month about banning online rummy in Andhra Pradesh, an MLA belonging to the ruling YSR Congress Party raised the issue of online rummy and its perils in the ongoing session of the legislative assembly of the state.

Malladi Vishnu, a YSR Congress Party MLA while speaking in the house mentioned that many families are being disturbed due to online rummy and that he was receiving requests from various people to bring a strict law against online gambling and rummy.

He further urged the government to seriously consider strict action against online rummy websites.

The speaker presiding over the legislative assembly called upon the concerned minister to reply to Vishnu’s suggestion. Since the minister concerned, i.e. the Home Minister was not present in the House, the Deputy Chief Minister responded saying he had noted down the request made by Vishnu.

Last month, it was reported that the state’s Minister for Tourism, Culture and Youth Advancement, Muttamsetti Srinivasa Rao alias Avanthi Srinivas had raised the issue of online rummy and gaming spoiling the lives of many educated as well as unemployed youth and demanded a ban on online rummy, at a conference of District Collectors and Superintendents of Police in the presence of Chief Minister Reddy.

On being told by the state’s Director General of Police (DGP) that, at present, Andhra Pradesh does not have any specific legislation against online rummy, Reddy reportedly stated that the state government will soon introduce a new law to ban online rummy.

Business Legal & Regulatory

Overview of India Fantasy Sports Industry, its Legality & GST

India fantasy sports industry has over sixty platforms, at present. These platforms are catering to about 20 million fantasy sports players in India, as per an IFSG-KPMG report.

By the end of 2019, over 100 million sports fans are expected to take to one or more fantasy sports apps or platforms. 

As per the fantasy sports information offered by Indian Federation of Sports Gaming (IFSG), two out of three sports fans in India know of fantasy sports.

One of the reasons for the popularity of fantasy sports in India is the mass availability of mobile 4G network, which was initiated by Reliance Jio.

The fantasy India market is expected to reach over $5 billion in the next two years.  This industry is not only attracting customers, but is also very popular among Venture Capital and Private Equity Investors. 

One of the largest fantasy sports company in India is Dream11. It recently became a gaming Unicorn. This fantasy sports startup has Series D funding and is backed by Chinese internet giant Tencent.

It achieved unicorn status and  is currently valued at over $1.1 billion after investment firm Steadview Capital invested in it.

To play fantasy sports, one can choose from any of the popular fantasy sports websites, and join a fantasy league with a team of their choice.

Related post:
March 27, 2019, India Bet parent company invests in new fantasy sports startup Scoring11

India Fantasy sports & leagues

The Indian fantasy sports market picked up with the launch of India fantasy cricket games and apps during Indian Premier League (IPL) in 2008. 

However, today, various fantasy sports games are offered through different platforms. Most popular fantasy sports are cricket, football, basketball, hockey, and badminton. 

In India, Fantasy cricket league has gained a lot of popularity.

Even kabaddi, carrom and pool fantasy sports games can be played through fantasy sports apps. Other games include Formula 1, rugby, golf, volleyball, tennis and squash.

Legality of Fantasy Sports in India and GST Applicable

As per the Indian law, Fantasy sports are not allowed in a few states like Assam, Odisha and Telangana.

Recently, a petition was filed by a Mumbai-resident, Gurdeep Singh Sachar–fantasy sports are luring people to gamble their hard earned money and, hence, are a form of gambling. He also contended that Dream11 was allegedly evading Goods & Services Tax (GST).

On 30th April, 2019, Bombay High Court judges Ranjit More and Bharati Dangre rejected both the allegations made by Singh. They noted the following:

“The petitioner has lost sight of the fact that the result of the fantasy game contest on the platform of Dream11 Fantasy Pvt Ltd is not at all dependent on winning or losing of any particular team in the real world game. Thus, no betting or gambling is involved in their fantasy games.”

Bombay High Court judges Ranjit More and Bharati Dangre

As per the ruling, 18% GST is applicable for Dream11’s format and fantasy sports gaming. “The court referred to Schedule III of the Central Goods and Services Act, 2017 which states that ‘actionable claims, other than lottery, gambling and betting’ are excluded from the scope of supply,” as reported in one of Glaws’ earlier articles.

Earlier, on 18th April, 2017, the Punjab and Haryana High Court also ruled that playing online fantasy sports does not amount to gambling as it requires a substantial degree of skill.

As there are no set laws for the industry, to create an industry voice, Harsh Jain, CEO and Co-founder of Dream11, helped set up Indian Federation of Sports Gaming (IFSG) in 2017. 

The federation sets up self-regulation standards for the fantasy sports industry in India till the government comes out with any rules and laws.

Related posts:
– February 11, 2019, TRS MP raises question on fantasy sports legality; central govt says states can decide

Indian and global Fantasy League websites

Here are some fantasy sports websites in India. One can play seasonal or daily fantasy sports on these websites or predict the results of various games and leagues.

Sports fans can engage with fantasy sports games through the following popular platforms in India and the World to play fantasy cricket, fantasy football, Fantasy NBA, fantasy hockey, fantasy MLB, fantasy NFL, and other fantasy leagues.

Some of the websites are Dream11, Mobile Premier League (MPL), Scoring 11, Fanfight, Halaplay, 11Wickets, etc.

Related posts:
June 3, 2019, India Today Group launches new fantasy sports website Aaj Tak 11
June 13, 2019, Kapil Dev launches new fantasy sports website Apne11
– May 3, 2019, 9stacks group entity launches new fantasy sports portal Faboom
March 16, 2019, Dream11 partners with BCCI to become official fantasy sports partner of IPL

Fantasy sports history

The concept of fantasy sports has been around since shortly after World War II, when sports enthusiasts would select their favourite players and keep a count of their scores.

The game took shape in Oakland with Wilfred “Bill” Winkenbach starting Fantasy Golf in the late 1950s. He also made the first reported fantasy Football league in 1962.

The first fantasy baseball league that was reported was held in Boston in 1960. The idea of fantasy sports grew with Rotisserie League Baseball in 1980, the book ‘Patton’s 1989 Fantasy Baseball League Price Guide’, Fantasy Football Index (annual guide) in 1987, Fantasy Sports Magazine in1989, and Fantasy Sports Trade Association in 1998.

In 1995, a fantasy hockey website called Molson Breweries was launched. Yahoo began fantasy sports in 1999. The industry got a push with the Dot com boom.

Daily fantasy sports (or DFS) was launched with Fantasy Sports Live in 2007. DFSs are played over shorter periods of time, e.g. a day or a week of a sports’ season. They are run as contests. 

These contests have an entry fee. Their organisers charge an organising fee and announce prize pools for the contests. For example, Dream11 charges 15% or more organising/service fee for contests.

Related post:
May 21, 2019: Sourav Ganguly endorses fantasy sports website My11Circle

Conclusion (Fantasy sports India)

The fantasy sports India market is expected to reach $5 billion in the next two years. By the end of 2019, the industry is expected to have about 100 million users. 

Dream11 fantasy sports is one of the biggest players in the market with about 90% of the market share.

Popular fantasy sports games in India are cricket, football, basketball, hockey, kabaddi, and badminton.

Fantasy industry standards  in India are regulated by Indian Federation of Sports Gaming, as there are no set government regulations.

Playing fantasy sports is considered as a game of skill by the Bombay and Punjab & Haryana High Courts; however, playing fantasy sports is not allowed in Indian states like Assam, Odisha and Telangana.

Read more about gambling laws in India.