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.

Business Gaming

Nazara pledges to invest $20 million in startups in 2020

Social gaming and sports content company Nazara Technologies Limited has announced its intention of investing upto US$20 million in select startups in the gaming and sports ecosystem in the Indian sub-continent, Africa and Middle-East over the next one year.

The company  aims to act as a catalyst to further expedite growth of gaming; esports and sports content across emerging markets. Nazara plans to infuse risk and growth capital in the selected startups besides offering mentorship to the founders of the startups that it invests in.

Commenting on the strategy, Nazara Technologies CEO Manish Agarwal noted, “Looking at the explosive growth in the interactive entertainment and sports ecosystem, Nazara has decided to up its aggression on investing in the emerging market ecosystem and support early stage startups accelerating the growth of these companies and of the industry at large.”

The company noted that it had already invested over US$50 million in 13 startups in the last two years. Nazara recently acquired majority stake in real money quiz app Qunami, daily fantasy sports platform Halaplay, sports news website Sportskeeda and preschool education app Kiddopia.


Nazara invests Rs. 83.5 crores in preschool edutainment app Kiddopia

Online gaming and sports media company Nazara Technologies Limited has announced that it has made an investment of Rs. 83.50 crores in Paper Boat Apps, the creator and publisher of Kiddopia, a subscription based preschool edutainment app.

With the closure of the transaction, the company will acquire a majority stake of 51% in Paper Boat Apps Private Limited at a pre-money valuation of Rs. 154 crores. The deal is subject to shareholders approval and customary closing conditions including any other regulatory approvals.

Kiddopia offers a wide array of interactive games and activities that foster cognitive development, self-expression and also social-emotional learning, for a subscription fee and has seen over 2.5 million downloads till date and currently has over 100,000 active subscribers.

Commenting on the transaction, Anupam Dhanuka, co-founder & CEO of Paper Boat Apps Pvt. Ltd., “The leadership at the two companies have very similar DNA and our goals are well aligned. This investment will help us grow our team, strengthen our market share in the US and expand to other high value markets such as Latin America, Europe and Japan. We also plan to leverage Nazara’s existing network of users to quickly grow in India, Southeast Asia and the Middle East.”

Nitish Mittersain, founder and Managing Director of Nazara Technologies Ltd. noted,“Kiddopia addresses the concern where young children are found to consume digital content through their parent’s devices. Kiddopia offers a positive alternative while bringing high quality, curated educational content packaged within an entertaining framework that keeps both kids healthy and parents happy. Kiddopia will be leveraged to over 100 million users through the Nazara network.”

In the past few months, Nazara has been on an acquisition spree, with the company recently acquiring majority stakes in sports news portal Sportskeeda, fantasy gaming platform Halaplay and real money quiz app Qunami.


Nazara invests Rs. 7.5 crores in Qunami, acquires majority stake

Online gaming and content company Nazara Technologies Limited has announced that it has invested Rs. 7.5 crores in Sports Unity Private Limited, the Delhi-based company that operates real money multiplayer quizzing app Qunami.

Apart from Nazara, Vaibhav Gaggar, a Delhi-based lawyer and managing partner of law firm Gaggar & Partners also participated in the investment round.

Qunami has over 3 lakh downloads and 40,000 monthly users playing up to 30 minutes per day and has crossed over 1 crore transactions.

The news about Nazara investing around Rs. 7 crores in Sports Unity, apart from making investments in Sportskeeda and Halaplay was first reported by Inc42 in July 2019.

With this investment, Nazara has acquired majority stake in Qunami. The company stated that is investment in the quizzing company is a strategic move in addition to Nazara’s investments and diversified presence in various areas of gaming including esports, fantasy sports, digital cricket gaming, real money gaming and infotainment among others.

Commenting on the development, Seemant Shankar, co-founder of Qunami noted, “Quizzing attracts audiences of all demographies and possesses a massive potential to scale. Nazara, a partner with a rock-solid reputation and international spread and carrier association within 118 countries creates the key alignment to Qunami’s vision of global expansion and opportunity to skyrocket Qunami’s success metrics.”

Manish Agarwal, CEO, Nazara Technologies Ltd. added, “We at Nazara are very excited with the quizzing space and are confident that Qunami will leverage Nazara’s network to grow into a large consumer centric internet brand and build quizzing as one of the leading real money gaming categories in the emerging markets.”


MPL announces Chess Mahayudh, India’s biggest chess tournament, Viswanathan Anand endorses event

Leading esports and digital gaming platform Mobile Premier League (MPL) announced the launch of India’s biggest chess tournament on its platform, christened as ‘MPL Chess Mahayudh’.

The 12-hour long online tournament, to be conducted on 21s July, will follow the speed chess format (with total of 3 minutes given to a player in a particular game). The tournament has already garnered over 2 lakh registrations, making it the biggest ever Indian chess tournament organised online and offline.

The total prize pool for the event is Rs. 10 lakhs for the top 30,000 players, with the first prize winner getting a cash reward of Rs. 5 lakhs.

Chess grandmaster and Padma Vibhushan award winner Viswananthan Anand announced the event in his tweet and a video released by MPL on social media.

Commenting on the announcement, Sai Srinivas Kiran G, co-founder and CEO of Mobile Premier League noted, “We are thrilled to launch the Mahayudh Chess tournament on MPL. This is a major landmark in our effort to keep our platform exciting to both casual and professional gamers.

We believe that real-time, multiplayer games are the future of digital gaming. Chess is one of the oldest strategy-based multiplayer game with deep roots to India’s culture. We’re proud to host this tournament and we expect it to be the largest online chess tournament in terms of number of participants competing on a single platform.”

Announcing his association with the chess tournament, Anand added, “I am excited to introduce chess to India’s growing digital gaming community. I am sure MPL Chess Mahayudh will be a closely contested event. It’s a great platform to introduce youngsters to the game and I am very excited to see them showcase their talent in this tournament.”

Legal & Regulatory

Deciphering games of skill: An MPL story

This is a guest post by Dibyojyoti Mainak, Consultant General Counsel of esports and online skill gaming company Mobile Premier League (MPL).

Operating an online games of skill platform for esports and digital sports gaming (hereafter DSG) in India can be interesting. The archaic laws, undefined legal parameters, multiple state specific legislations, conflicting judicial interpretations, and lack of competent regulatory supervision make it extremely challenging for anyone to operate an online skill gaming portal.

Under Indian law, games (online or otherwise) involving transaction of money (for entry; and if successful, as reward or prize) are potentially hit by anti-gambling laws (which are in most states, a century old) if it appears that these are ‘games of chance’. These laws have not been updated and the legislature could not have (at least, arguably) intended to make such provisions applicable to online platforms as they exist today.

The Indian online gaming space clearly highlights an area of concern where law fails to keep up with the developments in technology. This at a time, when esports and DSG is making waves internationally (esports were a part of the Asian Games 2018). India’s tech talent pool is renowned worldwide and yet, potential criminal action is a strong deterrent against any entrepreneur looking to innovate in this rapidly growing space.

Anti-gambling laws classify games as ‘games of skill’ and ‘games of chance’. These laws, as interpreted by various courts, outlaw games of chance; and make an exception for games of skill which involve substantial degree of skill over chance, or where skill plays a predominant role in the outcome of the game.

In this background, let me explain the systems put in place by MPL (Mobile Premier League), one of the leading online esports and skill gaming platforms in the country, to ensure that the 20+ online skill games, including games like fruit chop, Runner No. 1, Super Team, pool and carrom offered on MPL’s platform qualify as games involving substantial degree of skill over chance.

Games of skill, as noted by courts, are those where the success of the players depends on their knowledge, training, experience, practice, attention, familiarity with rules and strategies, and consequently their overall performance.

Adopting these parameters to an online platform we, at MPL, have put in place certain systems which help us show that all the games offered are games of skill. Good hand-eye coordination, muscle memory, reaction time (all of which can be improved by practicing) play a vital role in determining the success of a player on the MPL platform. One can generally observe that their score is improving over time as they keep practicing and their hand-eye coordination, muscle memory and reaction time keep getting better.

To demonstrate this mathematically, let us take an example of a specific game on the MPL platform – If we: (i) take a random sample set of 100 new users who have played the game more than 100 times; (ii) retrieve their scores of their first 100 games and sort them in the order of time; (iii) group the scores on counts of five and take their average (to remove the noise in the scores); (iv) plot the values (which is a set of 20 showing the average score in every five attempts) on a graph; and (v) a logarithmic scale is used on the game score axis (to make the difference in scores visible), we get the following graph:

Sample graph of 100 users gradually improving their performance in a MPL game

A line is plotted on the graph through the mean of the game scores of all the sample set users. This line shows a positive slope, which shows that the average game score of a new user has been continuously improving as the user makes more attempts at the game. As the games are predominantly based on skills like hand-eye coordination, muscle memory and reaction time of the user, the positive slope on the graph indicates that the user is improving these skills over time which is demonstrated by their increasing scores.

Put another way (a negative definition), a game of skill is one where it is possible to deliberately lose/play badly. In a game of chance, where luck is predominant, it is possible to win despite the player trying his best to lose. In other words, there is no bad way of playing at slot machines and you might win despite trying your best to lose, but there is a way to play badly at a racing game and lose. We call this the ‘Choose to Lose’ standard of skill gaming.

We, at MPL, use methods like these to constantly ensure that the games offered on our platform are games of skill under Indian law. We constantly repeat such calculations for every game, with different sample sets to ensure that we are always in compliance with the law.

We hope and trust (for the benefit of the Indian gaming community – which is one of the largest online gaming communities in the world) that the legislature enacts suitable new laws, with well-defined parameters for classification of games of skill, keeping in mind technological developments and evolution. Better and efficient legislation will encourage more players to enter this space of online gaming in India – which will not only help India emerge as a hub for the online gaming and esports industry but also help the large player community by improving their gaming experience.  

Till such that happens though, we hope self-regulation holds the key in this emerging industry and more platforms become part of a larger conversation and help us and the industry refine our understanding of what constitutes ‘skill’.

The views expressed in this article are that of the author alone and are not necessarily endorsed by this website.


Miss Fashion TV Gaming World 2019 to be selected in Malta on 30th May

B2B online gaming brand Fashion TV Gaming Group (FTVGG) has announced that it will be hosting its first Miss FashionTV Gaming World awards on the 30th May in Malta at the Fort St Elmo in Valletta, Malta.

Miss FashionTV Gaming World 2019 is being held in collaboration with Malta Fashion Week and will culminate the week-long fabulous programme of events with a one-of-a-kind FashionTV glam party.

The event will include a cocktail reception followed by the Miss FashionTV Gaming World contest, with models competing from all over the world.

The event is also slated to host a fashion show and live entertainment before announcing this year’s winner who will be crowned on the night and rewarded with a cash prize and the opportunity of becoming the face of FashionTV Gaming World for 2019.

Aviva Baner, Head of Media, at FashionTV Gaming Group noted: “Miss FashionTV Gaming 2019 is definitely an industry first of its kind and will represent one of the major highlights of the global online gaming industry this year.

We look forward to welcoming our guests and treating them in FashionTV style as we wait to crown our brand ambassador for the forthcoming year. Apart from representing FashionTV Gaming Group, this year’s winner will also gain the international exposure that comes with a mega brand like FashionTV, and we’re excited to being a part of the journey.”

Fashion TV Gaming Group licenses its ‘Fashion TV’ brand to B2C online gaming operators across the globe for various kinds of games including slot machines, casino games, sports betting and skill games.

Legal & Regulatory

Tax issues for skill-based gaming companies

This is a guest post by Pallav Pradyumn Narang, a Delhi-based Tax and Regulatory Partner at CNK, an accounting, tax and advisory firm.

That skill-based gaming companies have regulatory challenges every now and then is not a new story. There are however persistent issues and new developments with respect to the tax landscape that governs all businesses in India, including online games of skill.

In the recent past the sector has attracted investments, players, and with that even more regulatory scrutiny. We have tried to address some of the more burning issues in this article.

Indirect Taxes

Classification issues

Unfortunately, despite the size of the skill-based gaming industry in India, skill based games do not have their own SAC (Services Accounting Codes) allocated to them.

The department on its part has made several attempts to classify online skill based games under the bracket of this effort has been aided by the SAC description for Gambling and betting services which says , “Gambling and betting services including similar online services” not keeping in mind clear cut precedents set by the courts which have clearly excluded skill based games from the domain of gambling.

The result of tax officers trying to throw everything at the wall and seeing what sticks and using “similar online services” is a needless controversy over the classification of skill-based games and the rate applicable to such games. Thankfully, thanks to settled cases, better sense has prevailed in recent times and cases of such mis-interpretation have all but disappeared.

Related posts:
May 20, 2017 – GST council announces 28% tax on casinos and betting; 18% tax likely on skill games; lottery tax yet to be announced

Taxability of Advances

The moment in time at which GST on revenues earned by the operator has to be paid by the operator is determined by what is called the time of supply. Under the current provisions of the GST law time of supply of services shall be either of:

  • Date of issue of invoice
  • Date of receipt of payment
  • Date of provision of service

Whichever is earlier.

Online real money skill-based games work by allowing their customers to deposit money upfront which the players can then utilize to them play games on the platform.  Treating this money as an advance can have the adverse impact of subjecting the entire amount received as taxable at the time of receipt of such payments.

A view has also been taken by the department to allege that since the advances received from players will all result in eventual income for the operator the operator should discharge liability at the time of receipt of such advances. Careful structuring of flows within the operator’s system and an understanding of the relevant provisions is critical to avoid unnecessary tax litigation on this matter.

Value of Services subject to tax

The taxable component under GST is the consideration received by the service provider, in this case the operator of the skill-based games. Consideration can be defined as in simple terms as:

  • Any payment made, or to be made
  • In money or otherwise
  • In respect of, in response to or for the inducement of supply of goods or services

Consideration for services, particularly in the case of skill-based games that require an entry fee, ticket, or upfront payment of a similar nature, represents a significant grey area where there is enormous potential for tax disputes and prolonged litigation if preventive measures are not taken. This is because the definition includes all payments made or to be made for the inducement of supply of goods or services.

With this definition, a view can be taken to impose taxes upon the entire payment received regardless of the eventual sums charged by the operator and therefore presents a huge challenge to for money gaming operators.

To give you an example, if an online IPL fantasy game requires the player to pay 500 rupees to enter a prize game then as per the provisions the entire sum can be subjected to GST even though the monies may in fact be flowing into the prize pool.  Given that operators earn only a small margin of entry fee, subjecting the entire amount to GST eviscerates the revenue model.

Under the service tax regime, a stand could have been taken that the entry fee charged in the example above was analogous to an actionable claim in the manner of lotteries etc. and therefore was out of the purview of taxation under the previous regime. Under GST however lotteries, betting, and gambling are not only subject to GST but as discussed earlier they are subject to the highest possible rate of 28%. The challenges therefore for this nascent but emerging industry are not likely to end soon.

Further, non -resident operators of skill-based games have to contend with registration and payment of GST under the rules for Nonresident registered taxpayers which carry with them a different set of issues such as pre-payment of taxes, interplay with direct taxes etc.

Related posts:
April 29, 2019 – Online skill gaming companies face questions about manner of GST payments

In the realm of Direct taxes

Issues raised under GST are now also going to give sleepless nights to operators under the direct taxation realm. Due to exchange of information by the GST and direct tax departments what is reported to peter also gets known to Paul and therefore if lets say GST were to be imposed on the full entry fee then not reporting the same revenues under direct taxes could land the operator in the regulatory spotlight.

The biggest challenge from a direct tax perspective is posed by the nuances of Section 194B of the Income Tax Act, 1961 prescribes the method and quantum of tax deduction on winnings from skill-based games.

Since key terms such as “winnings” and “game” have not been defined in the charging law there exist many opinions as well as judicial decisions pointing in differing directions with respect to the correct application of the law on withholding of taxes on winnings from such skill-based games.

In the absence of any clarifications from the government this regulatory fog will continue to hang around the entire skill-based gaming industry for a while.

The views expressed in this article are that of the author alone and are not necessarily endorsed by this website.

Related posts:
March 30, 2013 – FAQ on taxes and gambling winnings

Read more about gambling laws in India.

Gaming Poker

Senior Telangana leader answers ‘complicated’ question on whether poker is a game of skill

Working President of the ruling Telangana Rashtriya Samiti (TRS) KT Rama Rao answered a Twitter users question on whether he feels the game of poker involves skill or not.

While fielding questions from citizens on Twitter, a user named Arvind asked the senior Telangana politician and son of current Chief Minister K Chandrasekhar Rao to address complicated issues too and give clarity on whether poker is a game of skill or not, although the game is not expressly banned.

Replying to the query, Rao tersely stated ‘Not a big fan of poker sir.’


In a similar interactive session in July 2017, replying to a user on the Telangana government’s decision to ban online skill games which is played by an individual out of his/her free choice, Rao had justified the move to ban all gaming for stakes stating that ‘There’s a huge difference between gambling & gambling. Online/offline gambling involves crores of rupees is against the law in Telangana.’

It may be noted that the Telangana government under the leadership of KTR’s father had taken the unprecedented step of banning all online skill games involving stakes (and deleting an exemption stating that games of skill do not fall under the ambit of gambling) through an ordinance in June 2017 and later through an amendment to the ordinance.

In November 2017, the Telangana legislature passed the Telangana Gaming (Amendment) Bill replacing the ordinance with a Bill that was approved by the governor.  The assembly had also amended the Prevention of Dangerous Activities Act to include gaming activities under the draconian law, which enables the government to taken into preventive custody those committing gaming-related offences.

Online rummy companies have challenged the decision of the Telangana government to ban online skill games in the High Court. However, their plea is pending in the court since the June 2017 and has not reached the final hearing stage due to frequent changes in the composition of the bench.


Read more posts about offline and online poker in India.

Gaming Legal & Regulatory

Gujarat may introduce new law to ban online gambling

The Gujarat government has initiated preliminary discussions to explore the possibility of amending the existing gambling legislation, i.e. the Gujarat Prevention of Gambling Act to cover online gambling and betting, as per a report in the Times of India.

The proposed changes to the existing laws are being discussed at the request of the Ahmedabad police department officials who felt that the current laws mainly cover gambling and betting in physical locations and are not stringent enough.

Ahmedabad police commissioner AK Singh confirmed that the Gujarat home department and officials of the CID crime branch have held a meeting to discuss changes to the existing gambling laws. Singh added that the state government is working on the issue so as to ensure that people indulging in online gambling are dealt in accordance with law.

The police commissioner added that the current gambling act does not give the department enough power and also discussed about banning the game of poker.

Various police commissionaires in cities of Gujarat such as Rajkot, Surat, Gir Somnath, Bhavnagar etc. recently issued orders under Section 144 of the Code of Criminal Procedure and Section 37(3) of the Gujarat Police Act to ban the game of PlayUnknowns’ Battlegrounds (PUBG) within their respective jurisdictions citing adverse impact of the game on the health of children and youth.

In December 2017, a single bench of the Gujarat High Court had ruled that the game of poker was one which involved chance and consequently playing the game amounted to an offence under the Gujarat Prevention of Gambling Act. A challenge to the order is pending before the division bench of the High Court which is expected to hear the matter on 20th June.

Is gambling legal in India?