spot_imgspot_imgspot_imgspot_img
spot_imgspot_imgspot_imgspot_img

Are Dream11 and other fantasy apps banned under new TN Online Gaming Ordinance?

Published on:

In less than two years, the Tamil Nadu government has twice enacted a law banning online real money games including rummy and poker. The earlier law enacted by former AIADMK government was held to be unconstitutional and infringing the rights under Article 14 and 19 of the Constitution of India.

While online rummy and poker are specifically included in the Ordinance brought earlier this month by the Stalin government, the law has no specific reference to fantasy sports – an industry worth a few billions of dollars.

One may think on a bare reading that fantasy games are exempted from the ambit of the law. But on a careful reading of the provisions, we may note the prohibition is on online gambling and specifically on the games mentioned in the schedule. The games mentioned in the schedule are poker and rummy.

Now let us understand what is ‘online gambling’ under the enactment. Under the Ordinance, ‘online gambling’ includes online games of chance for stakes. Games of chance are defined to include a game that involves (i) both an element of chance and an element of skill where chance dominates over skill, (ii) a game that involves an element of chance that can be eliminated by superlative skill, (iii) a game that is presented as involving an element of chance, and (iv) games involving cards, dice, wheel, etc working on a random or event generator.

So by definition any game of chance played online would amount to online gambling which is prohibited under the Ordinance. To analyse the definition of ‘games of chance’ it must be noted that the definition is four fold.

Indians courts have time and again held that mere presence of chance doesn’t make a game, a game of chance as long as an element of skill is present. Poker, Rummy, fantasy sports all have an element of chance along with a skill component.

It is this concept commonly known as preponderance of skill, the present Ordinance aims to target by borrowing the definition from UK Gambling Act, 2005.

Under the first leg of the definition, fantasy operators may prove that chance element in fantasy sport doesn’t dominate skill element. For third leg, fantasy operators may argue that the game is a skill game and is not presented as game of chance.

Here comes the crucial second leg which says a game where chance element can be eliminated only by a superlative skill. This means even where a chance exists it must be eliminated by skill making it a pure skill game and out of ambit of the Ordinance. On what is superlative skill, the England and Wales Appeals Court (Civil Division) held as follows:

It was argued on behalf of the appellant that, as Parliament had considered it necessary to refer to “superlative skill eliminating the element of chance” in relation to games played against “the bank”, Parliament had envisaged courts would, in determining whether a game of combined skill and chance was a game of chance, have regard to the predominance of the elements of skill and chance. We do not consider that this in any way follows; on the contrary, on the definition of a game of chance as set out in the Act, if there was no element of chance (as that had been eliminated by superlative skill), it would not be a game of chance and skill combined. The subsection was therefore directed at bringing within the definition games against the bank where (if such exist) skill had eliminated any element of chance.

To claim that fantasy sports as not amounting to online gambling under the present definition we must demonstrate that the chance element can be eliminated by superlative skill. But alas, the ultimate result in a fantasy game depends on the performance of professional players in a real world which fantasy players have no control to. In this regard, we may refer to another UK case involving “spot the ball” competition where the court held as follows:

On the issue whether STB was a game of “chance”, the FTT held that, however skilful a competitor might be and even therefore if he had superlative skill, the most that skill and judgment could do was to estimate the ball’s approximate position and that accordingly the game was one of chance.

The precedents outside India in a way state that fantasy sports where however skillful a player is, the ultimate result depends heavily on performance of real life sportspersons which cannot be defeated by superlative skill of a fantasy player. Due to this it can be concluded that fantasy sports would amount to gambling under the new definition and thereby will be subject to prohibition in the state of Tamil Nadu.

UK cases referred:

IFX Investment Company Ltd & Ors v Revenue And Customs [2016] EWCA Civ 436 (04 May 2016)

Kelly, R. v [2008] EWCA Crim 137 (08 February 2008)

Related