Indian population is very enthusiastic about sports and sports related activities. Indian sports has got a boost in the form of online gaming that has transformed physical sports into virtual sports, e-games, e-sports, online games, fantasy sports, etc. As on date we have no dedicated online gaming and online gambling laws in India. Similarly, we have no dedicated fantasy sports law in India till now. This is in line with the exiting game laws like online poker, online rummy, online lotteries, etc that are still not governed by any dedicated Indian law. The result is inevitable i.e. online card games in India are in limbo and legal troubles.
We at Perry4Law Law Firm are frequently approached regarding legality of online games and fantasy sports/games in India. For the larger interest of gaming community of India, we are providing a basic guideline about legality of running and playing online fantasy sports and games in India. Please note this this is not a legal consultancy and interested stakeholders must con cult a lawyers or law firm of their own choice. Of course, if you wish you can also establish a client attorney relationship with Perry4Law and seek our techno legal online gaming service.
Before discussing about legality of fantasy sports it is pertinent to know a little about it. Briefly speaking, a fantasy sport is an online game that involves selection of and competition among virtual teams for points. These points can be redeemed in multiple ways and money or cash is one of them. However, when cash for stakes is involved, a fantasy game or sport is required to comply with additional techno legal compliances.
The present trends among fantasy sports stakeholders in India is to apply the tests of traditional rummy to online poker, online rummy and fantasy sports. However, this is a wrong approach. At Perry4Law we strongly recommend that online poker, online rummy, online lotteries, fantasy sports, etc require customised and separate treatment than simply applying the skills v chance criteria. Even the central government and Supreme Court of India are cautious about these issues and they have deliberately refrained from commenting upon the legalities of online games in India. Without going into much details, it is sufficient to say that relying solely upon skills v chance criteria for running online poker, online rummy, fantasy sports, etc would be a big mistake and a sure recipe of attracting legal sanctions in India.
In United States the Unlawful Internet Gambling Enforcement Act of 2006 (pdf) (UIGEA) generally prohibits funds transfers to businesses engaged in unlawful internet wagering. While UIGEA does not impact the legality of any particular activity permitted or prohibited under other laws, it does contain some express exemptions to its funds transfer prohibitions. One of these exemptions from the UIGEA prohibitions is for fantasy sports that meet certain criteria. This means that fantasy sports that are based on teams of real multiple athletes from multiple real world teams, that have prizes established before the event starts, that use the skill of participants to determine the outcome, are exempted from the definition of a bet or wager that is the basis for requiring banks to identify and block funds transfers.
However, this exemption does not mean that fantasy sports is permitted or legal in US. All the UIGEA has done is creating an exemption in favour of some categories of fantasy sports. UIGEA has specifically mentioned that no provision of the applicable subchapter shall be construed as altering, limiting, or extending any Federal or State law or Tribal-State compact prohibiting, permitting, or regulating gambling within the United States. Since UIGEA is not a criminal gambling statute and it specifically does not alter any criminal gambling laws thus UIGEA does not make fantasy sports legal in US. Federal criminal gambling statutes are found in Title 18 of U.S. Code, such as the Federal Wire Act 18 U.S. Code § 1084 that deals with transmission of wagering information and its penalties and the Illegal Gambling Business Act 18 U.S. Code § 1955 that imposes prohibition of illegal gambling businesses.
As far as India is concerned, there is no clear regulatory framework that can be looked upon to decide legality or illegality of online poker, online rummy, online card games, fantasy sports, etc. However, there are some very complicated techno legal compliances that are required to be complied with to clear an online gaming or fantasy sports website from legal troubles. Unfortunately, online gaming and fantasy sports websites in India are not complying with these techno legal requirements and they are on the wrong side of Indian laws.
Recently the Indian government has clarified about the Foreign Direct Investment (FDI) in E-Commerce Sector of India. As per the “Consolidated FDI Policy Circular 2015” (pdf) (FDI Policy), FDI is prohibited in lottery business including Government/private lottery, online lotteries, etc and gambling and betting including casinos etc. Recently the Crime Investigation Department (CID) of the Andhra Pradesh police had sought a ban on the website of “Playwin” which had allegedly been selling online lotteries banned in the state.
As on date, online gaming, online gambling and lotteries websites are not complying with the internet intermediary compliances and cyber law due diligence (pdf) requirements prescribed under the Information Technology Act 2000. Similarly, almost all of the online poker websites in India are violating one or other laws of India. Although online gaming market in India is booming yet regulatory compliances cannot be ignored. It seems online gaming and online gambling industry of India is not considering regulations while conducting their businesses in India.
Perry4Law conducted a techno legal audit of various fantasy sports websites operating in India and we found the same problems with them as have been discussed above. Almost all of these fantasy sports websites have used a single cut-copy-paste criteria when it comes to techno legal compliances and drafting of legal documents of the websites. Clearly, these online fantasy sports websites are violating the laws of India and they may be prosecuted very soon. Those using mobile applications can also be prosecuted if they fail to comply with techno legal regulatory norms of India.
Even the banks, payment gateways and online payment merchants, mobile payment vendors, etc supporting these online poker, online rummy, online card games and fantasy sports websites can be held liable for not following cyber law due diligence norms as they have blindly approved online payment option to these illegal and law breaking websites. These banks and payment gateways can also be held liable for money laundering, FEMA violations and assisting in tax evasion. If such banks, payment gateways and online payment merchants have already approved such illegal and law breaking online poker, online rummy, online games and fantasy sports websites in India, it is in their own interest to cancel such approval immediately. The banks etc must ask them to first comply with applicable techno legal compliances and then support their claims with a proper techno legal consultancy from a reputed law firm.
If you need a techno legal compliance and legal consultancy from Perry4Law for your online games or fantasy sports, please establish a client attorney relationship so that we can start working upon your project. Perry4Law wishes all the best to all gaming stakeholders and entrepreneurs.