11 Dec 2020 shivani

NITI Aayog Issues Guiding Principles for National-Level Regulation of Fantasy Sports

Government of India’s think tank NITI Aayog has published a draft for discussion for the Fantasy Sports industry called "Guiding principles for the uniform national-level regulation of online fantasy sports platforms in India".

NITI Aayog has initiated this discussion to examine the structure of the fantasy sports industry in the country and to consider evolving guiding principles that can help the industry grow.

As per a KPMG India report called ‘The Business of Fantasy Sports (July 2020)’ cited in the paper, the fantasy sports industry in India is estimated to have the potential to generate approximately 1.5 billion online transactions by 2023 and attract over INR 10000 crore in Foriegn direct investment (FDI) over the next few years. The report also says that the number of fantasy sports users in India have grown "at a compounded annual growth rate (CAGR) of 212% from 2 million users in June 2016 to 90 million users in December 2019."

As per a Pricewaterhouse Coopers India report cited in the paper, "fantasy sports industry has the potential to generate an additional 5000+ direct and 7000+ indirect jobs in the next 2-3 years.” The report also estimates the GST revenue contribution potential of the fantasy sports industry to around “INR 3000 crore to INR 3500 crore over the next five years, with income tax on winnings and corporate tax paid by OFSP (Online Fantasy Sports Platforms) operators expected to contribute between INR 7000 crores and INR 10000 crore over the next five years".

As online gaming is regulated state-wise in the country, the paper highlights the need to address the legal ambiguity and differential treatment faced by fantasy sports across the states in India. "With the absence of regulation and lack of policy clarity, there is an imperative need for uniform operating standards, based on sound principles and best global practices, and the monitoring of adherence to these principles and practices to protect fantasy sports users’ interests," the paper states.

The paper also suggests formulating dispute redressal mechanism with "the twin objectives of (i) providing accessible and uniform dispute resolution to consumers and (ii) not repeatedly exposing compliant OFSP operators to repeated legality challenges that come from consumer disputes reaching the courts".

Highlighting the need to secure the industry against fly-by-night operators that offer sketchy games, the paper says, "It is worthwhile to add that with the recognition of fantasy sports as a game of skill, it is equally imperative to secure the industry and the users of OFPSs from unscrupulous operators who lure users with games of questionable legality in the guise of fantasy sports, and thereby tarnish the image and potential of the industry as well as the consumer’s trust and expectation that the outcome of a fantasy sports contest will be determined by the superior exhibition of skill relative to participating users."

The paper suggests that there is a public interest in independent recognition of the industry, which will enable the industry to innovate and achieve scale. "Thus far, certain formats of fantasy sports formats have received judicial recognition in various High Courts and with the Hon’ble Supreme Court of India also having endorsed certain of these judgments. However, fantasy sports contests do not have independent legal recognition, having to shelter under an undefined exception to the state gambling and public order laws. Formal recognition of the fantasy sports industry and providing for principle-led governance would enable Indian OFSP operators to focus on innovation and achieve scale and expand their operations in a clear and principle-based regulatory environment …”

NITI Aayog has taken the initiative to compile a list of guiding principles for the fantasy sports industry--highlighting the need for OFSP operators to stay in compliance with all applicable laws, to keep the games skill-predominant, restricting games to players under 18 years of age, relating games to real-world, officially sanctioned sports contests, offering fair and transparent terms of participation, not offering or advertising gambling or games of chance, conducting fair and truthful promotions of contests, sending requests to states to consider granting immunity to platforms from criminal prosecution in respect to fantasy sports contests that are in compliance with the given guiding principles.

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