27 Feb 2022 faisan

Niti Aayog to establish a regulatory body for Online fantasy gaming sector

Online fantasy sports platform Dream11 has gained a lot of traction after featuring as the title sponsors in the 2020 edition of the Indian Premier League. Niti Aayog which serves as the apex public policy think tank of Government of India has released several guidelines for the online gaming fantasy sector. The guidelines state that it will establish an independent body that will control all the operations of the fantasy gaming companies in India.

The Niti Aayog states how the fantasy gaming industry can contribute to the Indian economy. According to Niti Aayog, “The online fantasy gaming sector in India has grown at a compounded annual growth rate (CAGR) of 212 percent – from 2 million users in June 2016, to 90 million users in December 2019. It has the potential to attract Foreign Direct Investment of more than Rs 10,000 crore over the next few years, as well as generate 1.5 billion online transactions by 2023,” as reported by News18.

It further states that, “The fantasy sports industry has the potential to generate an additional 5,000+ direct and 7,000+ indirect jobs in the next 2-3 years. It has the potential to contribute GST revenue of Rs 3,000 crore to Rs 3,500 crore over the next five years, with income tax on winnings and corporate tax paid by OFSP (Online Fantasy Sports Platform) operators expected to contribute between Rs 7,000 crore and Rs 10,000 crore over the next five years.”

The key principle under this draft includes, “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,” as reported by News18.

The independent oversight body will look to provide a protective layer for start-ups. However, one of the main problems the Government is facing is that states like Andhra Pradesh, Assam, Orissa, Nagaland, Sikkim, Tamil Nadu and Telangana have made it illegal for their residents to use the fantasy gaming applications. It is the banning which is restricting the government to open up new revenue streams in the country.

Online fantasy gaming which is often termed as the ‘Game of Skill’ is governed by the Public Gambling Act of India, 1867. Stakeholders in the online gaming industry have stated Online fantasy sports and games require talent and skill and therefore it shouldnt be categorised as ‘Gambling’. Several PILs have been filed regarding the same issue against the legislation of online fantasy gaming in the country to which the High Court has expressed concerns regarding the lack of clear regulation in this field as reported by News18.

“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, achieve scale and expand their operations in a clear and principle-based regulatory environment. 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. Thereby, they 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,” Niti Aayog states as reported by News18.

The regulatory body will differentiate which fantasy sports qualifies as a ‘Sport’ and which one falls under the category of ‘Gambling’. Several PILs have stated that online poker, rummy and such other tournaments fall under Gambling.

The Online fantasy gaming industry is acquiring a lot of attention nowadays and the industry is expected to boom in the years to come.

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