20 Oct 2020 shivani

Rajasthan HC Dismisses PIL Alleging Dream11 Games Come Under Betting/Gambling

The Rajasthan High Court on Friday dismissed a PIL filed against Dream11 Fantasy Private Ltd. alleging that games played on the platform amount to betting on cricket teams.

As per a report in Live Law, the PIL also alleged that fantasy games are ‘games of chance’, and hence come under the gambit of betting or gambling.

There were further allegations that Dream11 is not paying GST under proper classification. The PIL said that the platform pays 18% (instead of 28%) GST and that too only on the amount received from gamers and retained by the platform, essentially evading taxes on the balance 80% of the amount which is held in escrow and distributed among winners.

The PIL raised two main issues—whether the games played on Dream11 platform are gambling/betting, and whether the company is filing GST under the wrong classification.

While dismissing the PIL, the Bench of Chief Justice Indrajit Mahanty and Justice Mahendar Kumar Goyal noted, "Since the result of fantasy game depends on skill of participant and not sheer chance, and winning or losing of virtual team created by the participant is also independent of outcome of the game or event in the real world, we hold that the format of online fantasy game offered by respondent No.5 is a game of mere skill and their business has protection under Article 19(1)(g) of the Constitution of India, as repeatedly held by various Courts and affirmed by the Hon'ble Supreme Court."

The court recognised that platforms like Dream11 are great tools for fan engagement, promoting the real world games, too.

For the GST issue, the court left the matter for the GST authority to resolve as per relevant laws and said, "The Bombay High Court was pleased to dismiss the said PIL holding that the online fantasy cricket of respondent No.5 was a game of mere skill, as distinguished from a game of chance. The Dream-11 fantasy game does not involve risking money or playing stakes on the result of a game or an event, henc, the same did not amount to gambling/betting. The Bombay High Court also held that respondent No.5 is correctly paying 18% GST by classifying its services under entry 998439 and is not liable to pay GST @ 28% as applicable to 'online gambling services' under entry 999692 and that Rule 31-A(3) of thCGST Rules, 2018 was not applicable as the said actionable claim as per Schedule III and Section 7(2) of the Act, are not considered as 'supply of goods' or 'supply of services' and, therefore, the authorities have rightly not taken steps against Dream-11."

The Rajasthan HC also acknowledged the self regulatory mechanism of Federation of India Fantasy Sports (FIFS), which has members like Dream11, MyTeam11, My11Circle, Fancy11, and Fancode.

The PIL was dismissed by the high court with costs as the court viewed the PIL to have been filed without any real public interest and relevant facts and research.

In September, a SPL was filed by social activist and financial consultant Avinash Mehrotra, challenging a February 2020 Rajasthan High Court order that dismissed a Public Interest Litigation (PIL) that had tried to stop 'illegal betting and gambling activities by fantasy sports operators Dream11'.

Recently, Dream Sports, owner of Dream11, secured US$225 million in new funding, which brought the company’s total value to over US$2.5 billion.

Read more fantasy news and tips.

Share article