Online gambling and fantasy games: Games of skill or chance?

In this photo illustration taken on October 12, 2020, a user checks the Dream11 application of the Indian Premier League (IPL) cricket tournament, on his mobile phone in New Delhi. - Unable to bet legally, tens of millions of Indian cricket fans have turned to fantasy games based on the Indian Premier League, which have exploited a loophole to create a billion-dollar industry. (Photo by Sajjad  HUSSAIN / AFP) / To go with 'CRICKET-IND-IPL-FANTASY-INDIA', FOCUS by Vishal MANVE with Faisal KAMAL in Delhi (Photo by SAJJAD  HUSSAIN/AFP via Getty Images)

The Madras High Court has refused to stay an ordinance banning online betting games. As per the ordinance, which makes online betting and gambling illegal, players will be liable to a fine of up to Rs 5,000- and face six-months jail time. For game operators, the fine will be Rs 10,000 plus two years in jail.

Online gaming platform Junglee had filed a plea against the Tamil Nadu Government which had promulgated the ordinance.

The counsels, appearing for the online gambling platform, quoted a 1968 Supreme Court judgement which said that rummy is a game of skill and not of chance, hence cannot be banned.

The Tamil Nadu Government had submitted a proposal to Governor Banwarilal Purohit, in November, to promulgate an ordinance banning online betting games, after a spate of suicides shook the state.

Call for a ban

India’s not new to gambling. It has been a part of Indian culture since times immemorial. In the Mahabharat, Yudhishthira lost all his possessions and their kingdom in a game of dice, against the Kauravas.

However, what was earlier restricted to physical spaces such as casinos and gaming arcades, have now moved online. Games such as Rummy, Blackjack, Poker involve wagering and an amount of initial investment, while others such as PUBG, Defence of the Ancients, etc are free, but give the option of paying for additions to player avatars.

Most states have outlawed online betting and gambling in various forms. While Andhra Pradesh and Telangana have already banned various forms of online gambling and games, Karnataka is also mulling a law to ban them.

States such as Uttar Pradesh, Punjab, and Madhya Pradesh have implemented the Public Gambling Act. This act prohibits all types of gambling except lotteries and games of skill.

The Madras High Court had also come down heavily on sports personalities such as current captain of the Indian cricket team, Virat Kohli and former cricketers Sachin Tendulkar and Saurav Ganguly for endorsing online games that involved money.

While Kohli has been endorsing fantasy cricketing platform MPL, Tendulkar has endorsed My11Circle and MS Dhoni is the brand ambassador of Dream 11.

A fuzzy line

By 2021, the Indian online gaming industry is projected to touch USD 1 billion. This year, Dream11 became India’s first gaming Unicorn, pointing to the growing popularity of online gaming in the country. The pandemic has further fuelled this growth – this Diwali saw many card games shift online due to movement restrictions.

However, there is much confusion over what can be defined as a “game of skill” or a “game of chance”. Fantasy sports, which require players to draft their own fantasy teams from a list of players to play a live game, require users to pay a fee.

Supporters of fantasy sports point to the fact that users need to have knowledge about the game in order to be able to choose their team. This then makes it a game of skill, rather than chance.

But, different states have their own rules.

While Tamil Nadu has banned online poker and rummy, Andhra Pradesh had, prior to that, banned all online betting games that involved wagering, including fantasy sports.

Google had also pulled-out financial services app, Paytm’s online gaming app from its play store for violating its gambling policies. The app, Paytm First Games, which has Tendulkar as its brand ambassador, offers fantasy cricket, football and kabaddi, apart from rummy, Ludo and other card and pool games.

According to Google, the app violated its gambling policies which do not allow online casinos and unregulated gambling apps. It was reinstated after it removed the real-cash based bids feature and, instead, added the feature of bonuses.

Both the Bombay High Court and Punjab and Haryana High Courts have, however, upheld fantasy sports offerings by Dream 11 a ‘game of skill.’

Dangers of online gaming

Those calling for a ban point to the many harmful effects that online gambling has on society. Here are a few:

Addiction: Studies have shown that online gambling can be more addictive than traditional gambling. With the internet, credit cards and wallets have gone online, providing easy accessibility to both the games and funding.

For most users, gaming and gambling start as a hobby but can grow into an obsession with serious repercussions. Compulsive gambling can lead to depression, social issues and health problems, in the long run.

Addiction can cause loss of interest in work, studies, daily chores and responsibilities. It can also lead to financial problems.

Family Problems: Compulsive gambling can severely impact families. Emotional disassociation due to addiction and financial burden brought on by wagering online, can lead to impaired family relationships, affecting the emotional and physical well-being of family members.

Financial losses can also cause repeated fights and sometimes, physical violence. Studies have shown that 34% to 53% of problem gamblers have resorted to physically harming their loved ones.

The children of compulsive gamblers may also develop similar addictions

Financial losses: Many websites lure users by offering them free-to-play versions. Once users get introduced to a game, they get more comfortable placing real bets. While the free-to-use versions are often programmed to be in favour of the user, the odds tip once real money is involved.

Increase in suicides: A major reason why states have moved to ban online gambling is the increased spate of suicides that have been taking place. While a 36-year-old man ended his life after losing lakhs in online games in Puducherry, a man from Chennai died by suicide after losing 8 lakhs on gambling, while another person killed himself after losing all his savings, in July this year.

Lack of regulation: While many states have their own laws governing gambling and gaming, there is much ambiguity. Many of these sites operate in countries where online gambling is legal, but regulations are not defined. Even if something goes wrong, legal action is often impossible because it is difficult to identify where it is located or who is operating the online casino/gambling site.

Beyond bans

Government thinktank NITI Aayog is seeking public comments on its draft guidelines regulating fantasy sports, nationally. In its recent report titled Guiding Principles For The Uniform National-Level Regulation Of Online Fantasy Sports Platforms In India, it has proposed uniform country-wide regulations on fantasy gaming sites.

However, NITI-Ayog has also stated that banning fantasy sports may not be the ideal option.

Reasons for this range from financial (online fantasy sports could attract FDI of more than 10,000 crores over the next few years), job creation (As per a PricewaterhouseCoopers India report, the fantasy sports industry has the potential to generate 5000+ direct and 7000+ indirect jobs in the next 2-3 years) to hampering innovation.

The report, instead, talks of creating a safe harbour for such games of skills. This could be through the creation of a single self-regulatory body for the online fantasy sports industry. The need of the hour is also a uniform legal framework that such platforms need to follow.