Why Regulation of Fantasy Sports Is a Revolutionary Move

The NITI Aayog guidelines draw a clear distinction between online games and fantasy sports.

4 min read

The legality of the Indian Fantasy Sports industry, most often, is misrepresented. Furthermore, we often end up confusing fantasy sports with online games. The recent draft guidelines by NITI Aayog in their report, titled ‘Guiding Principles for the Uniform National-Level Regulation of Online Fantasy Sports Platforms in India’, recommends regulating Online Fantasy Sports (OFS) platforms in India through a single-purpose fantasy sports industry body (Self-Regulatory Organisation).

The guidelines draw a clear distinction between online games and fantasy sports and underlines the impact of OFS on sports and overall economy in India.

Uniform Regulations

Recently, certain Indian states have banned ‘online gaming’. Since there’s no regulatory framework, fantasy sports are often treated as online games. As a result, this ban affects them too. However, the fact is that unlike gaming, fantasy sports are entirely dependent on the outcome of real-world sporting events. To this end, the NITI Aayog report distinguishes fantasy sports from online games.

As different states have different laws governing OFS platforms in India, the report points out that this may result in “inconsistent experience” for users and might prevent sports fans from actively engaging in fantasy sports.

Besides, having laws that vary from state to state can also lead to problems in the event of dispute resolution. This is where having a self-regulatory body will make all the difference.

While batting for creation of a self-regulatory organisation (SRO) for fantasy sports, the guidelines say, “A single self-regulatory organisation for the fantasy sports industry should be recognised by the Government. Such self-regulatory body should be a single-purpose fantasy sports industry body and have a membership of OFSP operators who, in aggregate, have as their registered users at least 66% of the registered fantasy sports users in India.”

Reduce Burden on Courts

Since 2017, multiple High Courts and the Hon'ble Supreme Court of India have adjudged Fantasy Sports as a skill-based engagement platform and has accorded protection as a legitimate business under Article 19(1)(g) of the constitution of India. A recent judgement by a division bench of the Hon’ble Rajasthan High Court examined the impact of self-regulation on ensuring that the rapidly growing space of online fantasy sports, long recognised as an important growth area, with significant follow-on effects on sports fan engagement, are skill-based. The judgment largely reaffirms the long-held position that OFS, where the elements of skill clearly predominate, as has been held repeatedly, including by the Punjab & Haryana High Court, the Supreme Court’s dismissal of the Special Leave Petition filed against the said judgment of the Punjab & Haryana High Court, Bombay High Court and the Rajasthan High Court.

The creation of a uniform regulatory framework and SRO has the potential to support the judicial determinations, reduce the burden on the courts and concurrently achieve the objectives of public interest and consumer protection.

Protect User Interest

The number of users participating in online fantasy sports in India has grown at a compounded annual growth rate of 212%, from 2 million users in June 2016 to 90 million users in December 2019. The OFS industry is booming but with lack of policy clarity and absence of uniform regulations. It is imperative to secure the industry and the users of OFS 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 NITI Aayog believes that a principle-based policy implementation for the fantasy sports industry is necessary to promote growth and innovation while securing consumer interest.

Such an approach could help ensure that the fantasy sports industry operates in a manner that continues to benefit and protect the interests of consumers while maintaining an environment that is supportive of innovative operators that follow good governance practices and protocols on responsible conduct with their users.

There is a need for uniform operating standards based on sound principles and best global practices. A self-regulatory organisation, if appointed, will establish an independent grievance redressal mechanism to handle consumer/user complaints against OFS operators as well as any disputes that arise between or relating to OFS platforms.

Promote ‘AatmaNirbhar Bharat’

The report underlines the formal recognition of the fantasy sports sector along with principle-led governance that would allow the growth of Indian companies. These guidelines will enable Indian OFS operators to focus on innovation, achieve scale and expand their operations in a clear and principle-based regulatory environment, thereby, achieving the mission of the ‘AatmaNirbhar Bharat’ Initiative and the Honourable Prime Minister’s vision of Indian-made and developed applications flourishing and succeeding in India and outside India as well.

This first-of-its-kind move by NITI Aayog that will set precedence for growth and development of emerging technologies in India.

It is important to set up light-touch regulatory frameworks that can complement the dynamic nature of disruptive technologies.

Into the future

Due to 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.

Whether it’s sports fans, fantasy sports platforms, sports leagues, athletes or the government, regulation of the fantasy sports sector and the appointment of a dedicated self-regulatory body will benefit all stakeholders.

On one hand, this move will boost sports consumption by giving equal access to fans from across the country to connect with sports they love. On the other, it will not only help do away with the legal ambiguities faced by the fantasy sports industry but also prove beneficial to the country’s economy.

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Topics:  Fantasy sports