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NITI Aayog proposes self-regulation of fantasy sports platforms

Central government think tank NITI Aayog has proposed a government-recognised self-regulatory organisation for online fantasy sports platforms such as Dream11, Mobile Premier League, My11Circle, etc,. The SRO will be responsible for ensuring that fantasy gaming companies stay within legal limits, follow rules, resolve customer complaints, and even reach out to state governments that view fantasy gaming unfavourably. 

In a discussion paper released on December 5, the body said the government should consider a “light touch” regulatory framework and that government recognition of fantasy sports industry is in “public interest” and having an identity “distinct from other games of skill and legally differentiated from betting and gambling”. The paper laid down the guiding principles for self-regulation; these principles “may be treated as a uniform ‘regulatory sandbox’ and may be recalibrated based on ongoing innovations and developments in the sector”, NITI Aayog said. 

Prepared by the Frontier Technology Vertical at NITI Aayog, the discussion paper was by “extensive stakeholders consultations”, including from industry experts and lawyers. Comments can be sent to adviserdma-niti@gov.in. The current deadline for sending comments is December 19.  

Safe harbour from state laws, ensure contests are skill based

The think tank highlighted differential state laws around gaming/gambling, that eventually end up impacting the operations of fantasy sports. Dream11, perhaps the largest fantasy gaming service, has been recognised as a game of skill by several high courts. According to its proposal, the self-regulatory organisation should have as its members online fantasy sports companies that capture 66% of the registered fantasy sports users. Member companies should enjoy safe harbour exemption from legal ambiguity and differential treatment under state laws. This exemption should define the parameters and mechanisms that make a fantasy sports game a game of skill. 

While OFSPs [online fantasy sports platforms] operate through online media on a pan-India basis, their regulation proceeds under varied State-wise regulatory regimes. This means that fantasy sports users’ interests of transparency, OFSP operator integrity, and fairness may vary from state-to-state, resulting in an inconsistent experience and the risk of forum/jurisdiction shopping. This may even deprive sports fans in some states of their right to engage actively on these OFSPs. 

The paper proposes that all fantasy sports platforms only offer contests that are skill-predominant, i.e. where winning mostly depends on the player’s skill and not chance. This skill/chance differentiation in Indian law and various judgments passed in recent years are what legally separate fantasy sports from gambling or betting. It has been responsible for the burgeoning of the entire industry, beginning with the Varun Gumber case in the Punjab & Haryana High Court that ruled Dream11 as being a game of skill. The paper proposes that the SRO ensure that fantasy sports platforms stay within this definition. 

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OFSP operators will be required to keep statistical data to track player/user performance on their platforms and submit the same to the self-regulatory organisation periodically to demonstrate that the formats deployed by the operator are skill predominant.

To offer a real-money contest that is not a game of skill as defined by jurisprudence, a company will have to get the approval of an independent evaluation committee. This Committee will be formed by the SRO and will undertake “statistical and legal evaluation” to ascertain whether winning in the contest is dominated by skill. Rules and recommendations by the Committee to contest formats will be binding on the companies. 

Importantly, the think-tank lays down that the SRO should reach out to state governments asking for immunity for fantasy sports platforms (that are self-regulating) from criminal prosecution. Currently, several states do not allow fantasy games to function, including Assam, Odisha, Telangana, Andhra Pradesh. 

A fantasy sports contest should generally relate to and emulate an entire real world sports contest “as closely as possible” and “not infuse elements of chance” that are not present in the real world, unless it has been specifically waived by an evaluation committee. 

Complaints redressal mechanism

The SRO should also establish a grievance redressal mechanism to handle customer complaints as well as disputes between or around fantasy sports platforms. The organisation should be governed by an independent oversight board comprising people in governance, law and administration, and other elected or appointed members. The board will be responsible for implementing uniform guidelines and principles, and also periodically review their operations. 

The companies cannot offer real-money fantasy sports contests to children below 18 years of age. 

Advertising, promotions of fantasy sports

Fantasy sports platforms should not offer or advertise gambling services or games of chance on their platforms, and should put on place industry standard policies and measures to prevent misuse of their platforms. 

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In line with recent guidelines by the Advertising Standards Council of India, advertising, promotions, and endorsements of fantasy sports should not represent or imply assured winnings or project fantasy sports as anything other than amusement and a fan engagement activity. Playing fantasy sports cannot be presented as a source of livelihood, lottery, or an investment opportunity. “In the same spirit, vigilance should be exercised over claims made by third parties involved with training or offering other services to users and organizing promotional events relating to fantasy sports contests,” it said. 

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