While sports betting remains illegal in India, betting on online fantasy sports (OFS) has been the biggest growth area of the country’s online skill-based gaming industry.
It’s the one sector of online gaming in the country that hasn’t benefited from the extensive lockdowns, seeing a sharp downturn in activity as actual sports tournaments evaporated.
However, with the imminent return of the India Premier League cricket, fantasy sports are expected to bounce back with a vengeance. One illustration of just how far this nascent industry has come is the emergence of the largest player in the market, Dream 11, as the lead sponsor of the league, knocking off household names such as mobile company Vivo and PepsiCo.
“Indian Premier League cricket is by far the most popular sporting event in India,” says Ranjana Adhikari, a lawyer with Nishith Desai. “It’s the equivalent, or if not more, than the World Cup, it’s almost like a religion in India. Fantasy sports are looking forward to this as finally a live event.”
Prior to Covid-19, the figures for OFS had been impressive. According to a recent report by consultancy firm KPMG and the Federation of Indian Fantasy Sports gross revenues of OFS operators stood at 2,400 crore for the 2020 fiscal year, compared with 920 crore the prior year, an increase of about three times.
The user base of the platforms has surged from two million in 2016 to 90 million in 2019, with the number of platforms surging from less than ten to more than 140 operators at the end of last year.
Cricket is firmly at the centre of the industry accounting for about 85 percent of the market, with the IPL itself generating about 35 - 40 percent of the revenue.
Dream 11 dominates, with about a 90 percent market share. Backed by China’s Tencent, the startup was India’s first gaming unicorn, gaining a valuation of more than $1 billion.
A trail blazer in the market, the company also won a landmark court case in the High Court of Punjab and Haryana in 2017, establishing a legal basis for the industry.
Broadly speaking the ruling has been interpreted as giving legal blessing to OFS as a skilled-based game, whilst in practice, it was the specific business model that was approved.
Adhikari explains that in India, a skill game must be able to prove that it has a higher than 50 percent level of skill involved.
“Courts have looked at the format. With Dream 11, you make a team and there are certain rules you adhere to and there are restrictions. You are perhaps increasing the difficulty level in regards to sports betting,” she said. “If your business model follows that you have a good case.”
When it comes to actual sports betting, it remains a legal grey zone in India. A bill was put forward to parliament two years ago that pushed to establish a legal framework for the industry, however, that lapsed due to federal elections and has been pushed down the priority list.
“Sports betting is ‘perceptually’ not allowed rather than legally,” she argues. “There is an argument based on precedent that says sports betting should be allowed.”
An interesting step forward has been taken during Covid-10 when it comes to horse racing and online betting. Several turf clubs, including Bangalore, have requested to be permitted to accept online bets due to the lockdowns and have received authorization.
The spike in online gambling in India during the Covid-19 crisis has generated a high level of publicity across the country, sparking debate and push back over legality.
That said, so far there has been no serious challenge and the status quo remains, that in the majority of states skill-based games, such as OFS, eSports, poker and rummy are legal, even when played online for money.
“Online skill gaming in India was already on a growth trajectory in the first half of the calendar year and the last quarter has witnessed a major spike in the business,” said Roland Landers, head of the All India Gaming Federation. “The Industry is self-regulated and all the AIGF stakeholders, including its OFS members have adopted the self-regulation charter in their businesses.”
FIFS has expressed a similar view. It’s members follow a charter and are self regulating.
However, problems have arisen from offshore operators targeting the Indian market with games that push the envelope of what is skill-based and what is pure chance.
Legal experts say any company wishing to operate in the sector needs to take a highly prudent approach and seek legal counsel as to whether their business model will pass muster.