Betting on regulation

Although the Mudgal commission report, Lodha Commission report and even a Law Commission report have all recommended legalising gambling activities in India and regulating the sector, states, in recent times, have been hardening their stance against online gambling with bans. Against such a backdrop, NITI Aayog’s latest draft guidelines for online fantasy gaming signal a more pragmatic approach.

While the NITI paper’s focus is fantasy sports/games like Dream11, the policy, if implemented, can have broader implications. Even though most countries have legalised gambling, realising that it is difficult to curb the menace of illegal and underground gambling, India still relies on an almost 150-year-old law, the Public Gaming Act, 1867; the laws in most states, too, seek to clamp down rather than regulate.

In 2017, Telangana banned online gambling, and Tamil Nadu and Andhra Pradesh followed suit this year. Now, Karnataka is also mulling a ban. The NITI paper proposes light-touch regulation instead for online fantasy players, and granting of licences for those proposing a pay-to-play model. Following suggestions of a 2017 paper from Sports Law and Policy Centre (SLPC), it also calls for wider discussion on what may constitute games of skill, as the current regulation does not provide a concrete framework.

The Supreme Court, in K Satyanarayana, declared rummy a game of skill, and in KR Lakshmanan stated that “game of skill […] although the element of chance necessarily cannot be entirely eliminated, is one in which success depends principally upon the superior knowledge, training, attention, experience and adroitness of the player”. But, gambling is still viewed by the courts as res extra commercium or outside the purview of protection from the Constitution on free trade. In one case, a Delhi district court opined that playing skill-based games for money in the virtual space renders them illegal.

A 2015 Nagaland law, which clearly defines skill-based gaming and classifies them under twenty-three categories, including virtual fantasy games, could be a template to resolve the knotty issue. The 2018 Law Commission recommendations can be another—the commission recommends the introduction of licences for carrying out such activities and registration using Aadhaar or PAN-Card. It also suggests that gambling transactions be made cashless so that it is easier to trace the source of funds. Moreover, it advises the government to make laws on illegal betting and match-fixing stricter.

Countries like the UK have also followed this approach. India also needs to ensure that states get a fair share of revenues from gambling such that the tax is paid at the point of transaction. Whatever example the country may follow it needs to move fast in this direction. A PwC report highlights that online fantasy sports alone have the potential to generate Rs 7,000 to Rs 10,000 crore in taxes in the next five years and may attract Rs 10,000 crore in FDI over the next few years.