Legality of Dream 11

6th March, 2020 - 7:46 am Categories: Legal Issues 0 Comments

Dream 11, arguably the most successful online fantasy sports platform in India, has had its fair share of legal controversy. The legality of Dream 11 has always been in question and contended in various Courts throughout the country. The general stance taken by courts, while dealing with legality of Dream 11, has been that online fantasy gaming conducted by Dream 11 is a game of skill and not chance, hence it does not amount to gambling under the Public Gambling Act, 1867.

The first case challenging the legality of Dream 11 was back in April 2017, when an advocate, Varun Gumber had filed a case against Dream 11 to initiate criminal proceedings, in the Punjab & Haryana High Court but it was rejected by the single bench of the Hon’ble Court. The Court was of the view that online fantasy sports carried out by Dream 11 do not amount to gambling since there is a substantial degree of skill attached to it. There are various factors that have to be taken into consideration by the users of this online fantasy game platform, such as statistical performance of the players, previous records, weather conditions etc. There was a Special Review Petition filed against the order, but the Supreme Court upheld the decision of the High Court dismissing the petition. The order of the High Court was seen as a significant boost to the emerging fantasy sports industry in India, since it was the first time that any High Court had meticulously analyzed the system of fantasy sports and ruled that these fantasy sports were game of skill and completely legal, irrespective of the fact that there was money involved in it.

In 2019, there was a Public Interest Litigation (PIL) filed in the Bombay High Court by Advocate Gurdeep Sachar, contending that the online gaming by Dream 11 has components of chance involved and conducted illegal betting/gambling activities in the name of fantasy sports and hence, should come under the ambit of gambling, as well as also accusing it of GST (Goods and Services tax) evasion, by wrongfully classifying itself under entry 998439 and paying only 18% rather than paying 28%, hence violating the provisions of the GST Act, 2017. However, the Bombay High Court, quashed the PIL and stated that the fantasy online sports does not amount to gambling or betting since there is skill exercised by the users in judgment and attention of players and teams and moreover, the result is not dependent on the winning or losing of a particular team in the real game. With respect to matters of tax, the court held that Dream 11 was not wrong in classifying itself under entry 998439(that covers online games intended to be played on the internet with a subscription fee or pay-per-play fee) and there cannot be tax evasion since it is not gambling and only gambling was excluded from the above entry, hence Dream 11 was taxed correctly at 18% as per the GST Act.

There was another PIL filed in the Rajasthan High Court in February 2020, against the state of Rajasthan and Dream 11 wherein it was contended that Dream 11 cheated public and were culprit of promoting gambling and betting activities and hence a criminal proceeding should be initiated against them and that the state of Rajasthan should be ordered to stop this illegal game. However, the court reiterating the decision of the Punjab & Haryana High Court and Mumbai High Court held that the fantasy sports by Dream 11 were definitely game of skill and falls outside the ambit of betting and gambling as per the Public Gambling Act. The Hon’ble Court clearly and indisputably rejected the request of initiating criminal charges against Dream 11.

The Court ultimately stated that the issue of Dream 11 having an element of betting or gambling is no more res integra i.e. it is not an untouched matter as the same has been held to not constitute gambling in cases dealt by the Punjab & Haryana High Court and the Bombay High Court and moreover, the special leave petitions rising from these cases has been dismissed by Supreme Court as well. Hence, there is no question as to the legality of Dream 11, at least as of now. These cases have provided a momentous relief, not only to Dream 11 but also to the gaming sector, in general, by ruling that fantasy sports are games of skill and hence, there cannot be any question on legality, at least on the matter that whether they fall under the ambit of gambling or not.

Author: Sudhansu Sahoo, Legal Associate at Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at  sudhanshu@khuranaandkhurana.com.