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Gaming LawsDifferential Treatment of Game of Chance v. Game of Skill In India

June 19, 2020by GLC & Partners

Indian laws differentiate between games of skill and games of chance.

With respect to games of chance, judicial precedents have held that a game of chance is a game that is determined entirely by mere luck, the result of which is wholly uncertain and doubtful and, a human being cannot apply his/her mind to estimate the result.

Whether a game is of chance or skill is a question of fact to be decided on the basis of facts and circumstances of each case. The Indian courts have recognised that no game is a game of pure skill alone and almost all games involve an element, albeit infinitesimal, of chance.

The Hon’ble Supreme Court of India (i.e. the Apex Court) has interpreted the words “mere skill” to include games which are preponderantly of skill and even if there is an element of chance, if a game is preponderantly a game of skill, it would nevertheless be a game of “mere skill”.

For example, the Supreme Court in the case of K.R. Lakshmanan Vs. State of Tamil Nadu and Ors [AIR 1996 SC 1153] while deciding the question that whether a horse-race run on the turf of the club is a game of ‘chance’ or a game of “mere skill” held that the “horse-racing is a game where the winning depends substantially and preponderantly on skill”. The Court also said that “we have no hesitation in reaching the conclusion that the horse-racing is a sport which primarily depends on the special ability acquired by training. It is the speed and stamina of the horse, acquired by training, which matters. Jockeys are experts in the art of riding. Between two equally fast horses, a better trained jockey can touch the winning-post.”

Another example is that of Rummy wherein the Supreme Court in State of Andhra Pradesh v. K. Satyanarayana and Ors. [(1968) 2 SCR 387] concluded that “Rummy, on the other hand, requires certain amount of skill because the fall of the cards has to be memorised and the building up of Rummy requires considerable skill in holding and discarding cards. We cannot, therefore, say that the game of Rummy is a game of entire chance. It is mainly and preponderantly a game of skill”.

Treatment of Fantasy Sports Games in India and the landmark ruling of various courts in “Dreams 11” Case

As per our understanding, fantasy sports games are games which involve users drafting fantasy teams based on certain conditions from a list of players scheduled to play live games on a given day. The users pay an entry fee to enter a contest and it is pooled in for distribution among the users after deduction of a service/administrative fee by fantasy sports games providers. The users draft their teams based on their application of knowledge (gathered through systematic research), attention, experience and skilfulness regarding the relevant sport. Based on the performance of the players selected by the user to draft his/her team, the user collects points. The users are ranked based on the points their selected players accumulate throughout the contest as per their on-field actions and scoring metrics for the contests.

In 2017, the High Court of Punjab and Haryana (“P&H High Court”) in the case of Varun Gumber Vs. Union Territory of Chandigarh and Ors [2017(4)RC R(Criminal)1047] became the first Indian court to rule a fantasy sports game (Dreams 11 in that case) to be a game predominantly based on skill. The P&H High Court observed that” It has been found that horse racing like foot racing, boat racing, football and baseball is a game of skill and judgment and not a game of chance. The aforementioned finding squarely applies to the present case. Even from the submissions and contentions of respondent-company and factual position admitted in writ petition, I am of the view that playing of fantasy game by any participant user involves virtual team by him which would certainly requires a considerable skill, judgment and discretion.”

In 2019, An appeal by way of special leave petition was filed in the Supreme Court of India for the aforesaid case, however, the same was not entertained by the Court and was accordingly dismissed.

Further in 2019, a similar finding was also reached by the Bombay High Court in Gurdeep Singh Sachar Vs. Union of India and Ors.[ (2019) 75 GST 258 (Bombay)] the Court observed that, – “It can be seen that success in Dream 11’s fantasy sports depends upon user’s exercise of skill based on superior knowledge, judgment and attention, and the result thereof is not dependent on the winning or losing of a particular team in the real world game on any particular day. It is undoubtedly a game of skill and not a game of chance. The attempt to reopen the issues decided by the Punjab and Haryana High Court in respect of the same online gaming activities, which are backed by a judgment of the three judges bench of the Apex Court in K.R. Lakshmanan (supra), that too, after dismissal of SLP by the Apex Court is wholly misconceived.”

A special leave petition was filed by Union of India against the Bombay High Court judgement. However, the same was also dismissed by the Supreme Court. In their order dated December 13, 2019, Justice R. F. Nariman and Justice S. R. Bhat however, allowed the Union of India to file a limited review petition before the Bombay High Court with respect to the issue of Goods and Service Tax (“GST”) evasion.

Another petitioner approached the same bench to seek a review of the Bombay High Court’s views on the game being a game of skill, but was dismissed by the Supreme Court with a stern observation that: “It is reiterated that in accordance with our order dated 13.12.2019, the only scope of the review filed in the Bombay High Court is with respect to GST and not to revisit the issue as to whether gambling is or is not involved.”

The Rajasthan High Court in the matter of Chandresh Sankhla vs The State Of Rajasthan [(2020 SCC Online Raj 264)] while deciding the Public Interest Litigation (PIL) before it observed that, – “This Court finds that the issue of treating the game “Dream 11” as having any element of betting/gambling is no more res integra in view of the pronouncements by the Punjab and Haryana High Court and Bombay High Court and further the SLPs have also been dismissed against the orders of these High Courts.”

Various courts in the above -mentioned cases have held that fantasy sports games are games which certainly requires a considerable skill, judgment and discretion.