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Gambling or gaming? Unpacking real money fantasy sports

Gambling or gaming? Unpacking real money fantasy sports
Photo Credit: 123RF.com
13 Apr, 2021

Do you think Queen was predicting the future of gaming when they asked “Is this the real life? Is this just fantasy?”  

Maybe, maybe not.  

Now that cricket entertainment festival IPL is in full swing, fantasy gaming platforms are all the rage. We’re not just saying that. As per a Deloitte India report, the online gaming sector is expected to grow at a compounded annual growth rate (CAGR) of 40% to $2.8 billion by 2022, from $1.1 billion in 2019. 

Apps such as Dream11, Mobile Premier League, and My11Circle, which are backed by investors such as Tiger Global Management and Falcon Edge, allow fans to create their own cricket ‘dream teams’, and win cash prizes based on how the players perform in real matches.  

Sounds fun? Not everybody thinks so. 

Google prohibits many of these platforms on the Play Store and several gaming industry stakeholders, including GoQii founder and FAU-G backer Vishal Gondal, have red-flagged their existence. 

“There is nothing called real money gaming. It is a made-up word in India. It doesn’t exist anywhere else. It is gambling," Gondal told TechCircle in an earlier interview

But can we classify all real money games, including fantasy sports, under the umbrella of gambling? Well, it’s a grey area.

Real money games let you win cash as rewards. In casual, free-to-play games, the reward is digital tokens or points, but there is actual money at stake. The players pay a small entry fee, pooling funds for the winner to take. 

Now, real money games are broadly of two types – games of skill and games of chance. 

In the former, the cash reward is determined by the user’s knowledge, practice, attention, and experience.  

For instance, if five players pool Rs 50 each for a winner-takes-all quiz, it is a game of skill because the player who answers most questions correctly has more knowledge than the others. 

In games of chance, the outcome is based, well, on chance.  

If people spend Rs 50 to buy a lottery ticket, or to play blackjack or roulette, it is a game of chance because the outcome is based purely on luck. 

Roland Landers, CEO of All India Gaming Federation (AIGF), which focuses on the skill-based gaming ecosystem, points out that there is a marked difference between games of skill and chance. 

“Just because games of skill are played for money does not make it gambling or betting. The Indian regulatory framework has clearly differentiated between games of skill and games of chance. Games of chance are considered gambling as it involves luck rather than skill and thus it is expressly prohibited by the law, wherein games of skill are considered legal across most states including digital and online,” he told TechCircle.

Gambling is illegal in India under the Public Gambling Act (PGA), 1867. 

So... are fantasy sports games gambling or not? The answer will bowl you over. 

Fantasy sports titles would ideally fall in the skills category.  

These gamers don’t bet on the outcomes of any set team. Instead, they pool in funds to set up their own dream teams, which can have players from rival teams, and are created based on the gamer’s knowledge.  

In October 2020, the Rajasthan High Court dismissed a plea to ban Dream11 with similar logic.  

"The result of fantasy game depends on skill of participant and not sheer chance, and winning or losing of the virtual team created by the participant is also independent of the outcome of the game or event in the real world,” the court said. “We hold that the format of online fantasy game is a game of mere skill and it has protection under Article 19 (1) (g) of the Constitution.” 

Dream11, operated by Mumbai-based Dream Sports, claims to have over 10 crore users, with a valuation close to $5 billion. 

Cinderella knew when to leave the ball. Be like Cinderella.  

Irrespective of whether these games are gambling or not (#NotAllGames), there is real money involved. And when you get a taste of free money, it can be addictive (looking at you, UPI cashback rewards). 

We all know fantasy game players are just trying their luck to see if anything sticks. This can be potentially problematic.  

This has also led states, such as Andhra Pradesh, Assam, Odisha, Telangana, Tamil Nadu, Nagaland and Sikkim, to amend the 150-year-old PGA and ban fantasy sports and other real money games. 

To promote responsible growth of the nascent industry, government think tank NITI Aayog in December 2020 issued draft guidelines. 

It proposed that inter-state self-regulatory organisations be set up with uniform rules and regulations, such as age limits, customer complaint resolutions, expenditure tracking and financial risk warnings. 

“The space needs regulatory clarity and the interpretation of the Indian Gambling Act needs to be advised, especially given how old it is,” Madhur Singhal, practice director for technology and internet at Praxis Global Alliance, said.

“Since money is involved, it will be prudent to have rules around how these games should be advertised and how users can be invited to participate in RMG fully responsibly and without it being mis-sold in hope of winning a lot of money,” he said. 

The real money gaming market, Singhal said, is growing at 40% CAGR, with about 30 million gamers engaging in fantasy sports. The sector is expected to cross $1 billion revenue this year in India.  

The global fantasy sports space, meanwhile, is expected to balloon from $19 billion in 2020 to $48 billion by 2027, as per a KPMG report.