Central government thinktank NITI Aayog released a draft position paper on Friday, titled ‘Guiding Principles for the Uniform National-level Regulation of Online Fantasy Sports Platforms in India’. The document recognises the stupendous growth of digital games and enormous potential for contributing to the nation’s economic development while proposing certain overarching guidelines for bringing clarity, certainty, and stability to the online fantasy sports sector.
Coming in the backdrop of the digital skill games sector facing several regulatory and judicial headwinds over the last few months, including bans in some states; PILs seeking punitive action against gaming companies and stricter advertising norms suggested by the Information & Broadcasting Ministry; the draft document, which is open for suggestions and feedback until 19th December, envisages the creation of a certain national level safe-harbour for fantasy sports games.
Access Outlook's Cover Story On Online Gaming HERE
According to reports, it is likely that a final paper is likely to be prepared by the Ministry of Electronics and Information Technology, which is the line ministry for online activities, post which the final paper might be placed before the cabinet for its approval.
The paper notes the contribution of online fantasy sports towards revenue generation, stating that online fantasy sports companies has the potential to contribute over Rs. 3,000 crores in GST and Rs. 7,000-10,000 crores in direct taxes over the next five years, while also generating thousands of jobs over the next few years.
The note also states that the sector possesses the ability to garner more than Rs. 10,000 crores in Foreign Direct Investment (FDI) to the country.
Despite the obvious value addition done by the sector, the report notes that there is a lack of proper recognition for the industry, with companies operating in this space having to take shelter under an undefined exception of ‘games of skill’ provided under most state gambling laws.
Given this ambiguity, the paper goes on to state that "there is a public interest in the fantasy sports industry receiving Government recognition as an industry and having its own identity. This identity is distinct from other games of skill and legally differentiated from betting and gambling."
ALSO READ: Legality Of Online Gaming Business Models
NITI Aayog’s note goes on to state that there should be national-level safe-harbour guidelines to define and regulate formats of the game, protect the interests of the consumers and ensure transparency and accountability.
To this end, it proposes that the government recognises a self-regulatory body, having an independent board of multi-disciplinary members and have membership of operators cumulatively accounting for at least 66% registered fantasy sports users in India.
Some of the guiding principles proposed by NITI Aayog for fantasy sports companies include (i) requirement to comply with all laws and regulations of India; (ii) obligation to offer only skill-predominant fantasy sports formats, which are either judicially recognised or approved by an independent evaluation committee of a government recognised self-regulatory industry body; (iii) have games that pertain to at least one entire real life event; (iv) offer real money games to only persons above 18 years of age and avoid offering any gambling or betting services, etc.
The paper also advocates that all fantasy sports providers should comply with standards prescribed by the Advertising Standards Council of India (ASCI)/other relevant bodies and be fair and truthful, while portraying the game only as a means of amusement and not as a source of sustenance or livelihood.
Need for broader discussion
NITI Aayog’s efforts to give recognition to the sunrise gaming sector is certainly a step in the right direction and indicate the forward-looking vision of the current government, which seeks to create digital entrepreneurs, nurture the startup ecosystem and create an Aatmanirbhar Bharat.
The guidelines can also be seen as a good initiative to restore investor confidence of marquee funds who have invested in this sector, but were left with a great deal of uncertainty after a spate of state-level bans on all kinds of online games and ongoing litigations about the legality of game formats in various courts.
However, there are few concerns with the proposed guidelines, as well, which would hopefully be addressed by NITI Aayog during the wider stakeholder consultation.
First, questions might be raised as to why the guidelines only cover online fantasy games and not other recognised digital skill-based games, which also satisfy revenue generation, employment and other economic arguments advanced in the paper.
The efficacy and rationale of carving out fantasy sports as a sui generis category out of the broader category of digital games of skill is something that needs to be reflected upon and requires detailed consultation.
Secondly, since gambling and betting along with sports, entertainment and amusements are all state subjects, keeping in mind the spirit of cooperative federalism as enshrined in the constitution, it would be worthwhile to engage in wider stakeholder consultation by soliciting suggestions from all state government and union territories as well.
Given that gaming is currently governed by state legislations where all online skill games for stakes are made illegal by amendments to the State Gaming Acts are banned by a few states, granting immunity from criminal prosecution to fantasy sports providers in such states as envisaged by the Draft Guidelines might only be possible through an amendment to such existing state gaming law by the state legislatures.
Further, the ministries governing the sector at the central level, i.e. Ministry of Electronics and Information Technology, Ministry of Law & Justice, Ministry of Finance, Ministry of Consumer Affairs, etc. should also be taken on board to ensure that the guidelines are framed after the broadest possible deliberation and consultation.
It would also be ideal if the overarching guidelines proposed by NITI Aayog for all digital games are eventually converted into a central policy framework or legislation by the line ministry along with the formation of an independent regulator.
(Jay Sayta is a law graduate and public policy analyst. He has advised several gaming companies on legal, regulatory, policy and strategic issues. Views expressed are personal.)