Karnataka’s Bill - well-intentioned but creates uncertainty: FIFS

Along with IAMAI, the Federation of Indian Fantasy Sports (FIFS) has also come out against the Karnataka Police (Amendment) Bill, 2021, which proposes to amend the gaming and police laws seeking to prohibit online gambling, betting and wagering in all forms.

In a statement issued, FIFS has said that said Bill, while being a well-intentioned legislation creates confusion and uncertainty for legitimate online fantasy sports businesses. While the government’s concerns maybe valid, however, the Bill appears to be misguided since it penalises legitimate businesses by treating them at par with illegal online gambling, betting and wagering platforms.

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FIFS’ legal experts have opined that the Bill runs contrary to a catena of judgments delivered by the Courts. In fact, vide judgment dated July 30, 2021 the Supreme Court finally upheld the validity of Online Fantasy Sports by stating that the issue of whether fantasy sports format amounts to gambling or betting or wagering is no longer res integra. Further, the Supreme Court also reaffirmed the judgments of the Rajasthan, Punjab & Haryana and Bombay High Courts, all of which upheld the validity of fantasy sports as being legitimate businesses entitled to protection under article 19(1)(g) and article 14 of the Constitution of India.

Going one step further the Rajasthan High Court vide judgement dated July 22, 2021, opined as follows:

“We are, therefore, of the view that offering of online fantasy sports in accordance with the Charter of the FIFS has already been judicially recognized as a business and consequently, entitled to protection under Article 19(1)(g) of the Constitution of India and the prayer seeking directions to the State Government to prohibit the same would be opposed to Article 14 and 19(1)(g) of the Constitution of India.”

Online Fantasy Sports is sui generis, that is, a unique and independent legal class of digital sports engagement platforms based on officially sanctioned real-live sporting events. It appears that the Bill intends to treat unequals equally, which would be in violation of Article 14 of the Constitution through an overbroad and ambiguous definition of ‘gaming’. Given the unique nature of fantasy sports, the FIFS members urge the government to respect and align with the judicial and constitutional protections provided to its business activities.

FIFS has many of its member companies with operating offices in the IT & ITES hubs where they are creating and developing software and services products and technologies for the fantasy sports sector. According to a report by NITI Aayog on Online Fantasy Sports, the sector has the potential to create over 12,000 additional highly skilled engineering jobs in the next few years, attract an FDI of over Rs 10,000 crore and contribute over Rs 13,500 crore in taxes to the government. FIFS and its members strongly believe that certainty is integral to the rule of law and hence the Bill needs to provide certainty and clarity to businesses, the investor community as well as consumers for the orderly growth and development of the industry.

“Needless to add, members of FIFS have been doing a yeomen service nationally and in the State of Karnataka by sponsoring, investing and building the sports ecosystem. Almost every major sports tournament, leagues, International, national level competitions have investments and partnerships with our member companies. Such confusing signals from the Karnataka government could result in impeding the development of sports in the State,” said the FIFS statement.

Today, India is the world’s largest market for Fantasy Sports by user base and the Indian entrepreneurs who have built these businesses epitomise Prime Minister Modi’s vision of AatmaNirbhar Bharat, that is, technology built in India, for India, by Indians. FIFS maintained that it is imperative that the State Government recognises that the unintended beneficiaries of this Bill would be the grey market platforms and offshore online gambling/ betting companies, which pose a serious risk to Indian users.

“Therefore, on behalf of the members of FIFS, we request the Karnataka government to remove any ambiguity or uncertainty in the Bill to ensure continuity and growth of the fantasy sports sector in the State,” the Fantasy Sports self-regulatory industry body urged.