As far as the rules and regulations with respect to online gaming including fantasy sports are concerned, no specific rules and regulations have been laid down by the central government. However, certain powers have been conferred upon the states by the Constitution of India with respect to regulate gambling and betting within the territory of state and using the said powers, few states like Meghalaya, Sikkim and Nagaland have imposed certain restrictions on online gambling and betting.

A big question about fantasy sports is whether they’re a type of gambling or betting. Gambling usually means betting money on the chances of something happening. The Hon’ble Supreme Court of India in it’s judgment dated 12.01.1996 in the matter of Dr. K. R. Lakshmanan v. State of Tamil Nadu 1996 AIR 1153, 1996 SCC (2) 226 held that gambling is when you pay to have a chance at winning something. Games can be split into ones where luck matters most, ones where skill matters most, or ones that are a mix of both.

The Punjab and Haryana High Court in 2017, in the case of “Shri Varun Gumber v. Union Territory of Chandigarh and Ors”held that fantasy sports predominantly include the skill factor hence they cannot be considered as a game of chance.

In another judgment, Justice R.V. More in matter titled as “Gurdeep Singh Sachar v. Union of India, 2019” before the Bombay High Court has predominantly relied upon the analysis and findings of the Punjab Haryana High Court in the Varun Gumber case and also established that Dream11 and the fantasy sports services it provided fall under the definition of a game of skill.

Further, the Rajasthan High Court passed a similar judgement in “Ravindra Singh Chaudhary Vs. Union of India & ors, 2020” where the court decisively established that fantasy sports, particularly those offered by platforms like Dream-11, are games predominantly based on skill rather than chance.

The Hon’ble Supreme Court of India in the matter of Avinash Mehrotra Vs The State of Rajasthan & Ors in SLP (C) No. 011794 of 2021 has recognized fantasy sports like Dream11 as games of skill protected under Article 19(1)(g) of the Indian Constitution. Fantasy gaming is considered within the scope of Article 19(1)(g), which provides citizens the fundamental right to practice any profession or carry on any occupation, trade, or business.

Further, the Kerala High Court in “Play Games 24 X 7 Private Limited vs State of Kerala, 2021” quashed an amendment to a government notification issued under Section 14A of the Kerala Gaming Act, 1960 banning online rummy in the State, affirming that it is a game of skill regardless of whether it’s played for money. It was held that stakes do not change the nature of rummy as a skill game, which means it is legally protected as a business activity and not considered gambling.

The Karnataka High Court in the matter titled as “All India Gaming Federation Vs. State of Karnataka, 2022” strike down significant portions of the Karnataka Police (Amendment) Act, 2021, which banned online gambling and skill-based gaming platforms. The court held that the amendments banning online gambling and skill-based gaming platforms violated fundamental rights guaranteed under the Indian Constitution, including those related to trade and commerce, liberty, privacy, and freedom of expression.

Tamil Nadu government had passed Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022 to prohibit Online gambling and to regulate Online games in the State of Tamil Nadu.

However, this act was challenged in the Madras High Court but the Court in “All India Gaming Federation v. The State of Tamil Nadu, 2023” refused to strike down the act in its entirety, but ruled that the prohibition would apply only to games of chance and not to games of skill such as rummy and poker.

All India Gaming Federation v. The State of Tamil Nadu, 2023

The Madras High Court held that while the State has the authority to legislate against online gambling, which includes games of chance, it cannot extend this prohibition to games of skill like online rummy and poker. The judgment emphasized that rummy and poker are recognized as games of skill by previous legal decisions, both online and offline. The Court noted the State’s failure to provide compelling evidence to distinguish the skill element in online versions from their traditional forms. Therefore, the Court set aside the Act’s classification of rummy and poker as games of chance under its Schedule, suggesting that the State should regulate these games instead of prohibiting them, possibly through measures like setting reasonable restrictions on play. This decision underscores the distinction between games of skill and games of chance in the context of online gaming regulation, affirming the protection of games of skill from blanket prohibitions intended for gambling activities.

As far as the rules and regulations with respect to fantasy gaming are concerned different states have different laws for fantasy sports, which makes it confusing for people to know if it’s allowed or not. For e.g., a few states, such as Sikkim, Nagaland, and Meghalaya, have contemporary gaming laws and licensing regimes for online games, skill games, and fantasy sports.

Nagaland licenses online skill games, Meghalaya has a licensing regime for online skill games, and Sikkim licenses both online games of chance and skill.

Exemptions for Skill Games

Most state laws provide exemptions for games of “mere skill,” which are typically interpreted to mean games primarily based on skill.

Recent Legal Changes and Challenges

Some states, such as Telangana, Andhra Pradesh, Karnataka, and Tamil Nadu, have amended their gaming laws to either dilute or remove skill game exemptions and impose a blanket prohibition on games played for stakes.

Legal challenges have arisen against these changes. Some courts have struck down amendments, while others are still pending.

Gambling and Betting

A big question about fantasy sports is whether they’re a type of gambling or betting. Gambling usually means betting money on the chances of something happening. The Supreme Court of India, in the matter of Dr. K. R. Lakshmanan v. State of Tamil Nadu, held that gambling is when you pay to have a chance at winning something. Games can be split into ones where luck matters most, ones where skill matters most, or ones that are a mix of both.

Key points which need to be complied with

• Licensing and Renewal Duration: Licensing durations vary by state, with most licenses having a validity of five years. Renewals are often possible on application.
• Exemptions for Skill Games: Most state laws provide exemptions for games of “mere skill,” which are typically interpreted to mean games primarily based on skill. Some states, like Nagaland and Meghalaya, have lists of recognized games of skill.
• Recent Legal Changes and Challenges: Some states, such as Telangana, Andhra Pradesh, Karnataka, and Tamil Nadu, have amended their gaming laws to either dilute or remove skill game exemptions and impose a blanket prohibition on games played for stakes. Legal challenges have arisen against these changes. Some courts have struck down amendments, while others are still pending.
• Advertising Standards and Regulations: An organization in India called the Advertising Standards Council of India (ASCI) has created rules for how advertisements about online gaming should be made. They also made rules for ads about online games. These rules help to prevent ads from being confusing or inappropriate, especially when they’re shown to minors.

Legal Recognition of Fantasy Sports

The Supreme Court has recognized fantasy sports like Dream11 as games of skill protected under Article 19(1)(g) of the Indian Constitution.

The Rajasthan High Court has also observed that online gaming is not betting or gambling and has provided interim relief to an online gaming platform.

Article 19(1)(g) of the Indian Constitution:

Fantasy gaming is considered within the scope of Article 19(1)(g), which provides citizens the fundamental right to practice any profession or carry on any occupation, trade, or business.

Staying up to date with changes in regulations and legal developments is essential for maintaining compliance and resolving potential risks. Because the rules for gaming in India are complicated and always changing, it’s always advisable for gaming start ups like yours to talk to lawyers who know a lot about both gaming and starting businesses. This will help you understand and follow the rules better. It’s also important to keep up with any new rules or changes so you can follow them and avoid problems.

Key requirements and documents to comply with

• Company Registration: First we will have to register a Private Limited Company,  with the Registrar of Companies (RoC) in India. We will have to draft Memorandum of Association and Article of Association for the benefits of founders and investors.
• Trademark Registration: We will have to register a unique name and logo for branding of gaming start up with registrar trademark of India which will protect intellectual property rights related to the company.
• Gaming Licenses and Approvals: Depending on the type of games you might need licenses and approvals from regulatory bodies like the All India Gaming Federation (AIGF) or state-level gaming authorities. In 2023, the Ministry of Electronics and IT (MeitY) released a preliminary set of rules for online gaming in India. This action came shortly after the Central government assigned MeitY the role of overseeing and controlling the online gaming and e-sports sectors in the country. According to these rules, online games must register with a self-regulation organization. Only games approved by this organization will be permitted to legally operate in India. Companies running online gaming platforms won’t be allowed to involve betting on game outcomes. The rules also lay out requirements like mandatory verification through know-your-customer (KYC) procedures and a system to address complaints.
• Gaming Licenses: Some states in India have specific licensing requirements for online gaming platforms, while others might not have a clear framework. States like Nagaland, Sikkim, and Meghalaya have introduced licensing regimes for certain types of online skill games.
• Compliance with State Laws: Ensure your fantasy gaming app follows the laws of the state(s) you plan to operate in. Comply with any restrictions on the types of games allowed, the age of participants, and responsible gaming practices.
• Financial and Payment Regulations: Set up secure payment gateways for transactions. Ensure compliance with financial regulations and anti-money laundering (AML) laws.
• Terms of Use and Privacy Policy: We will have to draft clear terms of use, privacy policies, and disclaimers for your users. These documents should outline the rules of the game, data usage, and any associated risks.
• Contracts and Agreements: We will have to prepare contracts and agreements, such as partnership agreements, service agreements, with game developers, content creators, and other stakeholders.
• Intellectual Property Rights (IPR): In the realm of online gaming, intellectual property (IP) protection is crucial to safeguarding various aspects of your game, brand, and technology. Here’s an overview of the types of intellectual property protection that are relevant to online gaming:
• Trademark Protection: Trademarks are used to protect distinctive names, logos, symbols, and other identifiers associated with your game and brand. They help consumers identify and distinguish your products or services from those of others. Registering your game’s name, logo, and other distinctive elements as trademarks can provide legal protection against unauthorized use and imitation. Trademark protection extends to the game’s title, branding, character names, and other visual elements.
• Copyright Protection: Copyright protects original creative works, including the code, graphics, music, text, characters, and storylines used in your game. As soon as your game is created and fixed in a tangible form, it is automatically protected by copyright. However, registering your copyright with the relevant authorities provides additional legal benefits and avenues for enforcement. Copyright protection extends to the actual game code, visual assets, music, dialogue, and other creative elements.
• Licensing and Contracts: In addition to formal IP protection, legal agreements and contracts play a vital role in protecting your interests. Licensing agreements outline how others can use your IP, while contracts with developers, artists, and other contributors can specify ownership of created content.
• Domain Names: For online gaming, securing appropriate domain names that reflect your brand is important. This falls more under the realm of trademark protection.
• Funding Documents: If you’re seeking external funding, prepare pitch decks, financial projections, and other relevant documents for potential investors.
• Financial Records: Set up proper accounting and bookkeeping systems to maintain accurate financial records, which will be essential for tax compliance and investor relations.
• Tax Registration and Compliance: Obtain a Permanent Account Number (PAN), Goods and Services Tax (GST) registration, and comply with relevant tax regulations applicable to your business.
• Employment Contracts and Policies: If you plan to hire employees, create employment contracts and HR policies that comply with Indian labour laws.
• Security and Data Protection: Given the sensitive nature of user data in gaming, establish robust security measures and comply with data protection laws.
• Advertising and Promotion Guidelines: Understand the advertising and promotion guidelines set by bodies like the Advertising Standards Council of India (ASCI) for the gaming industry.
• Insurance: Consider obtaining business insurance, including liability insurance, to safeguard your start up from potential risks.