Arun Prabhu , Amrit Mathur
Niti Aayog’s draft guiding principles on their regulation have the potential to drive innovation and growth of the industry and enable India to emerge as a global hub for fantasy gaming.
The draft ‘Guiding Principles for the Uniform National-Level Regulation of Online Fantasy Sports Platforms in India’ proposed by Niti Aayog have fuelled much discussion around the regulation of online fantasy sports.
As they are played online, usually on mobile devices, online fantasy sports tend to be confused with a diverse category of activities loosely termed online gaming, which practically range from games of chance to sports betting.
Driven by increased mobile internet penetration and user engagement during the pandemic, the focus on this space has increased of late. Unfortunately, as in many cases where dissimilar things are lumped together, not all of this attention has been positive. Incidents motivated by short-term profit and unconcerned with legality or protection of users have been witnessed, highlighting the urgent need for intelligent regulation.
Fantasy sports as a concept originated in academia as informal baseball fan leagues and have evolved into effective means for continuous fan engagement and growth of real-world sports. They serve essentially as a technology-enabled platform, offering sports enthusiasts a more engaging experience by elevating them from being mere viewers to active participants in the sport. Fuelled by improved internet connectivity and rapid proliferation of smartphones, fantasy sports today boasts of a massive user base of over 100 million.
Their appeal also stems from their unique propensity to encourage users to test their knowledge and acumen of their favourite sport against fellow enthusiasts. The players are required to rely on their adroitness to be able to create a team that they think will perform the best in the upcoming real-life match. Statistics show that 80% users of fantasy sports participate in contests for free, purely as a means of entertainment and to engage in their favourite sport. Even for users who participate in paid contests, the average ticket size is as low as ₹35 and more than half of such users win back their fees or more. Interestingly enough, more than 99% of all fantasy sports users have either won or lost less than ₹10,000 net in their lifetime. Fantasy Sports are intrinsically non-addictive and are consumed by a relatively more mature audience base, between the ages of 25 and 40. A report by Kantar and the Federation of Indian Fantasy Sports (FIFS) reveals that 60% of the users of fantasy sports started watching and following more sports than before and 59% of the users started watching new types of sports. This increase in viewership and revenue has also made sports a far more remunerative and appealing prospect for athletes.
Fantasy sports put the fans back at the centre-stage of all sporting events. They ensure that the interest of viewers drives the growth of the sporting industry in India. Recently, Dream11, the biggest fantasy sports platform in India, sponsored the Indian Premier League, which is the most prestigious cricket league hosted in the world today. This is an example of how the collective strength of sports enthusiasts and fans can drive the entire sports industry and empower it to become self-sufficient.
This unique nature of fantasy sports has also resulted in their recognition as a differentiated category under law. While legislation in the space is notoriously antiquated, inconsistent, and focussed on prohibiting gambling, the actual playing of sports and games involving skill has long enjoyed protection. Recent legislative initiatives in south India, driven by concerns around online gambling and their effect on youth, have blurred some of these lines.
Fortunately, online fantasy sports have been examined at length by various courts, and the evident requirement of skill, knowledge and adroitness to play them has resulted in their being classified as a protected category under the law.
Additionally, the existing self-regulatory regime to which a vast majority of online fantasy sport operators have committed themselves is sufficiently protective of user interests. The all too often quoted bogey of fantasy sports being used as a proxy for sports betting has also been soundly refuted by these self-regulation rules.
Similar to their physical counterparts, the operators of online fantasy sports have been early movers in ushering in responsible and effective self-regulation.
The Niti Aayog’s discussion paper, which proposes several important guardrails around advertising, gameplay formats, responsible gaming, independent evaluation, grievance redressal, and perhaps most importantly, regulatory certainty and consistency, is a welcome step in the evolution of this industry.
The emergence of fantasy sports and their increasing popularity have also made India a very attractive proposition for investors. The industry has already received ₹1,000 crore in foreign investment and is expected to attract an additional ₹10,000 crore in the next five years. Furthermore, the industry is projected to cumulatively contribute ₹13,500 crore in taxes to the Indian government and create additional 12,000 jobs through direct and indirect employment in the next few years.
Niti Aayog’s guiding principles come at a timely juncture and propose progressive reforms that will accord fantasy sports a national and uniform safe harbor that is conducive to innovation and growth of the industry. Under a supportive and facilitating regulatory framework, fantasy sports have the potential to drive tremendous economic growth and enable India to emerge as a global hub for the industry.
Arun Prabhu and Amrit Mathur are, respectively, partner, Cyril Amarchand Mangaldas and former general manager, Board of Control for Cricket in India.
Courtesy - Livemint.
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