Are Betting Games Based on Cricket and Fantasy League Games Nothing but a Source of Revenues for the Central Government?

Are games based on cricket and fantasy league games nothing but sources of revenues for the central government? Last month, SonyLiv, which had exclusive rights to the India-England Test series, bombarded viewers with advertisements of cricket gaming and betting companies. Many big cricket stars have deals with gaming companies to invite viewers, through advertisements, to play games online. These advertisements are being aired during the ongoing Indian Premier League (IPL) live telecasts as well.

The Indian government charges a 28% GST from these gaming companies and fantasy league matches. Besides live cricket matches, many entertainment and news channels also telecast these advertisements. On 30 July, the Supreme Court upheld a Rajasthan High Court verdict that concluded the fantasy sports platform Dream 11 involved skill and, therefore, was not gambling. If an online game involves 'skill', it is legal, and the government has fixed a 28% GST levy on such ventures.

However, many experts question cricket betting via gaming platforms, and consider it no less than gambling, done in the name of testing 'skills'. "It is grey area," says Vidushpati Singhania, a leading sports and gaming lawyer. "Broadcasters show the advertisements of betting companies only on Over-the-Top or OTT  platforms and there are no guidelines for OTT platform regarding such games," he says.

There are also inter-state variations in the rules on online betting, cricket-based games, and how they are advertised. For example, Sikkim and Meghalaya allow betting on sports (but banned its residents from playing in casinos located in the state), whereas other states do not. This week, Karnataka became the third state to ban online betting and gambling games after Telangana and Andhra Pradesh. The ban in Karnataka covers "any act of risking money, or otherwise, on the unknown result of an event including a game of skill". In India, the Public Gambling Act, 1867, does not account for betting on sports matches. "However, the government can take action in accordance with provisions in the Police Act," Singhania says. The Gambling Act also does not mention online betting.

In March, Rajya Sabha Member of Parliament and Congress party leader Vivek Tankha sought a written response on the question, "GST on online gaming and betting", from the Ministry of Finance. He asked, "Whether each game and each bet is being charged for tax, at 28% as defined as taxation rate of gambling. If so, reasons therefore and if not, details thereof?"

The Minister of State for finance, Anurag Thakur, who is also a former president of the Board of Control for Cricket (BCCI), responded, "Any person engaged in any taxable activity is liable to pay GST at the prescribed rate. The activities of sites like Dream 11 are taxable in GST. Therefore, they are required to pay GST…and charge the same from their customers. In case of 'betting', GST at the rate of 28% applies on the amount paid for the bet."

What this means is that since the government does not consider betting as illegal, therefore, games based on betting are liable to pay a tax. And, the current tax (GST) on games based on betting is 28% on the amount paid to place a bet. Gambling, on the other hand, cannot be taxed at all, as it is an illegal activity. However, this distinction between gambling and betting is based on whether or not there is an element of 'skill' or 'knowledge' involved. If not, then the activity is legally closer to gambling than betting. A number of court rulings have developed this approach to distinguish gambling and betting based on the Public Gambling Act, 1867, which exempts any game of "mere skill". That said, it does not fully account for the impact on viewers, especially younger TV audiences. Some even argue that betting involving cash payments is illegal per se, and must be seen as the equivalent of gambling—as the Karnataka law does—and, consequently, considered illegal. The situation is further complicated by e-sports and other forms of online betting and gaming, which is dealt with as a sort of exception to gambling.

"Broadcasting advertisements of betting companies is illegal," argues sports lawyer Rahul Mehra. "We have to go by the law, and the law says betting is banned in India. But there are many loopholes. For example, you can see surrogate advertisements of alcohol companies on the TV and roadside hoardings. The biggest question is how can a government collect tax on something that is not legal—it means you have legalised betting!"

In his ministry's reply, Thakur said, "Whether an activity is betting or gambling would be dependent on its overall nature and facts and the concerned legislation in force".

Interestingly, all such game advertisements carry a warning (in an unreadable small font size in a corner of the screen) that says something like: "This game involves an element of financial risk, and may be addictive. Please play responsibly and at your own risk."

On 5 July 2018, the Law Commission of India submitted a report, "Legal Framework: Gambling and Sports Betting including in Cricket in India" to the central government. The report, prepared under the chairmanship of Justice Balbir Singh Chauhan, drew the "inescapable conclusion" that "the State authorities must ensure enforcement of a complete ban on unlawful betting and gambling". It says, "Such activities show no signs of being stopped or curbed; the least that could be done is to regulate them." In other words, if a complete ban is difficult to enforce, then regulating betting activities was the only viable route to preventing unlawful activities. The Law Commission report is presently under the examination of the Ministry of Youth Affairs and Sports, the ministry Thakur heads.

Last December, the Ministry of Information and Broadcasting (MIB), which Thakur heads since July, issued an advisory that warned and instructed all broadcasters and private channels not to promote any prohibited activity. It says, "It had come to the notice of the Ministry of Information and Broadcasting that a large number of advertisements on online gaming, fantasy sports, etc., have been appearing on television." It further said, "Concerns were expressed that such advertisements appear to be misleading, do not correctly convey to the consumers the financial and other risks associated thereof, are not in strict conformity with the Advertising Code."

In the last six months of 2020, at least five people died by suicide, allegedly because they bet on cricket and fantasy league apps during the IPL and other matches. All were aged between 19 and 25. One of them was a student, one an engineer and another, a businessman. A previous investigation by this writer found that 14 people had died by suicide after they lost money on IPL and cricket matches in 2019. A number of reports on suicides attribute debts collected to participate in online games as the reason even now.

Tankha had asked another question in Parliament. It was: "Whether there has been an analysis of websites sponsored by cricket players, such as Dream11, Mobile Premier League, My11 Circle, etc.." But Thakur, the former czar of Indian cricket, ducked answering this query.

Virat Kohli, MS Dhoni, Jasprit Bumrah, Rishabh Pant, Ajinkya Rahane and R Ashwin are among the current test team who are brand ambassadors of different cricket betting companies and fantasy leagues. Bharta Ratna Sachin Tendulkar and former test captain Sourav Ganguly also appear on TV screens, asking viewers to play paid games.

The author is a freelance investigative journalist. The views are personal

First published by Newsclick.