Online gaming is not gambling on mere chance

Asmita Kuvalekar | Government Law College, Mumbai | 29^th March 2020. 

GURDEEP SINGH SACHAR V UNION OF INDIA AND OS (CRIMINAL PUBLIC INTEREST LITIGATION STAMP NO 22 OF 2019) 

FACTS OF THE CASE: 

Gurdeep Sachar, a practising advocate in the Bombay High Court filed this PIL alleging gambling activity under the garb of an online fantasy game called ‘Dream 11’. He also accused the respondent of evading GST by violating provisions of the GST Act and Rule 31A of the CGST Rules, 2018. 

In its defence, the respondent argued that there is no betting on the mere chance of a team winning or losing. Instead, players have to use a substantial amount of skill, expertise, prior experience of the game to actually win. Additionally, a prior judgement of the Punjab and Haryana High Court had decided in the respondents’ favour on the same issue in another case against them and the Supreme Court had upheld said judgement by dismissing a Special Leave Petition filed thereby. 

In this case, the Bombay High Court examines the fine line of distinction between chance and skill while upholding the legal rights of the creators of the game.

ISSUE: 

1. Whether Dream 11 amounts to Gambling/Betting?

JUDGEMENT: 

Highlighting that the Punjab and Haryana High Court vide its judgement in Varun Gumber v UT, Chandigarh and os¹had already settled the issue on merits in favour of the same respondent, the Court explained its grounds for not deciding otherwise. The Punjab and Haryana High Court judgement protects Dream 11 and similar online fantasy games from penal provisions against gambling as the skill set and user experience required to win the game are substantial and the game cannot be characterized as one of mere chance. Therefore, the liberty under Article 19 (1) (g) of the Indian Constitution, allowing every Indian citizen to practice any business or profession of his/her choice extends to the creators of this game. 

Moreover, a SLP challenging that judgement being well and truly dismissed by the Supreme Court, the Bombay High Court in this case declared that re-examining the merits of the issue would be an exercise in futility.

Furthermore, relying on several other judgments in similar cases, this decision underlines that any competition which substantially relies upon skill of the participants, chance not being the central factor in the outcome, can be said to merit protection from penalty. The Court admonished the Petitioner for ignoring the fact that as per Dream 11’s procedure, no bets are placed on the winning or losing of a team. It reiterated the requisite ratio of skill to chance elucidated in the Apex Court’s decision in K. R Lakshmanan (Dr.) v State of T.N². This decision being the basis and principal reasoning behind the Varun Gumber judgement, lays down quite simply that contrary to a game of “mere chance”, a game of “mere skill” is “mainly and preponderantly a game of skill”. Thus, finding no force in the allegation that Dream 11 is a disguised gambling activity, the Bombay High Court refused to accept the primary contention of the petitioner. 

Lastly, it was held that since any reasonable case for tax evasion would arise only if the activity of the respondent fell under the category of ‘gambling’, the offence of tax evasion cannot be made out either. Having regard to the provisions of the GST Act and the Rules made therein, the game cannot be considered to be either a supply of goods or a supply of services. To that end, the second contention also failed and the petition was dismissed with a clear message that the attempt to overrule past decisions through such a petition was misconceived and devoid of substance. 

1. 2017 Cri LJ 3827 
2. (1996) 2 SCC 226