Niti Aayog suggests single self-regulatory body for fantasy sports industry

Government thinktank Niti Aayog has pitched for setting up a single self-regulatory organisation for the online fantasy sports industry to be governed by the independent oversight board and also suggested restricting online fantasy games to users of 18 years and above.

In a draft report titled 'Guiding Principles for the Uniform National-Level Regulation of Online Fantasy Sports Platforms in India', the Aayog said that there was public interest in the fantasy sports industry receiving government recognition as an industry and having its own identity.

A single self-regulatory organisation for the fantasy sports industry should be recognised by the government, it added.

"Such self-regulatory body should be a single-purpose fantasy sports industry body and have membership of online fantasy sports platform (OFSP) operators," the report said.

Noting that while OFSPs operate through online media on a pan-India basis, the report said their regulation proceeds varied under state-wise regulatory regimes.

The Aayog said, "This means that fantasy sports users' interests of transparency, OFSP operator integrity, and fairness may vary from state to state, resulting in an inconsistent experience and the risk of forum/jurisdiction shopping."

"This may even deprive sports fans in some states of their right to engage actively on these OFSPs," it added.

Online Fantasy Sports Platforms (OFSPs) offer fantasy sports contests. Fantasy sports are not like any other form of online gaming as they are dependent on actualities, seasonality and availability of real-time sports matches, which make it a non-addictive form of play.

This sets fantasy sports distinctly apart from other forms that are perceived to be in the nature of gambling or betting.

"Pay-to-play formats of fantasy sports contests should not be offered by an OFSP operator to users who are less than 18 years old," the Aayog said, adding that all necessary safeguards to protect minors must be instituted.

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Uniform national-level safe harbour

According to the Niti Aayog draft report, the governance of the self regulatory organisation should be undertaken by an independent oversight board comprising reputed persons with experience in governance, law and administration, who may be elected or appointed by members of the self-regulatory organisation for fixed terms.

The self-regulatory organisation should establish an independent grievance redressal mechanism to handle consumer/user complaints against OFSPs and any disputes that arise between or relating to OFSPs, it added.

As per the draft guidelines, the extant legal ambiguity and differential treatment faced by fantasy sports games across the Indian states must be addressed through the creation of a uniform national-level safe harbour for fantasy sports games.

"This will enable the implementation of a single national policy on fantasy sports and bring clarity to regulators, operators and consumers alike," it said, adding that the government must consider a light-touch regulatory framework for the fantasy sports industry given the dynamic and technical nature of the activities.

This approach, according to the draft guidelines, will be facilitative of market-creation and market-growth.

"Self-regulation must also be the preferred mode of governance to ensure ongoing transparency, consumer protection, and accountability," it said.

The draft document also pointed out that the independent oversight board should be responsible for the uniform guidelines and ensuring OFSPs' continued adherence and compliance.

"All OFSPs that are members of the self-regulatory organisation should enjoy the benefit of the safe harbour exemption, subject to their adherence with the norms and procedures laid down," the report said.

These guiding principles may be treated as a uniform 'regulatory sandbox' and may be recalibrated based on ongoing innovations and developments in the sector, the Aayog observed.

Potential for growth

In a recent market report, KPMG had noted that the number of users participating in online fantasy sports in India has grown at a compounded annual growth rate (CAGR) of 212 per cent, from two million users in June 2016 to 90 million users in December 2019.

Further, the report estimated that the fantasy sports industry has the potential to attract foreign direct investment of more than Rs 10,00 crore over the next few years as well as generate 1.5 billion online transactions by 2023.

A PricewaterhouseCoopers India's report has noted that the fantasy sports industry has the potential to generate an additional 5,000+ direct and 7,000+ indirect jobs in the next two to three years.

It also estimates that the fantasy sports industry has the potential to contribute GST revenue of Rs 3,000 crore to Rs 3,500 crore over the next five years, with income tax on winnings and corporate tax paid by OFSP operators expected to contribute between Rs 7,000 crore to Rs 10,000 crore over the next five years.