you are here: HomeNewsOpinion

Building a safe harbour for online fantasy sports to facilitate responsible growth

A self-regulatory mechanism will ensure that the online fantasy sports industry continues to benefit and protect the interests of the consumers while supporting innovative operators who conduct themselves responsibly

January 16, 2021 / 10:16 AM IST

With sports being one of the most popular sources of entertainment after Bollywood, online fantasy sports (OFS) help by providing digital engagement across dimensions of sports fans, cutting across age, socioeconomic status and geography. OFS are skill-based sports engagement platforms where users create virtual teams by choosing real-life players from both the participating teams before the start time of the upcoming live match.

The meteoric rise of OFS in India has not only been pivotal in increasing viewership for sports and attracting patronage for sporting events (especially for those that have traditionally suffered from low fan engagement), but also emerged as a growth driver for the digital economy. This industry is showing significant possibilities in the three dimensions of engagement, investments and employment within the Internet economy.

Industry reports suggest that one in every seven or eight Indians engage with OFS. The increased viewership and user engagement translate into the higher inflow of investments that can be leveraged to upgrade India’s overall sports ecosystem. This sunshine sector is also pegged to attract an Rs 10,000 crore in foreign investment over the next few years. The OFS industry, however, was being held back from achieving its true potential and scale by the lack of formal recognition from the government and the absence of a uniform regulatory framework.

Recognising these challenges and the immense potential that the OFS industry holds, NITI Aayog recently released the draft Guiding Principles for the Uniform National-Level Regulation of OFS Platforms in India to address the legal ambiguity and eliminate barriers to growth such as differential regulations from the state governments. As per the guidelines, the OFS industry has also been pivotal in driving the digital economy, and industry estimates suggest that the sector has the potential to generate 1.5 billion online transactions by 2023.

Formal Recognition For OFS

Close

As selectors, OFS users rely on their knowledge, experience and adroitness about a sport to create a team they think will perform the best. This format clearly separates OFS from betting and gambling — a distinction that has been upheld by the courts.

NITI Aayog has emphasised that OFS’ identity must be legally different from betting and gambling to avoid any further ambiguity. Such a distinction will deter fraudulent operators from luring users with games of questionable legality in the guise of OFS.

Barriers To Growth And Innovation

In the absence of independent legal recognition, OFS platforms have had to seek shelter under ambiguous and undefined exceptions to the different state government’s gambling and public order laws. By requiring OFS platforms to conform to different regulations by state governments, the innovation and organic growth in the industry is getting curbed.

The considerable degree of variance observed across the different states is detrimental to consumer protection. At present, OFS users are located across various parts of the country and have different rights and remedies against various types of OFS operators. For example, the recent legislative forays in Andhra Pradesh and Telangana prohibits legitimate online sports engagement platforms by entirely removing the existing protection for all skill-predominant activities, without making necessary distinctions.

Self-Regulation

Self-regulation appears to be the ideal mode of governance to ensure responsible conduct from the operators and to protect the users’ interests. NITI Aayog’s proposition to set up a single self-regulatory organisation (recognised by the government) is noteworthy. A self-regulatory mechanism will ensure that the OFS industry functions in a manner that continues to benefit and protect the interests of the consumers while maintaining an ecosystem that supports innovative operators who conduct themselves responsibly.

To check that the proposed self-regulatory body remains fair and transparent, an independent oversight and evaluation committee must be set up to implement uniform guidelines and ensure that all OFS platforms adhere to them. Such an independent committee will ensure the guidelines are effectively enforced and also strengthen dispute redress mechanisms by ensuring accessibility and fairness.
Sreedhar Prasad is an Internet business specialist and former Partner, KPMG. Views are personal.
first published: Jan 16, 2021 10:16 am

stay updated

Get Daily News on your Browser
Sections