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Legality of Gambling and Fantasy Sports in India: Why was Paytm Removed from the Google Play Store?

Sep 20, 2020 7:22 AM 4 min read
Editorial

We might have become accustomed to some of our favourite apps going off the App Store/Play Store, but what happened with Paytm yesterday has truly piqued our interest, especially considering that it is India’s most valuable startup, with over 50 million monthly active users.

 

 

The What and The Why?

Yesterday, Google pulled the plug on the Paytm app and its fantasy sports app for football, cricket, kabaddi, and basketball - Paytm First Games - for alleged violation of gambling policies. 

While the apps were restored by the end of the day, it is worthwhile to probe what the fuss was all about, particularly in light of the ongoing IPL 2020 Season and the rising popularity of fantasy sports in India.  

 

Devil Lies in the Details

“We don’t allow online casinos or support any unregulated gambling apps that facilitate sports betting. This includes if an app leads consumers to a third party website that allows them to participate in paid tournaments to win real money or cash prizes, it is a violation of our policies,” Google said.

As per a TechCrunch report, Google had reached out to Paytm before and raised concerns about Paytm First Games, but the incident with Paytm’s main app, was merely over the announcement of “Paytm Cricket League”, wherein users could win cash rewards based on the actual performance of cricketers in the IPL.

And therefore, according to experts, Paytm First Games could have been the primary reason for both apps being pulled down as they allow users to win real cash, which can be transferred to a user’s Paytm Wallet.

For the uninitiated, a fantasy sport is a game where participants can create their own imaginary teams using real players from different teams scheduled to play in a league/match. They win or lose based on the real performance of the players in their fantasy team.

So Google pulled the plug on Paytm because it disallows sports betting. But isn’t sports betting banned in India anyway? In that case, how did Paytm First Games get past the regulator in the first place? And how is it still up and running on other platforms like Apple’s App Store? 

That’s the catch!

 

The Grey Zone

While sports betting is banned in India, fantasy sports is not illegal in most Indian states.

In fact, in a recent newsletter, we saw how the Online Fantasy Sports (OFS) in India is a booming one, with the number of users growing from two million in 2016 to 90 million in 2019, and the number of OFS platforms increasing from fewer than 10 in 2016 to over 140 by 2019.

 

Legality of Gambling and Fantasy Sports in India: Why was Paytm Removed from the Google Play Store? 

Regulations Around Gambling in India

All types of gambling in India is prohibited under the 150-year-old Public Gambling Act of 1867, subject to individual State sanction. 

However, there is no specific law covering online betting, thus granting a legal loophole and enabling promoters to set up offshore betting firms.

In addition to this, the Act has several other discrepancies, the most significant of which is the ambiguity it allows between a “game of chance” and a “game of skill”. While the former is considered illegal, the latter in general is granted more leeway.

For instance, while betting on horse races is thought of as a game of skill and treated as legal, cricket is understood as a game of chance with any related betting deemed as illegal. 

For a deeper understanding, here’s one of our older pieces on the subject. 

Given the hazy nature of the Act, there has been a lot of speculation around the legality of fantasy sports in India. However, these were put to rest by a Punjab and Haryana High Court’s landmark ruling that regarded Dream11 as a ‘Game of Skill’, followed by the Supreme Court’s dismissal to challenge the HC’s verdict. 

The courts have also clarified that the format offered by OFS platforms does not fall under the ambit of the Indian Public Gambling Act of 1867.

In spite of a favourable ruling, fantasy sports app Dream11 - also the title sponsor for the IPL 2020 this year - has not been allowed on Google’s Play Store because it allows users to win actual money.

The whole episode has yet again brought to light the monopoly that Google and Apple hold over their app stores. Recall the recent incident wherein Apple and Google removed the popular video game Fortnite from their app stores for violating their in-app payment guidelines and the repartee that followed?

Interestingly, Paytm is one of the biggest competitors of Google Pay in the Indian digital payments space. And therefore, the incident should likely trigger a discussion around the monopolistic powers that Google and Apple hold, especially in areas where the two tech giants themselves are competitors. 

FIN.

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