Bombay High Court affirms Dream11 as a game of skill, rejects gambling allegations

Dream11 is not gambling: The Bombay High Court upheld the skill-based nature of the popular fantasy sports platform, Dream11, dismissing a Public Interest Litigation (PIL) that alleged it was gambling and evading taxes. The PIL, represented by Advocate Sujay Kantawala, contended that Dream11 promoters were promoting gambling and evading tax payments. However, the court presided over by Justices Ranjit More and Bharati Dangre, refuted these claims, emphasising that Dream11 is a game of skill rather than chance, aligning with its ad slogan 'Khelo Dimag Se'.

The court underlined that success on Dream11 is contingent on a user's skill, knowledge, judgement, and attention, not on the outcome of real-world games. It clarified that the result is determined by a player's understanding and strategic choices, establishing it as a game of skill and not chance.

Addressing allegations of Goods and Services Tax (GST) evasion, the court made it clear that tax fraud could only be claimed if Dream11 allowed gambling or betting, which is not the case. The court also reprimanded the petitioner for attempting to reopen a previously settled case by the Punjab & Haryana High Court in 2017.

Scrutinise tax payments by gaming startups

Concerns about tax evasion were initially raised in April, prompting the Indian Tax Department to scrutinise tax payments by gaming startups like Dream11 and other fantasy sports platforms. Currently, taxes are levied on the commission earned by gaming platforms from user contributions. However, tax authorities are now questioning whether the tax should be applied to the entire contest entry amount, which could significantly impact these fantasy gaming platforms.

The court's decision affirms Dream11's position as a platform that relies on users' strategic skills, knowledge, and judgment. It also sets an important precedent regarding the legal classification of fantasy sports platforms and their tax implications, which have been under increasing scrutiny by regulatory authorities.

Social activist Avinash Mehrotra had previously filed a PIL in a Delhi court, alleging that fantasy gaming apps are fostering addictive gambling tendencies in various segments of society, further sparking debates about the nature and impact of these platforms.