Legality

Sports Unity Private Limited owns and operates the platform ‘Sports Unity’ through which it offers its registered users an opportunity to participate in tournaments of quiz based skill games for real money and product prizes. The platform shall be available on a dedicated app, website and/or other medium and the Users/Players may access the platform through any compatible device.

The concept of ‘Sports Unity’ is to provide the registered Users/Players an opportunity to participate in tournaments consisting of quiz based skill games by registering and creating an account on the Sports Unity website and/or app (“ Sports Unity platform”), purchasing credits, using these credits to buy tournaments and winning real money or prizes in the tournaments on the platform.

Sports Unity complies with all Central and State legislations in India to protect Users/Players from any legal risk. The quiz based skill gaming tournaments for real money and prizes available on the Sports Unity platform are carefully designed to comply with the applicable statutes and regulations in India.

Games can be broadly classified into the following two categories:

  • Games of chance, where the winner is determined entirely by mere luck, the result is wholly uncertain and doubtful and a human being cannot apply his/her mind to estimate the result or his/her efforts to influence the result. Generally, such games are illegal as constituting gambling.
  • Games of skill, where, skill plays the dominant role and the result depends primarily upon the relative knowledge, training, attention, experience, and/or adroitness of the players. Such games are not deemed to constitute ‘gambling’ and hence are not prohibited under gambling laws. For a game to be considered a ‘game of skill’ under Indian law, the element of skill must pre-dominate the element of chance in affecting the results of the game. Thus, the extent to which skill is involved in the game is the key factor in the determination of the nature and legality of the game under Indian law.

The principal legislation governing gambling in India is the Public Gambling Act, 1867 (“ PGA”). The PGA criminalises the acts of ‘public gambling’ and keeping of a ‘common gaming house’. The PGA, however, creates an important exception in favour of games of skill, by stating that the provisions of the PGA shall not apply to any ‘ game of mere skill’ wherever played. Therefore, games of skill have been excluded from the ambit of ‘public gambling’ by the PGA.

Apart from the PGA, several states across India have enacted and implemented State specific laws/regulations governing gambling and gaming whereby games of skill have been exempted from the purview of gambling. Where a State law on the subject exists, it takes precedence over the PGA as gaming and gambling is State subject under the Constitution of India. Pertinently, under the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act 2016, ‘Games of Skill’ has been defined under Section 2 (3) as follows:

“Games of skill- shall include all such games where there is preponderance of skill over chance, including where the skill relates to strategising the manner of placing wagers or placing bets or where the skill lies in team selection or selection of virtual stocks based on analyses or where the skill relates to the manner in which the moves are made, whether through deployment of physical or mental skill and acumen.

Explanation: For the purposes of this Act:-

All Games provided in Schedule A of this Act shall fall under the category of “Games of Skill”.

‘Games’ which have been declared or determined to be ‘games of skill’ by Indian or international courts or other statutes, or games where there are domestic and international competitions and tournaments, or games which can be determined to be ‘games of skill’ shall further be entitled to be included in Schedule A.”

Games of skill may be (a) Card based and (b) action / virtual sports / adventure / mystery and (c) calculation / strategy / quiz based.”

The Indian courts have adopted the standard that a game of skill is one in which the element of skill predominates over the element of chance. The cases of State of Andhra Pradesh v. K. Satyanarayana, AIR 1968 SC 825 (the “ Satyanarayana” case) and Dr. K.R. Lakshmanan v. State of Tamil Nadu, AIR 1996 SC 1153 (the “ Lakshmanan” case) are the two important cases in this regard.

In the Satyanarayana case, the Hon’ble Supreme Court of India defined a ‘ game of mere skill’ to mean a game “in which, although the element of chance necessarily cannot be entirely eliminated, success depends principally upon the superior knowledge, training, attention, experience and adroitness of the player.” By application of this definition, the Hon’ble Supreme Court held that the game of rummy was a game of skill, and did not amount to gambling under the PGA. While upholding the levy of a nominal service charge for provision of a physical space, cards, etc., to play a game of rummy, the Court reasoned:

"15.....Rummy.....requires certain amount of skill because the fall of the cards has to be memorised and the building up of Rummy requires considerable skill in holding and discarding cards. We cannot, therefore, say that the game of Rummy is a game of entire chance. It is mainly and preponderantly a game of skill."

In the Lakshmanan case, the Hon’ble Supreme Court of India held that betting on horse races was a game of skill. It rationalised that in a horse race the winner is not determined by chance alone, as the condition, speed and endurance of the horse and the skill and management of the rider are factors affecting the result of the race. The person betting has the opportunity to exercise his judgment and discretion in determining the horse on which to bet.

“29. We have no hesitation in reaching the conclusion that the horse-racing is a sport which primarily depends on the special ability acquired by training. It is the speed and stamina of the horse, acquired by training, which matters. Jockeys are experts in the art of riding. Between two equally fast horses, a better trained jockey can touch the winning-post.

30. In view of the discussion and the authorities referred to by us, we hold that the horse-racing is a game where the winning depends substantially and preponderantly on skill.

32. Gaming is the act or practice of gambling on a game of chance. It is staking on chance where chance is the controlling factor. 'Gaming' in the two Acts would, therefore, mean wagering or betting on games of chance. It would not include games of skill like horse-racing. In any case, Section 49 of the Police Act and Section 11 of the Gaming Act specifically save the games or mere skill from the penal provisions of the two Acts. We, therefore, hold that wagering or betting on horseracing - a game of skill-does not come within the definition of gaming' under the two Acts.”

In order to achieve success at the Sports Unity game/tournament, a User/Player must have the aforementioned knowledge, attention, experience and adroitness. The Users/Players are subject to several carefully structured constraints and limitations in the game rules which minimize the instance of chance dictating the outcome and are required to engage in a qualitative assessment of the challenges and their execution in light of the scoring criteria used by Sports Unity.

In order to succeed in the Sports Unity game/tournament, a User/player shall apply his/her mind and for these reasons, the determination of the outcome in the Sports Unity game/tournament is based on the predominance of skill over chance and the game/tournament offered on the Sports Unity platform should be classified as a game of skill according to Central and most State legislations. The most important part of any quiz based game is that the User/Player should know the answer of the asked question. This means that the User/Player has to use his /her knowledge, adroitness, memory and attention to answer that particular question correctly and within the stipulated time constraints. Accordingly, the Sports Unity quiz based games do not amount to ‘gambling’ under the Central and most State gambling statutes in India.

The Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act 2016 exempt games of skill from the purview of ‘gambling’ and persons intending to run the business of providing skill based games platforms require a license from the State Government before offering online games such quiz games.

Quiz based games have been classified as games of skill by the Hon’ble Madras High Court in the decision dated 30.04.2001 in the case of S. Singaram vs. Government of Tamil Nadu and Ors., AIR 2001 Mad 419 where the court under Paragraph 9 of the decision observed that:

“9. We have given our careful consideration to the arguments advanced by the learned counsel and also perused the material available on record. First of all, we are satisfied with the fact that no betting is involved. The entries received from the contestants are filtered by various methods. Among the candidates so selected to take part in a single day's participation, a person is further filtered by asking a question, leaving out only the clues. The person who got selected by giving the correct answer is eligible to sit in the chair to take part in the programme conducted by the third respondent. Then for every question, he is given two answers, three answers or four answers. He has to choose the correct one. If he succeeds in giving the correct answer, he will be allowed to go further failing which he will be sent out with the money so far collected. In our view skill alone is involved in these programmes. The questions are framed by collecting materials from all the fields every day a common man comes across. It depends upon the intelligence of the person facing the programme. A question appearing to be so easy for one will be difficult from the point of view of another person. So, we confine our attention to the question as to whether any skill is involved or not in the said programme. We are satisfied that skill really exists.”

The Hon’ble Calcutta High Court in the case of Bimalendu De and etc. vs Union of India (UOI) and Ors., AIR 2001 Cal 30 where a PIL was filed challenging the legality and constitutionality of the Television Quiz show- ‘Kaun Banega Crorepati’. It was contended that the show violates the Prize Competitions Act, 1955; West Bengal Gambling and Prize Competition Act, 1957; and PGA. The Division Bench of the Hon’ble Calcutta High Court observed and held under Paragraph 7 and 12 of the judgment:

“7. A perusal of the definition of gambling would clearly show that there should be an element of wagering or betting to be called it a gambling, that is totally missing in the present case. People across the country are picked up and ultimately chosen to sit on the hot chair, he has to answer the question out of four options provided for each question, this is a plain and simple case of skill and not chance. Out of four options given one answer is correct and that has to be picked up by the participant. There it depends upon the knowledge and skill of the participant to pick the correct answer. If his answer is wrong he is eased out from the competition with whatever money he has earned by answering correct questions. Such kind of game cannot be said to amount to gambling as defined in the aforesaid Act.

12. Nothing is at stake of the participant. Once he is picked up for the hot chair he has to answer the questions out of four options given, he does not have to pay or put any stake in the hope of any prize or reward. It is only his skill is put to test and if he is successful in-answering, the payment is incidental to that. Essentially it is a game of skill like one organised in the schools. Such programmes are not so lucrative like this programme. During this programme many of the advertisements are being shown is short break and that commercially promotes the goods advertised for. Therefore, it is more of a sales promotion programme rather than a case of gambling.”

Pertinently, while the PGA and most State statutes exempt games of 'mere skill’ from their purview, certain Indian states classify all games of mixed skill and chance as gambling regardless of whether skill is the predominant factor. In the states of Assam, Odisha (Orissa) and Telangana, games of mixed chance and skill cannot be played for any monetary consideration. Therefore, we do not offer the Sports Unity platform to the residents in the states of Assam, Odisha (Orissa), Telanagana, Nagaland and Sikkim.

Further, the conduct of the Sports Unity quiz based game does not fall within the scope of Section 2(c) of Prize chits and money circulation schemes (banning) Act, 1978 ( Money Circulation Scheme) as the spirit of the above stated Act of 1978 is to prevent exploitation of the public. The User/Player needs to complete online registration process and then buy credits through which the User/Player purchases tournament(s) to participate in the quiz based skill game on the Sports Unity platform. Also, the Sports Unity platform exhibits a quiz based skill game where the Intelligent Quotient (I.Q.) & high skill including knowledge, adroitness and attention plays an important role as the skill game is based on clicking and/or tapping the correct answer after reading the question and that too quicker than the other Users/Players.

Another important aspect of our platform with respect to the Act of 1978 is the transparency of the quiz based skill games operated and run by Sports Unity. The Sports Unity website/app is a secured platform with extensive security features & is open to all the citizens of India [except the residents of Assam, Odisha (Orissa), Telangana, Nagaland & Sikkim]. Also, the winning amount of all the Users/Players is credited in their Sports Unity accounts which can be withdrawn only after verification of the User’s/Player’s MIDs (Mandatory Information Documents) and Tax Deductions according to Sports Unity Terms & Conditions and Sports Unity Privacy Policy.