Regulation of Esports in India

Introduction

Electronic sports (esports) have emerged globally during the last two decades and are evolving at an exponential pace in India. Its domain remains a grey area due to lack of awareness amongst the general public. Esports is a relatively new field, though popular among the younger population, but the general public is still unaware about it. In India, there is no specific set of regulations that govern esports or any other aspect related to it. The Government of India is yet to promulgate an enactment in order to govern the same, meaning thereby it remains fairly unregulated except for some State regulations.

In a press statement dated 4-2-2021, the Ministry of Youth and Affairs acknowledged the emergence of esports and also stated that esports are very different from iGaming and gambling². The Prime Minister of India has also acknowledged the growth of the gaming sector while addressing the country with respect to the impact of Union Budget for 2022-2023³. This indicates that esports are being recognised as an emerging field and requires Parliament to ponder over a legislation that will govern this specific field. The Data Privacy Bill is pending consideration before Justice B.N. Srikrishna Committee in the Parliament which will also have a direct impact on any legislation on esports. It is not just that we do not have legislation to govern esports, but the Ministry of Sports is yet to recognise a federation as per the sports code. In order to dwell upon the same, we need to shed some light on the global federations.

What is esports?

Esports are essentially electronic sports in which a large number of players with the necessary skill sets compete against each other on an online platform.⁴ It mostly consists of teams/individuals participating in online tournaments to achieve the highest levels/rankings.⁵ Esports are digitally assisted activities with varying degree of materiality, virtual environment, and technical involvement. Many sportsmen have opposing viewpoints because it does not need physical labour⁶. Nonetheless, the amount of mental effort required makes it as demanding as any other sport.

Esports are very different from conventional sports as one is played on the ground and the other is played virtually. Therefore, the mode of conduct is very different. As to the way a lawyer sitting anywhere in the country can attend a matter in the Supreme Court virtually, similarly, players in different States can participate in an event that is taking place in another part of the country or anywhere in the world. Therefore, the contours of esports are different from those of any conventional sport. India talks about one nation, one tax. Similarly, the legislation governing esports cannot be limited at the State level.

In conventional sports, it is the State level association and the State talent that has been nurtured in the homeland of the State. However, contours are different in esports, particularly in relation to a world opening up for the metaverse.

At the international level, federations have been formed with the goal of creating platforms for athletes to promote esports and to organise events. There are several such federations in India as well, however, none of them are currently recognised by the Ministry of Youth and Affairs.

Where will esports be placed under the Constitution?

Articles 245⁷ and 246⁸ of the Constitution of India, read with Schedule VII, bifurcate the subject-matter upon which the Union and the State can make laws. It implies that the Union’s and the State’s powers are distributed, and if there is an element that requires attention from both the Union and the State, it is subject to the concurrent list.

The entries from Schedule VII which are relevant and required for the purpose of the present discussion are as follows:

“List I

10. Foreign affairs; all matters which bring the Union into relation with any foreign country.

13. Participation in international conferences, associations and other bodies and implementing of decisions made thereat.

97. Any other matter not enumerated in List II or List III including any tax not mentioned in either of those lists.

List II

33. Theatres and dramatic performances; cinemas subject to the provisions of Entry 60 of List I; sports, entertainments and amusements.”

List I covers subject-matter upon which only the Union can frame laws.

List II covers the subject-matter upon which only a State can frame laws.

Lastly, there is a Concurrent List under which both the Parliament and State authorities can formulate laws and in case of any repugnancy, the law framed by the centre shall prevail.

Sports are currently a State subject in India⁹, but esports, given the band with it covers, cannot be legislated by one State alone. This leads us to the question as to whether esports can be regulated individually by separate States or we require a legislation at a national level for governing the same. In other words, either sports being a State subject as per Schedule VII, will have to be shifted to the Concurrent List to enable a national legislation on it or assuming competence on residuary subjects it shall form a part of List I.

However, Entries 10 and 13 of List I, Schedule VII discuss foreign affairs and participation in various events¹⁰. Its main objective is to vest the Union with the authority to regulate any event that takes place on a national or international scale. The basic rationale behind it is that the participants competing represent the country and not individual States.

If the notion that esports is not a segment of sport is accepted in view of the Schedule VII, then according to Entry 97 of List I, it can also fall under the ambit of List I, as anything that is not a subject of List II or List III automatically falls under the ambit of List I which is directly the subject-matter of the Union.

The possibility of adding “sports” to the Concurrent List has been discussed at various occasions. However, no steps have been taken in that direction. According to the Ministry of Youth and Affairs, no proposal is pending in this regard¹¹.

So, if sports are shifted to List III, esports should also fall under List III as esports is a category of sports¹². However, its scope is much broader than sports because, firstly, access to esports is much simpler and secondly, esports is linked to technology, therefore Central Government’s involvement is necessary to safeguard people’s interests from cybercrime. Data protection laws will play a big role while coming up with a legislation to regulate esports in India. As a result, esports should be included to the Union List since monitoring and assessment are necessary at all levels.

Present legislations and esports

At present, India is limited only to the following set of legislations related to esports; the Public Gambling Act, 1867¹³ (Gambling Act) and the Prize Competitions Act, 1955. As per Section 12 of the Gambling Act, its provisions are not applicable to games which require skill. Therefore, Gambling Act cannot be stretched to a point where it touches esports as it is played virtually and requires a skill set. Evidently, esports is not covered under the Gambling Act and demands a separate legislative framework.

Since sports is a State subject, several State Legislatures have enacted legislations to regulate esports in their respective States. The Sikkim Online Gaming (Regulation) Act, 2008 (Sikkim Act) is one such example. It was enacted with the goal of regulating internet gaming and Tax on such activities. This statute also defines “online gaming” and “sports gaming”. It addresses various aspects related to online gaming such as mandating the licensing of online games, prescribing offences related to online gaming, defining punishment and so on.

The definition of “online gaming” and “sports gaming” are reproduced below:

2. Definitions:

(k) “Online gaming” means any gaming, where any player enters or may enter the game or takes or may take any step in the game or acquires or may acquire or may acquire a chance in any lottery, by means of a telecommunication device including the negotiating or receiving of any bet by means of a telecommunication device;

(p) “Sports gaming” means games involving the prediction or the results of sporting events and placing a bet on the outcome, in pad or in whole, or such sporting event;

Another notable example is the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2015 (Nagaland Act), which was enacted to outlaw gambling and promote online gaming within Nagaland’s territorial jurisdiction. The Act also places an obligation with respect to licensing.

The Nagaland Act defines “game of skills” as

2. Definitions:

(3) “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.

The Nagaland Act also includes “virtual sports” under the definition of “games of skills”.

There is a visible disparity across various State legislations on the aspect of sports activities, as it falls under List II. For example, States including Andhra Pradesh, Assam, Odisha, Meghalaya, Nagaland, Arunachal Pradesh, Sikkim and Telangana have prohibited internet poker, others have no such prohibition. This demonstrates the enormous difference between State Legislatures on the aspect of governing sports activities and also indicate the need to establish consistency through a parliamentary legislation. Interestingly, none of the State legislations have yet defined esports, a completely distinct concept demanding a separate legislative framework.

Looking at current judicial trends, the Supreme Court of India in the landmark case of K.R. Lakshmanan v. State of T.N.¹⁴, provided a strict bifurcation between the “game of skills” and “game of chances”. Relying on such distinction in Varun Gumber v. UT of Chandigarh¹⁵, organised internet gaming tournaments, fantasy sports, and so on have all been characterised as “games of skill” by the Punjab and Haryana High Court. Further, it was ruled that fantasy sports, such as horse racing require skills and a sense of judgment in order to make the necessary moves. The High Court of Bombay in Gurdeep Singh Sachar v. Union of India¹⁶ also had a similar view, observing that fantasy gaming is not equivalent to gambling activities.

In 2018, an attempt towards consolidating esports related issues was addressed by Member of Parliament, Mr Shashi Tharoor by introducing a private Bill —”the Online Gaming and Prevention of Fraud Bill, 2018″. The objective of the Bill was “to establish an effective regime to maintain the integrity of sports in India by preventing and penalising sports fraud, regulation of online sports gaming and for matters connected therewith or incidental thereto”. However, the Bill is currently being debated in Parliament.¹⁷

Being a subject-matter of List II, few States have enacted laws to prevent gambling and promote online gaming but, as mentioned earlier, even they have not touched upon esports. Another pertinent issue is that of uniformity — only if a rigid set of laws are passed by the Parliament, can we expect the complications related to esports to get subdued. Promulgation of legislation will not only provide legitimacy to this industry but will also serve twin purposes of economic growth and data protection.

Comparative law

The laws connected to esports are addressed distinctly in the United States of America,¹⁸ as different aspects of it impact different segments of law. Gambling activities are lawful in the US if conducted within the jurisdiction where gambling is officially permitted or authorised by the gaming commission. No specific legislation however exists even in the US, placing India and the US at an equal footing in the matter of esports regulation.

Under the system prevailing in the United Kingdom,¹⁹ there is no specific set of regulations that solely govern esports.

Similar to position in the US, the subject-matter related to esports is bifurcated into different segments of law. While gaming and related aspects are covered under the Gambling Act, 2005 (Section 6), protection of data is covered under the Data Protection Act, 2018.

Many other countries like Japan, South Africa do not have a defined framework for regulation of esports and are still exploring the dynamics of it.

Conclusion

Esports, as stated at the outset, is a relatively new notion that is still evolving throughout the world. There are several federations striving to make it a worldwide phenomenon. In India, there are no regulations to govern esports. However, as stated earlier, the Ministry of Youth and Sports has acknowledged the rise of this form of sport.

If esports is listed in List II, each State will have a separate set of regulation which may result in lack of uniformity. It is therefore advisable that it is included in either List I or List III, and if it is included in List III, every State Government develop their own framework based on the national legislation. It is pertinent to add that while doing so, the State Government must not enact anything that fall repugnant to the central legislation. Recently, the Supreme Court struck down the West Bengal Housing Industry Regulation Act (WB-HIRA), 2017 in Forum for People’s Collective Efforts v. State of W.B.,²⁰ observing that, “RERA being an exhaustive code regulating the contractual relationships between promoters and buyers in the real estate sector, WB-HIRA entrenches on an occupied field and is hence repugnant and void under Article 254(2) of the Constitution.”

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