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Today fantasy sports is one of the pioneer industries worldwide but gained the most recognition in India. Nowadays, today fantasy sports industry has more than sixty online platforms. These industries are catering to more than 130 million users in India, and it's expected to grow to 160 million fantasy sports players at the end of 2022, as per the Statista report.
Fantasy sports platforms have become a new home for fantasy sports players. Many fantasy sports app development companies are working their way to enter this industry to make their presence more broadly. Clearly, the picture of today's fantasy sports industry says you should also invest in this industry to enlarge your business ROI and growth.
If we talk about the fantasy sports market, it is expected to become a 20.14 billion dollar industry by the end of 2022 and is projected to reach $34.66 billion by 2024-2027, growing at a CAGR of 11.48%.
The numbers tell everything that a fantasy sports business owner wants to hear. But entering and establishing a business in the fantasy sports industry is not an easy task. A new fantasy sports business needs to pass many stages to create a legal platform for users to play.
Fantasy sports may be the world's fastest-growing industry, but it is because people are supporting them with emotionally and energetically. Legality issues are one of the toughest stages for fantasy sports to clear, and it also takes too much time to get the platform completely ready to welcome new users. There are four legal scenarios for countries to categorize these kinds of platforms in the fantasy sports industry.
Many countries consider fantasy sports as a 'pure game of skills. These countries do not classify fantasy sports games as gambling, allowing fantasy sports companies to be free. However, countries consider it a very high-risk industry, plus it gives higher ROI to them as well.
Many countries don't approve of fantasy sports as a gambling-free platform. In terms of gambling, their governments prohibit such activities, and violating or breaking the gambling rules will lead to strict punishment for gambling organizers and users. Therefore, only licensed companies can provide fantasy sports services to terminate such activities.
Countries with such regulations that require a special national license apply stricter rules. Some countries prohibit using real money in these games, while others impose a limit on the bet amount. Thus, companies that want to operate in those sectors need proper compliance and regulations.
Illegal
Finally, some countries have vigorously rejected these applications and banned their use in their country. The authorities consider these online fantasy leagues gambling or sports betting; Thus, they reject its rules and cease their operations in their countries.
The legality and laws for fantasy sports work differently from region to region. We have summarized the rules and regulations for the fantasy sports industry in India, the UK, the US, and Australia.
There are very limited individual laws designed for fantasy sports apps, but some laws cover activity in the relevant industry. Till date, the fantasy sports industry is considered gambling and is not recognized under Schedule View in the Indian Constitution.
Before any state rule, fantasy sports should have been regulated under a central government legalization name - Public Gaming Act, 1987. The Act states that; the game in which skill is involved will not be considered under the Gambling Act.
The Government of India later declared fantasy sports a game of skill. But still, some states in India, such as Asam, Sikkim, Nagaland, Odisha, Telangana and Andhra Pradesh, have banned online and offline fantasy sports apps or gambling games. Besides those stats, most of India has no issue with online fantasy sports. India has changed the gambling law and accepted that fantasy sports are skill games, not chance.
The Government of India later declared fantasy sports a game of skill. Also, in 2008, Sikkim, the Online Gaming Act allowed skill-based games to be legally licensed.
Government Laws on Indian Fantasy Sports Industry:
Operators of fantasy sports games should ensure that the tournament or any sporting event held on their platform does not constitute gambling. If they do it, they are breaking the gambling act 1987 fantasy sports rule, and regulation and their services will be terminated immediately. And that can lead to punishment for both the operator and the users.
There is a need for centrally and nationally administered guidelines for the fantasy sports industry to foster growth, the SPLC report suggested.
Although the development of laws and guidelines is limited compared to other developed countries, the most important thing is that fantasy gaming apps are getting recognition and are being treated as a game of skill which saves app developers from any criminal liability for the growth of this industry.
Fantasy sports legalization is a federal and state issue in the United States. The demand for fantasy sports in the US is so high that the government needs to enact laws that support the regulation of fantasy sports. An Interstate Wire Act was introduced, allowing legal gambling but banning sports betting.
In 2006, a new law was introduced called the Unlawful Internet Gambling Enforcement Act, which exempted fantasy sports from the field of gambling or betting.
In 2014, a bill called the Interactive Fantasy Sports Bill was issued and signed by the governor, Mr. Andrew Cuomo, which states that fantasy sports are only allowed if the developers have a license in New York. Also, the law depends on the states; some states legalized the use of fantasy sports while others still consider it legal and have shown a restrictive approach.
Similar to India, Australia has also been too tight about online fantasy sports. Earlier, fantasy sports were treated as gambling in Australia and were prohibited from running such a business. But later, the new rules and regulations were introduced, and the Interactive Gambling Act 2001 came into effect.
The Interactive Gambling Act 2001 changed the whole scenario of the fantasy sports industry in Australia. However, a fantasy sports business operator should possess online gaming licenses to make their platform legal to play for users.
The IGA of Australia prohibits certain interactive gambling services from being provided to end users in Australia. Under the IGA, one of the ways of defining "gambling service" is as a service for the conduct of a game where:
As the fantasy sports industry grew, in 2015, an amendment bill was passed to the Interactive Gaming Act, allowing the fantasy sports industry to be regulated.
And recently, in 2021, according to the new amendment, all fantasy sports operators can regulate their business by obtaining a legal license from the authority and conducting only skill-based sports activities.
In the UK, the fantasy sports legal position is more settled and straightforward. Under UK law, fantasy sports betting operations are considered gambling and are subject to the Gambling Act 2005's jurisdiction as a regulator of the Gambling Commission. Specifically, it is considered pool betting.
The UK gambling scene is very clear, but still, there are certain rules and regulations for fantasy sports. Fantasy sports operators should have fantasy sports betting and software licenses to make their services legal and make their platforms legally open for users and the public. Or advertise to the UK public and comply with the relevant provisions of the Gambling Act 2005, its terms and licensing conditions and the Code of Practice and pay gaming fees.
Sports betting apps such as DraftKing and Fanduel have already made a proficient impact, and both companies expect to enter the UK fantasy market very aggressively. In addition, both companies have already received a UK Gambling Commission license for a pool betting operating license and an online gambling license.
With each passing time, the government is taking positive steps to understand the fantasy sports industry better and differentiate the 'game of chance' and 'game of skill'. However, on the positive side, many countries have taken big steps to make this industry more helpful for businesses and users. In addition, the future of the fantasy sports industry is on the success path and is likely to generate higher revenue. The only thing to consider is licensing and legal facts that can ruin the new fantasy sports business if we don't cater for it carefully.
As I mentioned, legal status is completely different in each region. If you decide to launch your fantasy sports business, consider reading this topic first. This will help you see important things for your fantasy sports business to drive it on a success path.
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DC Kumawat is the CEO of Orion InfoSolutions, a leading provider of IT solutions to businesses of all sizes. He has over 14+ years of experience in the IT industry. He is a passionate advocate for the use of technology to improve business performance.