UNIVERSITY OF PETROLEUM AND ENERGY STUDIES

School of Law
Dehradun

DREAM 11 THE INCEPTION OF A LEGITIMATE WAGER CONTRACT IN

INDIA

Programme : BB.A.,LL.B(Hons)2019
Course : Contract
Semester : 1
Batch : July to Dec. 2019
Subject code : CLCC 1002
No. of credits ; 4
Prepared by : VIRENDAR DHAKA and ARYAMAN
WHAT IS DREAM 11?

Dream11 is a fantasy sports platform based in India[1] that allows users to play fantasy cricket,
hockey, football, kabaddi and basketball.[2][3] In April 2019, Dream11 became the first
Indian gaming company to enter the ‘Unicorn Club’.[4]1

PROCEDURE TO PLAY
“Follow these 5 easy steps to get started*:
* Select A Match :
Select any of the upcoming matches from any of the current or upcoming cricket series
* Create Your Team:
Use your sports knowledge and showcase your skills to create your Dream11 team within
abudget of 100 credits
* Join a Contest:
Join any Dream 11 free or cash contest to win cash and the ultimate bragging rights to
showoff your improvement in the Free/Skill contest on Dream 11!
* Follow the Match:
Watch the real match and track you fantasy scorecard (updated every 2 minutes)”
* Withdraw your Winnings:
Instantly withdraw your winning from your Dream11 account
(One Time Verification required)”
Dream11 takes great care to comply with all central and state legislation in India to ensure
that our users are fully protected. Every contest on our platform is carefully designed to
comply with applicable statutes and regulations in India.

Below are the key points from an Indian High Court’s judgement specifically regarding
Dream11's game. A challenge to this judgement was also dismissed by the Supreme Court of
India:

1
https://en.wikipedia.org/wiki/Dream11
The Court, in its ruling, stated that playing the Dream11 game involves considerable skill,
judgement and discretion and that success on Dream11 arises out of users’ exercise, superior
knowledge, judgment and attention
The Court also held that ‘the element of skill’ had a predominant influence on the outcome of
the Dream11 game, which follows the following format:
Participants have to choose a team consisting of at least the same no. of players as playing in
a real-life sports team (e.g. 5 in basketball, 7 in kabaddi and 11 in cricket/football)
All contests are run for at least the duration of one full sports match
No team changes are allowed by participants after the start of the sports match
On this basis, the Court adjudged that playing on Dream11 constitutes a ‘game of mere skill’,
which makes the Dream11 game exempt from the provisions of the Public Gambling Act,
1867 (PGA).2

Finally, the Court held that the Dream11 is a legitimate business activity protected under
Article 19(1)(g) of the Constitution of India.
You can find more information on the legality of Dream11 and Fantasy Sports in India on the
website of the Indian Federation of Sports Gaming (IFSG): www.ifsg.in. IFSG is India’s first
and only self-regulatory Sports Gaming industry body formed to protect consumer interest
and create standardised best practices in the Sports Gaming industry.

History
Dream11 was co-founded by Harsh Jain and Bhavit Sheth in 2008.[5][6] In 2012, they
introduced freemium fantasy sports in India for cricket fans.[7] In 2014, the company
reported 1 million registered users, which grew to 2 million in 2016 and to 45 million in
2018.[8][9] It is a member of the Fantasy Sports Trade Association (FSTA) and is the
founding member of the Indian Federation of Sports Gaming (IFSG).[10] Dream11 is a
Series D funded company with Tencent leading the latest round.[11][12] In April 2019,
Steadview Capital completed secondary investment in Dream11. Apart from Steadview,
Dream11’s investors included Kalaari Capital, Think Investments, Multiples Equity and
Tencent.[4]

In June 2018, Dream11[13] reported that it has 4 million users, up from 2 million users in
2017.[14][15] The company also made to the list and ranked 9 among India's Great Mid-Size
Workplaces - 2018. Dream11 was also recognised as one of the top 10 innovative companies
in India by Fast Company in 2019.

Legality
2
https://www.dream11.com/about-us/legality
In 2017, a case was registered against the company in an Indian High Court. The court, in its
ruling, stated that playing the Dream11 game involves superior knowledge, judgement and
attention. The Court also held that ‘the element of skill’ had a predominant influence on the
outcome of the Dream11 game. However, the law does not allow Fantasy Sports in few
Indian States like Assam, Odisha and Telangana.[16]

A challenge to this judgement was filed with the Supreme Court of India, which dismissed
the appeal.[17] The judgement provided legality to the company and allowed them to run
their operations throughout the country.[18]

Despite it being adjudged to be a "game of skill", experts believe that the company operates
in the country's regulatory "grey area".[19][20]

WAGERING CONTRACT

The meaning of wagering' is staking something of value upon the result of some future
uncertain event, such as a horse race, or upon the ascertainment of the truth concerning some
past or present event. In UK ' All contracts or agreements, whether by parole or in writing, by
way of gaming or wagering ,shall be null and void; and no suit shall be brought or maintained
in any court of law or equity for recovering any sum of money or valuable thing alleged to be
won upon any wager'.

The effect of these words is that a wagering contract is struck with invalidity at the outset, i.e.
before the event contemplated by the wager has occurred' [Hill v. William Hill (park lane)
Ltd: All ER 452[1949]. It is void though not illegal. It confers no rights upon either party. If
the loser fails to pay, recovery cannot be enforced by action.

The contract Act does not define a wagering agreement. Cotton, L.J. (Thacker v. Hardy) said:
'The essence of gaming and wagering is that one party is to win and other to lose upon a
future event which at the time of contract is of an uncertain nature, i.e., that if the future event
turns out one way A will lose, but if it turns out the other way, he will win'. Hawkins, J.
(Carlill v. Carbolic smoke Ball Co.)Said: 'It is essential to a wagering contract that each party
may under it either win or lose, whether he will win or lose being dependent on the issue of
the event and therefore remaining uncertain until, that issue is known. If either of the parties
may win but cannot lose, or may lose but cannot win, it is not a wagering contract'. In this
case the defendants promised to pay 100 pounds to anyone who caught influenza after using
the smoke ball manufactured by them. It was held not to be a wager because the user could
not lose anything if he failed to catch influenza. The important points to be noted here is that
there should be equal chances of gain or loss to the parties and it should be regarding an
uncertain event. The most striking feature of wager is that each party has the chance of
winning or losing.

Essentials of wagering agreement:

firstly, uncertain event. Uncertainty in the minds of the parties about the determination of the
event in one way or other is necessary. A wager generally contemplates a future event; but it
may even relate to an event which has already happened in the past, but the parties are not
aware of its result or the time of its happening.

Secondly, equal chances of gain or loss to the parties' .There is no wager if there are no
mutual chances of gain or loss, each party should stand to win or lose. If one party wins and
there weren't any chances of them losing, then in that case there is no wager. If winning or
losing is completely based on skill there will be no wager (Cole v. Odhams press) it should be
dependent on chance.

Thirdly, neither party to have control over the event. Neither party should have control over
the happening of the event one way or the other. Birdwood J in (Dayabhai Tribhovandas v.
Lakshmichand) 'If one of the parties has the event in his own hands, the transaction lacks the
essential ingredient of wager'.
Lastly, no other interest in the event. Neither party should have any interest in the happening
of the event other than the sum or stake he will win or lose.

Wagering agreement not unlawful

It has been laid down by the Supreme Court, in Gherulal Parekh v.Mahadeo Das that though
a wager is void and unenforceable it is not forbidden by law .Hence a wagering agreement is
not unlawful under section 23 of the Contract Act and therefore the transactions collateral to
the main transaction are enforceable.
This section does not render void a subscription or contribution, or an agreement to subscribe
or contribute, toward any plate, prize or sum of money, of the value or amount of five
hundred rupees or upwards to the winner or winners of any horse race.
Crossword competitions and lottery The supreme court of India in B.R Enterprises V. State of
U.P. held that even the state sponsored lotteries have the same element of chance with no
skill involved in it and it comes under wagering contracts as the very nature of agreement has
not changed and thus be void. If chance does not play a role and victory is completely
dependent on skill, the competition is not a lottery .Otherwise it is. The Madhya Pradesh
High Court in Subhash Kumar Manwani v. State of MP has characterized lotteries as wager
and the court held that agreement for payment of prize money on a lottery ticket was held to
be coming within the category of wagering agreement as contemplated by section 30.
The principle and purpose behind Sec. 30 to treat an agreement by way of wager as void is
that, the law discourages people to enter into games of chance and make earning of trying
luck instead of spending their time , energy and labour for more fruitful and useful work for
themselves, their family and society.3

LEGALITY OF DREAM 11 ACCORDING TO INDIAN

LAW OF GAMBLING

The principal legislation governing gambling in India is the Public Gambling Act, 1867
(“PGA”). The PGA criminalises the act of ‘gambling’ in a public forum and the 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] be held to apply to any
‘game of mere skill’ wherever played.

In determining whether a given game or contest is a game of skill or chance, Indian courts
have adopted the standard of assessing the ‘dominant factor’ of a game. The two most
important Indian cases in this regard are State of Andhra Pradesh v. K Satyanarayana (AIR
1968 SC 825) (the “Satyanarayana” case) and KR Lakshmanan v. State of Tamil Nadu (AIR
1996 SC 1153) (the “Lakshmanan” case).4 In the Satyanarayana case, the Supreme Court
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 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:

"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 Supreme Court held that the 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

3
http://www.legalserviceindia.com/article/l376-Wagering-Contracts.html
4
https://www.quora.com/How-is-Dream11-legal-in-India
factors affecting the result of the race. The bettor has the opportunity to exercise his judgment
and discretion in determining the horse on which to bet.

Also Dream11 comes under Games Of Skill rather than Gambling

JUDGEMENT
Gurdeep Singh Sachar Vs Union of India (Bombay High Court)
In the instant case, admittedly, there is no dispute that the amounts pooled in the escrow
account is an ‘actionable claim’, as the same is to be distributed amongst the winning
participating members as per the outcome of a game. But, as held hereinabove since the
activities of the respondent No.3 do not amount to lottery, betting and gambling, the said
actionable claim would fall under Entry 6 of the Schedule III under Section 7(2) of CGST
Act. Therefore, this activity or transaction pertaining to such actionable claim can neither be
considered as supply of goods nor supply of services, and is thus clearly exempted from levy
of any GST.

Since the CGST Act itself do not allow the imposition of Tax on such ‘actionable claim’ in
relation to the Online Fantasy Sports Gaming of the respondent No.3, it being other than
lottery, betting and gambling, the said Rule 31A(3) of CGST Rules 2018 cannot be read in
such a manner so as to override the parent CGST Act.

Since the actionable claim in the Online Fantasy Sport Gaming of the respondent No.3 are
amongst such actionable claims as per Schedule III and Section 7(2) of the Act, which are not
considered as ‘supply of goods’ or ‘supply of services’, Rule 31A has no application.
Moreover, actionable claim referred to in Rule 31A is limited to only activities or
transactions in the form of chance to win in “lottery” or “betting” or “gambling” or “horse
racing in a race club”. Thus, Rule 31A which is restricted only to such four supplies of
actionable claim, has no application in this case.

“Explanatory Notes” to the said classification under entry 998439 evidently covers host of
online games which are intended to be played on the Internet and involve payment by
subscription, membership fee, pay-per-play or pay- per view. The said entry however
excludes on-line gambling services. Since the Online Fantasy Sports Gaming of respondent
No.3 are not gambling services, the respondent No. 3 is not in error in paying GST under this
entry for its on-line gaming activities, by paying applicable GST @ 18%.
The authorities have therefore not taken any coercive steps against the respondent No.3, and
rightly so. No case for issuing any directions is made out. It is seen that the entire case of the
Petitioner is wholly untenable, misconceived and without any merit. It can be seen that
success in Dream 11’s fantasy sports depends upon user’s exercise of skill based on superior
knowledge, judgment and attention, and the result thereof is not dependent on the winning or
losing of a particular team in the real world game on any particular day. It is undoubtedly a
game of skill and not a game of chance. The attempt to reopen the issues decided by the
Punjab and Haryana High Court in respect of the same online gaming activities, which are
backed by a judgment of the three judges bench of the Apex Court in K. R. Laksh5manan
(supra), that too, after dismissal of SLP by the Apex Court is wholly misconceived.

5
https://taxguru.in/goods-and-service-tax/dream-11-fantasy-sports-not-gambling-game-skill-18-gst-payable-
hc.html