What to keep in mind while playing real money games online

Will India cross 5 crore covid cases? Will bitcoin be priced at ₹31,00,000 at midnight of 2 February 2021? Will U Mumbai beat the Patna Pirates at Kabaddi? These are some of the questions that Better Opinions, a 4-month old startup with around 1.5 lakh downloads allows people to trade on. Better Opinions is backed by Y Combinator and recently raised over $1 million in a pre-seed round. The startup is in its nascent stage but real money gaming is making increasing inroads among Indian consumers. A series of court decisions have opened the door to legalised wagers on some kinds of games by Indians. Dream11, Mobile Premier League (MPL), Paytm First Games are some of the other online gaming platforms that allow users to play real money games through fantasy sports, card games, etc. In a fantasy game, the user selects a real-life upcoming match of a sport to compete in, say cricket, picks a team with proxies of real players of that sport based on their real-life performance and earns points on the basis of performance of those players in the match.

Legal or not?

Gambling is prohibited in India by the Public Gambling Act, 1867. However, the law excludes games of skill from its purview. Several judicial decisions over the past few years have categorically identified fantasy sports as games of skill and hence platforms offering these games are legally allowed to operate in most states. Games of skill are seen by the law as those games that require human knowledge and its application in the game to win it, as opposed to games of chance that are purely based on luck.The fantasy gaming industry, along with other online gaming platforms like Better Options, sees its offerings as games of skill. “We are the stock market of opinions. We believe that by trading in relatable categories such as sports, politics and entertainment, users will better understand the nuances of trading better, and as a result become more financially literate,” said Samay Jain, co-founder and CEO, Better Opinions.

However, there are also state laws on gambling and some states have banned games such as fantasy sports. In October last year, Karnataka had outright banned fantasy sports after clubbing them alongside betting and gambling. On Monday, Karnataka high court lifted the ban saying that the government should form laws to impose restrictions on gambling and leave fantasy sports out. After this ruling, Telangana and Andhra Pradesh are the only two states that have outright prohibited any games played for stakes, including those that require skill. Vaibhav Kakkar, partner (expert in gaming law), Saraf & Partners in an interaction with Mint explained additional restrictions that other states have enforced with regard to fantasy sports, “Assam and Odisha have regulated all games involving real money under PGA and Sikkim and Nagaland require people to get a licence to play fantasy sports.”

Taxation same as gambling

Income from fantasy sports or any other game recognized as a game of skill is taxed in the same manner as gambling proceeds at a flat rate of 30%. Further, the taxpayer cannot deduct any expenditure incurred in playing such games or allowances from the income. Losses, if any, are not allowed to be offset or carried forward either. When the total income is above ₹10,000 in a financial year, the distributor of the prize money, which will be the likes of Dream11 in the case of fantasy sports, deducts 30% TDS before crediting the amount in your account.