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Online gaming platforms: the risk of a fantasy

A police sub-inspector in Maharashtra has been suspended indefinitely from service after becoming a crorepati. Aroon Deep reports on how despite it being legal, real-money fantasy sports gaming in India carries the stigma of propagating gambling and betting in society

November 03, 2023 02:11 am | Updated February 08, 2024 04:33 pm IST

Somnath Zende, who won ₹1.5 crore for assembling a ‘fantasy’ winning cricket team on Dream11, works out at a gym in Pimpri-Chinchwad.

Somnath Zende, who won ₹1.5 crore for assembling a ‘fantasy’ winning cricket team on Dream11, works out at a gym in Pimpri-Chinchwad. | Photo Credit: Emmanual Yogini

Somnath Zende, 39, a police sub-inspector (PSI) in Pimpri-Chinchwad, Pune’s largest satellite city, says he trains at the gym for two hours, before work begins at 9 a.m. To build his body, he spends ₹600 daily on protein shakes and other supplements, besides his expenditure on the gym membership.

About three months ago, as chatter about the ICC Men’s Cricket World Cup grew through media channels and across dining tables, his brother, Ganesh, 26, downloaded Dream11, a fantasy sports app, on Zende’s budget smartphone. Zende himself ‘invested’ ₹1,500 on creating Dream11 teams over the next few months, a great deal less than what he spends on bodybuilding each week.

But on October 10, when he won ₹1.5 crore for assembling a ‘fantasy’ winning cricket team for the England-Bangladesh match in Dharamshala, Zende was suspended for “promoting” real-money gaming, as a senior officer in the Pimpri-Chinchwad police says. The officer adds that playing these games is “not socially correct”.

The suspension laid bare the continuing tension between governments and law enforcement officials concerned about Indian citizens’ mental health on one hand, and fantasy sports gaming companies concerned about revenue, on the other. A Deloitte report from 2022 values the nascent industry at ₹34,000 crore.

Euphoric from the win, Zende, in uniform, had given media interviews — including to the BBC — that went viral, speaking in Marathi about how he had assembled the team that led to the win. The reason for his suspension on paper was that he had violated Maharashtra State Police’s code of conduct by a) playing the online game without permission from his unit commander, b) giving media interviews about his personal victory in uniform, and c) potentially being on the app while on duty.

An inquiry was opened into whether he was playing the game on duty as a PSI of the riot control police. “We would have been very happy if he had won in the real team 11,” says one of the officers on the investigation team.

App happy

Fantasy gaming apps allow users to deposit money in-app to build a virtual team or teams of players, and pit them against others. Users may win different amounts, depending on players’ actual on-ground performance. Those who top the leaderboard win the maximum cash, with a few others also reaping in some benefit. Many simply lose their money; some get back just what they had put in.

Much like mutual funds and stock market investment firms do with all advertising, companies in the real-money gaming app space declare the cash people put in as “financially risky”. However, these companies have successfully resisted the “betting and gambling” label in India’s courts. In fact, Dream11, which calls itself a strategy-based game, and others like it, have been upheld in various judgments as centred around skill that cannot be prohibited by State governments. This makes earnings from these apps taxable, and Zende will get roughly two-thirds of the ₹1.5 crore after fees and tax deductions.

In the past though, the concern of at least four State governments — reflected in various court proceedings in the High Courts — is that real-money gaming is in essence, gambling.

Dream11, one of the official partners for the ongoing ICC World Cup, raked in over ₹4,000 crore in annual revenue in 2021-22. Founded in 2008 as a free-to-use fantasy league for cricket fans, it began in-app purchases in 2012, and has grown to be the biggest fantasy sports league in India, with over 20 crore registered users playing across live cricket, football, and kabaddi, according to its website. “In the fiscal year 2022, Dream11 had the highest ad spend among fantasy sports and real-money gaming companies in India, with around 21.6 billion Indian rupees,” says an article on Statista, a data intelligence service.

A Dream11 advertisement at an ICC Men’s Cricket World Cup 2023 match, at the Maharashtra Cricket Association Stadium in Pune.

A Dream11 advertisement at an ICC Men’s Cricket World Cup 2023 match, at the Maharashtra Cricket Association Stadium in Pune. | Photo Credit: PTI

Legal eagle

Recalling the day he won, Zende says, “A friend called me up and told me my name was flashing on TV. I was so happy. I told my wife immediately, and she said, ‘That’s not possible; things like this don’t happen’.” But it had. After two weeks, he talks about the win with a certain nonchalance, to some extent because of all that has happened since: the indefinite suspension from service, the viral reach of his win, and the media circus around both.

As videos featuring interviews of Zende went viral on WhatsApp, and Pimpri-Chinchwad, an emerging industrial hub, came into the limelight, a local politician took note. Amol Thorat, who was until recently the city’s BJP general secretary, shot off a letter to the police commissioner and to other top officials in the State government. Forwarded interview clips made it look to him like Zende was promoting online gambling, Thorat’s aide says. “He took up this issue and gave a letter to the commissioner saying it’s against the law. And the pressure started building up.”

On his part, Zende, who has not broken his routine of going to the gym from 6 a.m. to 8 a.m., refuses to speak about the suspension while he is being investigated. He has busied himself visiting relatives in and around Pimpri. “My philosophy in life is just to be happy, no matter what,” says the family man, with two children, aged 7 and 3, as he breaks into a faint smile. When the term “online gambling” comes up, he quickly clarifies, “Not online gambling, skill gaming.”

Vinayak (first name withheld on request), a police constable, who works under Zende, says, “He doesn’t take tension (sic) at work. Outside the station, he freely speaks his mind.”

Born to farmers in Jejuri — a part of the Pune district and home to the Shaivite Khandoba Temple, a pilgrimage destination — Zende moved to Pimpri in 2011 and started work as a constable in 2012. After three years of preparation and obtaining a B.A. degree, he cleared the Maharashtra Public Service Commission’s entrance examination to join as a PSI in 2016. He had started working out around this time.

Somnath Zende is a sub-inspector in Maharashtra’s riot control police force.

Somnath Zende is a sub-inspector in Maharashtra’s riot control police force. | Photo Credit: Emmanual Yogini

Concerns of States

States have been worried about the rise in people landing in financial trouble, and worse, taking their lives from the trauma of losing lakhs of rupees when they play real-money games online. Gaming disorder is a mental health condition, after all. In Tamil Nadu alone, a four-member committee found that 17 people in the State had killed themselves after they had lost money on these apps. States such as Karnataka and Tamil Nadu tried to prohibit these games, but the bans were overturned in their respective High Courts.

Some States decided that enough was enough. Zende’s was one of them. A Group of Ministers (GoM) chaired by Maharashtra was formed at the GST Council, the powerful body that decides the rates and terms of sales taxes. The plan was simple: instead of taxing firms like Dream11 on the 5-20% commission they imposed, charge the entire amount that users deposited.

“Activities detrimental to social well-being should not be encouraged or promoted,” Sudhir Mungantiwar, a Maharashtra Minister, who headed the GoM, said in its final meeting. Minutes of that meeting, released in October, say that he took a “resolute stance” on the issue. The tax, which kicked in on October 1 this year, is 28% of the ‘face value’ of bets. This means that if a user puts ₹100 into their wallet on the app, ₹28 will be taxed, against the earlier ₹4 or less.

Sanjay Malhotra, the Union government’s Revenue Secretary, went even further: people were being taxed less when they were risking their money than when they were buying essential food items, he complained. Whether something was a game of skill or chance wasn’t the determining factor anymore. Everything was taxed: from casinos and horse races to real-money games and lottery tickets.

The industry has been quiet since the tax was announced, after briefly expressing anguish at its imposition. “We are deeply distressed,” one firm lamented in a press statement. Real-money gaming began internationally in the late 1990s, with India picking it up in the early 2010s. It boomed as Internet prices fell and smartphones became cheaper and apps more accessible.

Editorial | Skill over chance: On the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act and gaming

A top office-bearer of the Federation of Indian Fantasy Sports, of which Dream11 is a founding member, declined to discuss either the current legal situation or Zende’s dismissal. Another top official from the All India Gaming Federation, with 56 member companies on its membership rolls, did not respond to calls. A Dream11 spokesperson declined to comment too.

Zende hasn’t decided what he will do with the money yet, not even if he will pay off his ₹30-lakh home loan for a house he has bought in Pimpri-Chinchwad. As he waits for the inquiry report, due in about six months, he’s clear about one thing: he won’t quit his job, even though he has won far more than his salary will amount to over his police career. “I won’t leave this job,” he says. “I’ve worked very hard for it.”

If you are in distress, please reach out to these 24x7 helplines: KIRAN 1800-599-0019 or Aasra 9820466726.

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