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Fantasy gaming giant Dream11 has been in the eye of a legal storm for almost a year now. Last April, the Bombay High Court had turned down a petition filed by Gurdeep Singh Sachar, questioning the ‘skill-gaming’ element of the games that the site hosts.
Even though the court rejected Sachar’s contention that Dream11 was wrongly paying GST at 18%, the Central government and the government of Maharashtra filed Special Leave Petitions (SLP) at the Supreme Court against the decision. At the same time, Sachar and social activist Avinash Mehrotra also filed intervention appeals. Upholding the Bombay High Court’s ruling, the Apex Court on December 13 rejected all the appeals. In the landmark judgment, Justice Nariman observed, “There is no doubt that fantasy sports is a game of skill.”
This should have settled the issue of the legality of fantasy games once and for all. Still, last week, Sachar submitted a clarification application to the Supreme Court.
The Apex Court had, in its December ruling, permitted the Union Government to file a review petition at the Bombay High Court for pursuing the alleged GST evasion by Dream11 amounting to ₹2,173 Crores. Sachar, in his application, sought clarification on why the ‘skill-gaming’ aspect could not be reviewed by the Bombay High Court as well as the issue of gambling/betting is connected to the determination of the manner of payment of GST.
Firmly reiterating its prior stand, a two-member bench of the Supreme Court comprising of Justices Rohinton F. Nariman and S. Ravindra Bhat, while hearing Sachar’s clarification application on January 31, dismissed the same.
The bench heard out the arguments put forth by Sachar’s counsel, Senior Advocate Mahabir Singh, former Attorney General of India, and Senior Counsel Mukul Rohatgi, who was representing Dream11 and Senior Advocate K. Radhakrishnan, the counsel representing the central government.
Rejecting Sachar’s application, the court observed, “It is reiterated that in accordance with our order dated 13.12.2019, the only scope of the review filed in the Bombay High Court is with respect to GST and not to revisit the issue as to whether gambling is or is not involved.”
The Verdict – What This Means For Dream11
The Central government’s review petition on the Dream11 GST matter is scheduled for hearing at the Bombay High Court on February 11. While this would primarily deal with the manner in which the company is paying GST and decide on the alleged tax evasion charges against it, with the Supreme Court’s dismissal of Sachar’s application, the question of whether the platform hosts games of skill has been settled for good.
The verdict has enormous ramifications not only for the entire fantasy gaming industry but Dream11 specifically. Already a gaming unicorn, Dream11 is a dominant market leader in this space, and this legal victory should enable it to gallop towards unheralded growth.
The company has been generating massive investor interest over the recent months. The company is likely to get another significant fund boost estimated at $500 Million with New York-based Hedge Fund, Tiger Global Management, reportedly leading the upcoming funding round.
While we can hope to see the company’s fantasy gaming revenues increasing exponentially, it will be unsurprising if Dream11 soon diversifies across other gaming verticals as well. The company that changed its name to Sporta Technologies last April has already hinted that it may quickly start selling sports merchandise as well.
The company has also stepped into live streaming through its multi-sports app, FanCode, and recently tied up with National Basketball Association (NBA) for live-streaming select NBA’s 2019-2020 season matches.
Coupled with the green signal from the Apex Court, these well-timed business moves could well usher in a steeper growth chart for Dream11.