Dream11 is an Online Fantasy sports platform that allows people to play various sports. It is based in India. It became one of the biggest Online Fantasy Sports App during the Indian Premier League(IPL Cricket) in 2019. The person who wants to play is required to pay a certain amount to join the contest, select the players from the teams who are going to play the upcoming match and earn points on the basis of performance of the selected players in real matches. The player wins real cash according to the points earned.

Recently, a case of Gurdeep Singh Sachar vs Dream11 Fantasy Pvt. Ltd. was decided by the Hon’ble Bombay High Court on 30th April, w.r.t GST.

Dream 11 fantasy sports

Issues raised in the case:

1. Dream11 Fantasy Pvt. Ltd. is involved in conducting illegal operations of Gambling or Betting or Wagering in the guise of Online Fantasy Sports Game.

2. Dream11 Fantasy Pvt. Ltd. has allegedly evaded GST payable by it by violating the provisions of the GST Act and Rule 31A of the CGST Rules, 2018.

Facts considered by the Court in the 2 issues mentioned above:

1. The result of the online fantasy game is not dependent upon the winning or losing of any particular team in the real world on any given day. The players selected by the person playing the Dream11 game can be from both the teams. The person selects the team based on his/her skills and expertise. Therefore, this activity is not ‘Gambling’ or ‘Betting’ or ‘Wagering’.

“Fantasy Sport is a type of online game where participants assemble virtual teams of real players of a professional sport and the teams compete based on the performance of those players in the real games”.

2. The amounts to be distributed to the winning participants at the time of result are pooled in an escrow account. These are ‘Actionable claim’. But since this activity does not amount to Gambling or Betting or Wagering, hence these Actionable claims fall under Schedule III of Section 7(2) of the CGST Act and are neither considered as Supply of goods nor Supply of Services for the purpose of levy of GST. Also, Rule 31A which is limited to activities of Lottery, Betting, Gambling or Horse Racing does not apply in this case. Therefore, the transactions pertaining to Actionable claim are exempt from GST and Dream11 Fantasy Pvt. Ltd. has not evaded any amount of GST.

“Actionable Claim is a claim on any unsecured debt where a recovery action can be initiated through Court”.

Relevant provision of the GST Act:

SCHEDULE III- ACTIVITIES OR TRANSACTIONS WHICH SHALL BE TREATED NEITHER AS A SUPPLY OF GOODS NOR A SUPPLY OF SERVICES

Entry 6- Actionable claims, other than lottery, betting and gambling.

Under the GST regime, actionable claim relating to lottery, betting and gambling alone will be regarded as ‘goods’.

Conclusion: The activity of Dream11 Online fantasy Game is not illegal. It is not gambling or betting or wagering. The amount to be distributed to the winners is an Actionable Claim which is not Supply for the purpose of GST and hence, EXEMPT.

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CA in Practice ..Partner at S.Saraf & Associates .. Also a blogger : https://indiantaxhub.blogspot.com View Full Profile

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