TRADING ATHLETES: THE UNREGULATED MARKET of INDIAN FANTASY PLAYER STOCKS

Core platform structure

The foundational architecture of Player Stock Trading (PST) platforms is built on a structured account creation process with multiple verification layers. All examined platforms require users to be at least 18 years of age and explicitly prohibit participation from residents of certain Indian states. For instance, Sixer excludes residents from “Andhra Pradesh, Telangana, Assam, Sikkim, and Nagaland,” ² while Sportiqo extends this restriction to include “Meghalaya, Andhra Pradesh, Telangana, Assam, Sikkim, Nagaland, and Odisha.” ³

The platforms implement Know Your Customer (“KYC”) verification processes. For example, Sixer requires e-mail verification through OTP validation, PAN card verification, including name, PAN number, and date of birth, and Bank account verification with documentation showing account number and IFSC code.

The financial architecture is built around a sophisticated wallet-based system. Sixer, for instance, implements three distinct wallets: One, deposits wallet which is credited when users make deposits, usable for buying stocks but not withdrawable. Two, winnings wallet that contains proceeds from stock sales, available for both trading and withdrawal. Three, discount bonus wallet, contains GST-equivalent amounts and promotional bonuses. ⁴ Similarly, Sportiqo maintains separate wallets for deposits, winnings, and bonus amounts. These platforms also implement deposit limits-Sixer caps monthly deposits at ₹20,00,000 and annual deposits at ₹1,00,00,000. ⁵

Trading mechanics

The core innovation of these platforms lies in their ability to transform athlete performance into tradeable virtual assets. Analysis of the major platforms reveals three fundamental components that define their trading mechanics: One, price discovery and valuation. Two, trading directionality and position types. Three, portfolio structure and risk management. I look into each of these.

For price discovery, FPST platforms employ algorithmic pricing models that combine two key factors: (i) Performance-based scoring: Platforms use proprietary algorithms to convert real-world cricket statistics into point-based scores. For example, Sixer employs a comprehensive scoring system that accounts for batting, bowling, and fielding contributions, with different weights assigned to different types of achievements (e.g., runs scored, wickets taken, catches); and (ii) Market dynamics: Stock prices are influenced by user trading activity through various mechanisms. Sportiqo uses a bonding curve algorithm where prices automatically adjust based on supply and demand. ⁶ TradeStars implements smart contracts on blockchain to determine prices through user interactions. Sixer combines both performance scores and market activity in its pricing model. ⁷

FPST platforms have introduced sophisticated trading options beyond simple buy/sell mechanics. Directional Trading, done by platforms such as Sixer and Sportiqo allow users to take both positive (“Up”) and negative (“Down”) positions on players, similar to long/short positions in traditional securities trading. ⁸ This enables users to profit from both positive and negative performance expectations. Furthermore, several platforms offer ways to amplify potential returns using multipliers and leverages. Sixer provides multiplier options that can increase the impact of performance scores. Sportiqo’s “boosted trading” system allows for leveraged positions with automatic risk management through stop-loss mechanisms. ⁹

The platforms also implement various mechanisms—such as Minimum Holding, Trading Cycles, and Risk Controls—to ensure portfolio diversity and risk management. Minimum Holdings: All major platforms require users to maintain minimum portfolio sizes and diversity. Sixer mandates at least three unique stocks per portfolio. Initial portfolios often have specific composition requirements (e.g., Sixer’s 2 Up/1 Down structure). ¹⁰

Additionally, platforms employ different approaches to trading periods. Sixer uses a defined 5-game cycle system with clear IPO and expiry points. Other platforms operate on continuous trading models with more flexible holding periods. There are also various mechanisms that exist to manage user risk such as automatic liquidation triggers (e.g., Sportiqo’s stop-out system), portfolio balance requirements, and trading limits and position size restrictions.

Value determination

The value determination systems of PST platforms represent sophisticated frameworks that combine real-time sports analytics with market dynamics. These systems operate through multiple interconnected components that together establish stock values and govern price movements.

At the foundation of PST value determination lies a comprehensive performance scoring system. Sixer, for instance, employs a multilayered scoring methodology that evaluates cricket players across batting, bowling, and fielding dimensions. ¹¹ Raw batting points are calculated by combining run points, boundary bonuses, milestone bonuses, and dismissal points, which are then modified by a “batting multiplier” based on batting position. This granular approach ensures that player valuations reflect both obvious contributions (such as runs scored) and nuanced performance elements (such as batting strike rate or bowling economy).

The platforms overlay market dynamics onto these performance metrics through different mechanisms. Sportiqo implements a bonding curve algorithm where “the price of each stock increases or decreases with an increase or decrease in its supply.” ¹² This creates an automated price discovery mechanism responding to user trading activity. TradeStars takes a different approach through its “Fractional NFT Market,” where the price for each Smart Token is determined by the underlying smart contract following a bonding curve algorithm, which adjusts pricing based on the actual supply and demand. ¹³

PST platforms employ different temporal frameworks for value determination. Sixer’s “5-game series” system creates distinct valuation cycles where “each Stock goes through a 5-game series where a series starts at an IPO price and expires at the end of 5 games (where the cricket player was in the playing XI), at an expiry price.” ¹⁴ This creates defined periods for value assessment and realization, contrasting with more fluid systems used by other platforms.

Another unique feature of PST value determination is the incorporation of future performance expectations. As detailed in Sixer’s documentation, stock prices combine both “Scored Points” (based on actual performance) and “Expected Points” (projected future performance), creating a forward-looking valuation mechanism. ¹⁵ This hybrid approach distinguishes PST platforms from traditional fantasy sports, which typically focus solely on actual performance.

Trading rules and regulatory parameters

These platforms operate under a complex web of trading rules and limitations designed to govern user participation and risk management. These rules attempt to create a structured trading environment, seeking to balance user accessibility with platform stability and risk control. However, a closer examination reveals that these mechanisms, while sophisticated, often serve to mask underlying vulnerabilities and further highlight the platforms’ resemblance to unregulated financial markets, thus raising critical regulatory questions.

They implement variable fee structures, often combining fixed and percentage-based components. Platforms like Sixer, for example, levy a dynamic “administrative fee” that fluctuates based on market conditions for each transaction, including purchases, sales, expiries, and portfolio liquidations. This dynamic fee structure serves the dual purpose of generating revenue and attempting to modulate market activity. The platforms also impose multitiered position limits designed to restrict both individual stock holdings and overall portfolio composition. These limitations are operationalized through several mechanisms: minimum portfolio diversification mandates, as seen in Sixer’s requirement that users maintain at least three unique stocks ¹⁶ ; maximum position size restrictions, often expressed as percentages of total portfolio value to prevent manipulation and excessive concentration risk; and directional balance requirements, which enforce specific Up/Down stock ratios within initial portfolios. These measures, while designed to perhaps promote portfolio diversification and reduce concentrated risk exposure, are again similar to mechanisms employed in traditional financial markets, thereby highlighting the need to look at them as a similar, if not a replica, of such markets.

Trading activity on these platforms is subject to various restrictions aimed at maintaining market integrity, such as price band limitations, order size restrictions, and trading window limitations. Many platforms implement daily price movement limits, which bear a marked resemblance to those implemented in securities markets, and attempt to limit maximum order sizes in both absolute terms and in relation to total market volume.

Collectively, these trading rules and limitations create a constrained environment that distinguishes PST platforms from both traditional fantasy sports and conventional securities trading. The complexity of these rules underscores the sophisticated nature of PST platforms, indicating an evolution beyond simple gaming applications. While presented as risk management mechanisms, many of the rules have the additional consequence of generating revenue for the platform, while simultaneously aligning their financial goals with heightened market activity. Ultimately, the implementation of such complex trading rules and mechanisms shows that these platforms operate increasingly within a space that shares key characteristics with regulated financial markets—which is closely linked to the analysis in the subsections An unhelpful binary classification and Self-regulation mechanism of this article. This gives rise to pressing questions about the appropriate regulatory frameworks that should govern their operation, and which must take into account their dual nature as market platforms that also host a unique type of gaming activity.

The game of skill v game of chance debate

The emergence of PST platforms presents a novel challenge to India’s traditional jurisprudential framework governing games of skill and chance. While the Supreme Court in State of Andhra Pradesh v. K Satyanaryana ¹⁷ and K.R. Lakshmanan v. State of Tamil Nadu ¹⁸ established the foundational “predominance test”—examining whether success depends predominantly on skill rather than chance—these precedents emerged from a simpler context of traditional games with readily identifiable skill elements. FPST platforms, by contrast, introduce a multilayered complexity that strains the analytical utility of this binary framework. In essence, even if there are multiple pockets of skill, the architecture and interaction of these elements may still be a game of chance. This is precisely what the traditional game of skill test, as applied in practice, struggles to grapple with—and can lead to oversimplistic conclusions.

The skill components in FPST platforms manifest across three distinct but interrelated dimensions, each demanding specialized expertise. First, the platforms require sophisticated sports analytics capabilities. As evidenced in Sixer’s scoring methodology, users must synthesize complex performance metrics including historical statistics, match-specific variables, and contextual factors like playing conditions—an analytical burden that extends significantly beyond traditional fantasy sports. The Delhi District Court’s analysis in Gaussian Network v. Monica Lakhanpal ¹⁹ of what constitutes a “substantial degree of skill” becomes particularly instructive here, as the court emphasized the importance of domain expertise and analytical sophistication.

Second, and more problematically for traditional analysis, PST platforms incorporate market dynamics that demand skills akin to securities trading. The documentation from platforms like Sportiqo reveals price formation mechanisms based on both performance metrics and market forces, requiring users to master technical analysis and market psychology. This introduces what might be termed “derivative skill”—expertise not in the underlying sport but in the financial mechanisms built atop it. The Supreme Court’s observation in K.R. Lakshmanan that multiple skill requirements strengthen the “skill” classification takes on new significance in this context.

Third, PST platforms host some risk management capabilities. The implementation of portfolio diversification requirements, position limits, and automated liquidation protocols creates what the securities markets recognize as portfolio management skill. This dimension finds no analogy in traditional gambling activities or even conventional fantasy sports, suggesting the inadequacy of historical precedent for proper classification.

However, the presence of chance elements in PST platforms transcends the traditional conception of randomness in games. Beyond conventional sporting uncertainties such as injuries or weather conditions, PST platforms introduce systematic market risk through their bonding curve algorithms. This creates what might be termed “endogenous chance”—volatility generated by the platform’s own mechanics rather than external events. The Supreme Court’s assertion in K Satyanarayana that skill must be the “dominating element” becomes difficult to apply when chance itself is systematically embedded in the platform’s architecture.

This suggests that PST platforms exist in what might be called a “hybrid domain” where the traditional skill-chance dichotomy loses its analytical utility—which the next section focuses on in little more detail. While the platforms arguably require more skill than many activities previously classified as skill-based games, they also introduce novel forms of chance that resist traditional categorization. This indicates the need for a more nuanced regulatory framework that moves beyond the binary classification established in early Supreme Court jurisprudence.

An unhelpful binary classification

It is necessary to study the evolution of Indian gaming jurisprudence, from R.M.D. Chamarbaugwala ²⁰ to more recent decisions. The game of skill versus chance dichotomy, first articulated in R.M.D. Chamarbaugwala emerged in a distinctly different context, addressing traditional gambling activities such as card games and horse racing, where the primary policy concern was preventing addiction and financial ruin among the masses. The Supreme Court’s subsequent refinement of this test in K Satyanaryana and K.R. Lakshmanan remained anchored in this historical context, focusing on games where the skill element could be clearly isolated and measured against discrete chance events. This binary classification worked effectively for activities such as rummy (where card arrangement skills could be evaluated) or horse racing (where handicapping expertise could be assessed) because they presented relatively contained environments with identifiable variables.

However, PST platforms fundamentally disrupt this analytical framework by introducing what the securities market has long recognized as “systematic risk”—market-wide factors that affect all participants regardless of skill level. When the Delhi District Court in Gaussian Networks emphasized evaluating whether success depends on superior knowledge, training, attention, experience, and adroitness, it presupposed that these attributes could meaningfully differentiate outcomes. Yet in PST platforms, as evidenced by the bonding curve algorithms detailed in Sportiqo’s terms, even the most skilled analyst faces unavoidable exposure to market-wide price movements driven by aggregate trader behavior and complex feedback loops between performance expectations and trading dynamics. This systematic element transcends both the traditional notion of “chance” (which contemplated discrete probabilistic events) and “skill” (which assumed direct causation between expertise and outcomes).

Forcing PST platforms into this historical framework would be particularly problematic because the original classification emerged from a policy need to distinguish socially destructive gambling from legitimate contests of skill—a binary that loses meaning in the context of modern financial markets where sophisticated risk-taking serves valuable price discovery functions. The documented trading mechanics of platforms such as Sixer and Exchange22 ²¹ demonstrate that they operate more like alternative trading venues than conventional gaming platforms, making the traditional skill-chance analysis not just technically difficult but conceptually misaligned with the actual regulatory needs of this novel market structure.

The inadequacy of the traditional skill-chance dichotomy in regulating FPST platforms manifests across three fundamental dimensions, each highlighting the framework’s analytical limitations when confronted with hybrid gaming-trading platforms.

First, the framework’s inability to account for securities-like trading elements represents a structural deficiency. While courts have developed robust tests for evaluating skill in traditional gaming contexts, these tests fail to capture the sophisticated market mechanisms—including bonding curves, automated liquidation protocols, and price discovery systems—that characterize PST platforms. These elements introduce what might be, arguably, understood as “market skill,” a category that transcends the conventional understanding of gaming expertise contemplated in cases such as K Satyanarayana and Lakshmanan.

Second, the multidimensional nature of skill in PST platforms creates what we might call classification complexity. Users must simultaneously master sports analytics, market dynamics, and portfolio management—a combination that defies the unitary skill analysis prevalent in existing jurisprudence. This complexity is not merely additive but multiplicative, as success requires the integrated application of these distinct skill sets in a manner unprecedented in traditional gaming contexts.

Third, and perhaps most significantly, PST platforms introduce systematic market risk that fundamentally differs from the chance elements contemplated in traditional gaming jurisprudence. Unlike the discrete, identifiable elements of chance in conventional games, market volatility in PST platforms creates endogenous risk, self-generating uncertainty embedded in the platform’s core mechanisms. This systematic risk element finds closer parallels in securities markets than in gaming contexts, suggesting the fundamental misalignment between these platforms and traditional skill-chance analysis.

Self-regulation mechanism

Having examined the limitations of the skill-chance binary, we now turn to the proposed self-regulatory framework for online games under the Information Technology Rules, 2021, ²² and analyze its applicability to FPST platforms. This framework, aimed at providing a flexible regulatory approach, hinges on a specific definition of “online game” and the establishment of SRBs. This section will critically assess whether PST platforms meet this definition and the capabilities of the proposed self-regulation model to address the unique challenges they present, specifically regarding the nature of its structure.

The IT Rules define an “online game” through three essential elements that merit careful examination in the context of such platforms: (i) deposit by user, (ii) expectation of winnings, and (iii) winnings based on user performance. ²³ This definition, introduced through the 2023 amendments, specifically contemplates that the deposit may be “in cash or in kind” and defines winnings as “any prize, in cash or in kind, that is distributed or intended to be distributed to a user of an online game based on the performance of the user and in accordance with the rules of such online game.” ²⁴

The first element—deposit by user—is unambiguously satisfied by PST platforms. These platforms require users to make monetary deposits into platform wallets before engaging in PST. For instance, Sixer mandates a minimum deposit of ₹100 while maintaining distinct “deposits wallet” and “winnings wallet” architecture. ²⁵ It also implements a deposit wallet system which credited when you make a deposit on the Platform. ²⁶ The deposit requirement is not incidental but fundamental to the platforms’ operation, as users can only purchase player stocks using deposited funds.

The second element—expectation of winnings—requires more nuanced analysis but is nevertheless present. The platforms create clear expectations of financial returns through their very structure. This is evident in their deployment of “bonding curve algorithms” where, as Sportiqo’s terms explain, the price of each stock increases or decreases with an increase or decrease in its supply. ²⁷ The algorithmic price determination, combined with the ability to liquidate positions, creates a direct mechanism for realizing financial gains. Moreover, the platforms’ terms explicitly frame participation in terms of potential returns, with Sixer’s documentation referring to “proceeds from sale of Stocks” that can be withdrawn as winnings.

The third and most critical element—winnings based on user performance—is structurally embedded in PST platforms. User performance manifests in two distinct ways: first, through the strategic timing of buy/sell decisions, and second, through the selection of players whose real-world performance impacts stock values. This dual performance element is unique to PST platforms. The platforms employ sophisticated scoring systems that translate player performance into stock value changes, creating what Exchange22 terms a “performance-based” trading environment. A user’s success depends on their skill in predicting both market movements and player performance, making the connection between user performance and winnings particularly robust.

The interlocking of these three elements in PST platforms creates a compelling case for their classification as online games under the IT Rules. The platforms have developed a sophisticated mechanism where user deposits are transformed into potential winnings through performance-based trading decisions. This arrangement satisfies not just the technical requirements of the definition but also embodies its substantive intent of capturing online platforms where users stake money in expectation of performance-based returns. The presence of additional gaming elements—like leaderboards and contests—while supportive, is not necessary for this classification, given the clear satisfaction of the core definitional elements.

Nonetheless, while FPST platforms fall within the ambit of online games under the IT Rules, the proposed self-regulatory framework faces significant implementation challenges. The Ministry’s delay in registering SRBs under Rule 4B creates a regulatory vacuum. Despite the Rules prescribing detailed criteria for SRB registration—including requirements for an independent eminent person, player representation, and expertise in psychology and technology—no PST-focused body has been recognized. Recent policy discussions suggest the Ministry may be reconsidering the self-regulatory approach entirely, creating further uncertainty around the framework’s future. This regulatory inertia particularly impacts PST platforms, which continue to operate without clear oversight despite falling within the Rules’ scope.

The existing self-regulatory landscape, dominated by bodies such as FIFS (Federation of Indian Fantasy Sports) and E-Gaming Federation, is ill-equipped to regulate PST platforms. As explained earlier, while these platforms share surface similarities with fantasy sports, their underlying mechanics of continuous trading, bonding curve algorithms, and market-making functions introduce complexities beyond traditional fantasy gaming. The Rules’ requirements under Rule 4B(6) for SRBs to evolve frameworks addressing “measures to safeguard users against the risk of gaming addiction and financial loss” and “repeated warning messages at higher frequency beyond a reasonable duration for a gaming session” reflect a traditional gaming paradigm that fails to capture the market-like dynamics of PST platforms. This misalignment suggests the need for a specialized SRB with expertise in both gaming and financial market oversight.

Even if implemented, the current self-regulatory obligations under the IT Rules may prove insufficient for PST platforms. The Rules mandate basic safeguards such as display of registration marks (Rule 4 A(1)(a)), risk disclosures (Rule 4 A(1)(b)(ii)), and KYC verification (Rule 4 A(1)(d)). However, they fail to address the unique challenges posed by PST platforms’ hybrid nature—particularly their potential to create systematic market risks through their bonding curve mechanisms and the need for specific trading limits, position monitoring, and market manipulation prevention. Furthermore, it is also woefully unable to deal with the more critical addition and market-related challenges discussed in Part IV of this article.

Limitations of current classification

The preceding sections of this article have illuminated the inadequacies of existing gaming and self-regulatory frameworks in addressing the complex operational architecture of FPST platforms. As these platforms increasingly blur the lines between gaming and financial markets, there arises a pressing need to assess whether the provisions of securities regulation should apply. A conventional, legalistic approach would attempt to neatly categorize FPST tokens within the existing contours of Section 2(h) of the Securities Contracts (Regulation) Act, 1956 (“SCR Act”). While a superficial analysis might suggest that the term “securities” as defined in the Act is inclusive ²⁹ , the definition is primarily geared toward those instruments which relate to some financial or corporate claim or are otherwise derivative in nature based on underlying securities. The definition under the SCR Act, therefore, does not intend to capture instruments that are related to nonfinancial metrics, like player performance, even though the market dynamics may be highly similar to security markets.

However, such a formalistic approach proves to be analytically limiting. A close examination of Section 2(h) reveals that its enumerated instruments—shares, scrips, stocks, bonds, debentures, etc.—are grounded in corporate finance, representing claims on equity or debt. FPST tokens, by contrast, do not represent any formal or direct claim on a corporate entity or financial asset. Their value, as established earlier, is intricately linked to a combination of player performance metrics, algorithmic pricing, and dynamic user trading activities. This is despite that they use all the market-like instruments, such as price discovery mechanism, trading interfaces, and the overall psychology of trading, which is indistinguishable from normal security markets.

The same holds true for the classification as “derivatives” under Section 2(h)(ia). While derivatives derive their value from an underlying asset, often financial, FPST tokens derive their value from a complex web of factors primarily relating to player statistics, which may be considered as nonfinancial metrics. Though some of these are based on data which is collected from financial instruments, the metric itself is nonfinancial and is not pegged to a security. While the courts have adopted a liberal interpretation of Section 2(h) to include “marketable securities of a like nature,” an essential criterion to that is a demonstrable functional resemblance to traditional securities, and a market dynamic that warrants the same degree of regulatory oversight. Despite the inclusionary spirit of the courts, such expansions have been limited to instruments that fundamentally represent a financial claim or a derivative based on some underlying financial asset. The absence of a direct link between FPST tokens and such traditional financial metrics, therefore, poses a major challenge to fit them within Section 2(h) of the SCR Act.

Therefore, while the “other marketable securities of like nature” clause in the SCR Act appears to leave some room for a more expansive interpretation, the fact that FPST tokens’ core function is not based on any financial obligation and is heavily dependent on a performance-based assessment prevents its proper classification as a security. It is therefore argued that FPST tokens, while being “marketable” in some form, do not quite fit the conventional understanding of “securities” under the SCR Act, and that they also do not fit the definition of derivatives. This conclusion is not an end in itself. Instead, it serves as the point of departure to a more nuanced exploration of functional regulation, where the focus shifts from formal classification to an assessment of the economic substance and systemic risks associated with FPST platforms.

The functional equivalence: Mirroring securities market dynamics

Even if FPST tokens do not neatly fit the formal definition of securities, the operational mechanisms of the platforms exhibit a striking functional similarity to established securities markets. These platforms, as detailed in Section I, are not merely games. They are, by their operational design and functionality, markets for trading on a derivative based on player performance. At the core, the mechanics of these platforms are indistinguishable from normal security markets, particularly with respect to: (i)

Price Discovery Mechanisms: FPST platforms employ what they call “bonding curve algorithms” for price discovery, which is not unlike the manner in which stock prices are determined in certain unregulated exchanges. While traditional security markets rely on a mixture of order-book mechanisms and market makers to determine prices, the bonding curve algorithms in FPST platforms create an automated, yet nontransparent, price adjustment mechanism that closely mirrors the dynamics of supply and demand. When the algorithmic determination of price is coupled with a trading interface, this mechanism creates a trading environment similar to markets where there are no underlying assets being traded.

The operational similarities between FPST platforms and security markets are not superficial. They are deeply structural, creating the same opportunities for speculative behavior, the same potential for manipulation, and the same degree of systemic risk.

The imperative of functional regulation: Addressing systemic risks and investor protection

The functional equivalence of FPST platforms with security markets could elicit an argument from SEBI that they should be regulated under existing financial market frameworks. This conclusion is not dependent on the precise legal classification of FPST tokens as “securities”; instead, it arises from a principle of regulatory necessity and concern for investor protection. (i)

Investor/Gamer Protection: Users of FPST platforms are exposed to a variety of risks that are functionally similar to those faced by investors in traditional securities markets. The risks are, inter alia, (i) the risk of manipulation due to nontransparent algorithmic structures and lack of adequate surveillance mechanisms (ii) the risk of market instability created by the absence of market makers and a reliance on automated execution (iii) the risk of financial losses from highly leveraged and speculative trades, all of which are further compounded by an absence of robust disclosure standards. Without adequate regulation, retail investors, often less familiar with these types of market dynamics, are at a greater risk.

Given the structural similarities and risks, a robust, tailored regulatory framework is necessary, and there would be merit in SEBI taking a close look at it. If the platforms are allowed to operate unchecked, the systemic vulnerabilities pose potential financial harm, especially for retail investors who are often the most exposed.