While the online gaming market has undoubtedly witnessed a meteoric rise over the past year, the journey has not exactly been a smooth-sailing one. Amid a spate of detractors, litigations, bans and complaints, the future of this otherwise burgeoning sector lies in the hands of Indian courts. Even as the investors from around the world train their eyes on India, this new-age sector that has taken the country by storm has sprung open a box full of riddles, questions and dilemmas.
To glean deeper insights about what lies ahead for India’s online gaming market and decode the complexities in the online giving space especially with regards to the litigation and bans, G2G News invited Gopal Jain as the second guest in its flagship video series Game On With Jay Sayta, which aims to aggregate India’s online gaming community and bring together its most important stakeholders to discuss key aspects of real money gaming in India, legal and regulatory frameworks.
Jain has worked with new age technologies, telecom and various other sectors, observing and sussing out their policy matters and regulatory frameworks for decades.
In the second episode, Jain touched upon several key factors linked to the future of India’s online gaming business, the issue of litigation and cases faced by gaming companies at large. Pondering on where the industry stands at the moment, where it is headed and how gaming companies should prepare in this battle of perception and narratives, Jain and Sayta deftly cut across the crucial aspects of the market in a definitive and insightful conversation.
FIRST EPISODE OF GAME ON WITH JAY SAYTA: GAMES24x7’s BHAVIN PANDYA
In the present day and age, we are straddling what Jain aptly calls a ‘digital future’ as new age sectors like online gaming gain momentum. According to him, it is important to look at new-age businesses, new-age technologies, new-age sports and entertainment in the context of a forward looking regulatory and policy regime which fits into the mantra that the Indian Government has rather emphatically promulgated time and again – Ease of Business.
A complete regulatory and policy support is the need of the hour for a solid framework that supports these growing multi-million dollar businesses. Jain points out that the significance of being able to consume sports and entertainment while sitting in our homes or at our doorstep has been sharply realized over the past few months of the Covid-19 era.
Likening litigation to a rapidly-spreading virus, Jain shares that it doesn’t even have a containment zone. He shares, “It’s very important to think of how to re-imagine strategies for proper litigation, planning & management and most importantly, I think familiarizing decision-makers with new-age sectors so when you are deciding whether it is the regulators, the policymakers or the decision makers, they must make an informed view.”
Informed view, according to him, presupposes effective knowledge-sharing and awareness in an accelerated way so one can understand the sector to its full extent.
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Without a doubt, online gaming is being seen as one of the hottest sectors in India but the specter of negative sentiments and prohibitions continue to haunt its upwards trajectory.
Speaking about its positioning viz-a-viz government policies in the current scenario, Jain expounds, “I think the sector has seen an exponential growth quickly and that’s a great sense of acceptance so first the moment you have a large number of you users and viewers, It’s a good sign that there is healthy acceptance. Second it requires framework to be created by regulators and policymakers with enabled conducive environment for its growth. After all these sectors require significant amounts of investment so that is a very good sign as it has a multiplier effect. I think sometime back even the government’s think-tanks came up with the policy paper (NITI Aayog).”
Describing the bans that some southern state governments have imposed on the online gaming sphere as a ‘result of a very maximalist approach’ and a ‘measure of extreme resolve’, Jain shares that this is not uncommon in the Indian context.
Citing the example of mining, he shares, “It took another sector for example; Mining. the courts have always gone and banned it so they have taken extreme measures because sometimes you associate that with certain illegalities or wrongdoings but that is a very small component because of sectors and stakeholders in this industry.”
The new age mantra is what Jain calls proportionality and balance by the virtue of which he believes that recognition must be given to legitimate businesses.
He adds, “Perhaps we need to introduce a form of licensing, set the rules of the game and thereafter allow businesses full play and traction while keeping a vigilant eye on it rather than saying look we don’t understand you so let’s start by banning you. That is akin to putting a stranglehold, if I can use a pun on the word, that is game NOT on.”
As important as it is for the industry to come across as a responsible stakeholder committed to the cause, Jain believes that if there are ‘some learning or causes of concern’, then they must be addressed and that is also a skill of its own as to how to address this by communicating in the right way the benefits of participating in the sector
Revoking Knee-Jerk Bans By States
There are parallels between the knee-jerk reaction of banning mining and online gaming through executive action or by courts.
Touching upon the absurdity of banning approach, Jain shares, “Karnataka was the first state where mining got a bad name for a variety of reasons and this again is a super-spreader so people associated that with the word spectrum and telecom as if there was something wrong and the entire premise of strong action was based on this.”
With several bans being reversed on various sectors over a period of time, many have wondered whether courts should rethink their banning approach.
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Casting light on the commonalities of the said sectors, he elaborates, “Even if you look at the trajectory of mining and spectrum, I will compare it with the sector straightaway. First you ban and then over the period of time, you bring in a transparent process for example say of auctions and then you allow them to sort of get on with that, creating a regulatory regime or a legal regime which sets as I said certain conditions for legitimate businesses and over a period of time, the bans were relaxed right but the first was the electric shock that you go straight for the jugular.”
While a flurry of southern states have passed legislation, all of that ultimately has resulted in litigation. Jain asks rhetorically, “Is litigation the end by itself? The answer is no.” Speaking in favor of self-regulation, he continues, “Therefore, in all mature systems, we now are moving very strongly towards what is called ‘self regulation’ where industry and stakeholders get together. The government also is a strong votary and supporter of self regulation.”
Historically, self regulation has worked effectively in the broadcast sector with respect to the entertainment channels, news and advertisements.
Jain propounds that it is imperative to have an overarching forward-looking regulatory framework with a greater emphasis towards self-regulation because nobody knows the industry better than its stakeholders. He shares, “The moment a responsible sector draws out the right mechanism, then first thing is you don’t have to go to different states and you don’t have so much of litigation you focus on the business but like I said in a very structured way and that’s what builds confidence”
According to him, independent sectoral experts, legal experts and others from the creative industry can form a multi-disciplinary band. “That’s what ease of business is; where you don’t micromanage, control and take over businesses. You aid and support them but like with any sport you draw what I call the outer perimeter within which it happens so it’s a very win-win for all”
The debate of ‘games of skill’ vs ‘games of chance’ has been repeated ad nauseam in various forums with the bone of contention often landing in courts
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Addressing the issue, he notes, “Sometimes you get very confused with skill and chance and they are very quick to stamp something as not being skilled but fortunately the courts there have laid down certain tests. There are certain judgements which they have given like a dominant test for example in which a substantial degree of skill is required so when we have principles and precedents, then they should be applied but unfortunately every case has to be fought as if it was a separate case.”
Certainty is crucial for businesses to plan their affairs so they need to be given clarity and stability. Jain states that businesses should not have to go through a corridor of uncertainty and therefore principles evolved by courts must be followed. He shares, “Though we are very much a rule of law in a precedence-based system and this is very important for certainty. If there are certain causes of concern or mischief; it can be diagnosed and addressed.”
The domino effect of bans may have gained momentum in the southern states however it is interesting to note that in constitution and courts, Jain informs that, bans and prohibition fall in the category of the rarest of rare.
Envisioning an era of governance over government, he shares, “Resorting to an extreme measure has caused a lot of uncertainty and disruption in the business. New forms of sports and entertainment, particularly in your home are very important even psychologically as people have gone through difficult times so today it is a sports and entertainment channel where you feel entertained and happy and that’s an ecosystem that needs to be encouraged.”
Jain bats for a resolution-based approach rather than a problem-generating approach. He shares. “It is crucial and look at it, stakes are banned in so many different places and litigation is pending; does it settle the issue? No, it doesn’t. So I think these are very important takeaways that we have a new age sector and a new age economy so we must address it and that will provide comfort to stakeholders; particularly to those in the creative sector and to our investors.”
As many as three states have banned online gaming namely Telangana, Andhra Pradesh and Tamil Nadu where litigation has reached their respective high courts. Kerala has banned online rummy. In total, four ban-related litigations are going on in the country.
Giving his take on the matter, Jain shares, “When you look at a particular enactment in a constitution, the constitution itself is a very dynamic document. It is not static, it constantly breathes life. So you have to interpret things in context.”
Emphasizing on the need to accurately contextualize while interpreting the law, Jain opines, “You have to marry the text of the enactment along with the context to arrive at a conclusion. As there is a spate of bans and litigation, it becomes very important to set the principles primarily of interpretation and principles that you can take from existing precedents and apply it.”
He shares that it is important to understand the secretary thoroughly in all its details; its DNA, its Kundali before arriving at any judicial decisions. Calling for self-corrective mechanism where concerns can be addressed, he shares, “Have a platform by which the concerns can be addressed then it will not take judicial time for courts to look into these issues because it is very difficult to go in today, people will pick multiple aspects; we have seen it with the content and the OTT industry. There have been a chunk of complaints and FIR’s but ultimately we all enjoy the content.”
Online gaming sector is no different. India has a rich history of sporting activity and according to Jain, we have to look at it in the online space and have a functional equivalence. He shares, “This will give encouragement to this sector. The regulator, the policy-maker and the decision maker have to act in harmony with this larger purpose rather than have an ad-hoc or a knee-jerk reaction and that’s what fortunately happened when you have chunks of PILs etc., they just bring in a whole amount of stuff which is very difficult for courts to go deep in.”
Jain shares that there is a pressing need to re-think and re-imagine a digital era along with the digital economy, digital stakeholders and ultimately digital India. He adds, “Therefore policymakers and regulators must also be nimble, flexible and forward-looking saying let’s not play one over the other. Usually the debate always is; here are the stakeholders who are providing a service and here are the consumers as if to say that they are in conflict but they are not because it is for that consumer that all this has happened.”
Stressing on the importance of balance and proportionality, Jain recounts, “We have had a spate of judgements from the court where they have recognized this principle of proportionality, applied it and have fought certain decisions. If you want to bring balance, you need to bring all the stakeholders onboard and that is really the way forward.”
Ideal Framework Of Self-regulation For India’s Online Gaming Companies
Within the online gaming space, there are various verticals for which they have their own bodies. If self-regulation is the way forward, what’s the right way to do it?
Jain answers, “First and foremost, the commitment of all responsible stakeholders must be towards self regulation collectively in espousing the cause of self regulatory bodies with well-laid out mechanisms which address all issues transparently and fairly.”
While some have called upon the industry to have a unified approach, others have agreed with the existence of more than one self-regulatory body.
Jain shares that while there are a few self-regulatory bodies, the industry may witness a convergence eventually. He shares “The strength always lies in being under one roof but we’ve seen recently that even as far as broadcasters and OTT players are concerned, they have now set up a separate self-regulatory body so sometimes it leads to a little bit of competition. Industry as a whole must believe in it, commit to it and that is very important as governments are also thinking of encouraging and supporting self regulatory bodies by giving them recognition or policy-support.”
He adds, “That should be the trend and direction; even if there are separate bodies that’s fine but the ecosystem overarchingly must be governed by a self regulatory fold.”
The stakeholders, he feels, can come up with what are called good governance self regulatory principles. He notes, “These good governance self regulatory principles can be common across self regulatory bodies but they may apply them to different nuances of the games and the sectors to get a desired or a correct outcome.”
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Naming the three key principles of self-regulation, Jain shares, “So independence, neutrality and accountability are important and issues can be addressed if it is widely representative. It is not only for the industry, it is for the users, legal experts and sectoral experts. It becomes a multi-disciplinary thinking process and that can address more concerns as each of them can have a voice there and all of them can look into the problems and situations and address them.”
Indian system also requires a system of deterrence and consequence. Jain suggests that this will ensure a set of checks and balances of a particular kind. He adds, “There is a need to empower the self-regulatory bodies, make them neutral and widely representative and we have great global best practices. If you’re looking for something, there exists a good model. Let’s be good copy cats and follow it.”
Center vs State: Who Should Regulate India’s Online Gaming Industry?
Deterrence by voluntary bodies is difficult as it runs the risk of people not agreeing. Do we see the need for the central government to step in?
Being a nascent sunrise sector, Jain adds that it will take some time for the self regulatory body to be fortified by the court of law and that is an inevitable process. He shares, “You empower them and give them a statutory flavor or power so that’s the journey to go but I think you have to create an overarching chamber. You gave a good example of the IT rules which have come because they have created an overarching chamber. In the broadcasting sector, it is totally self-regulatory so self-regulation or co-regulation or regulation with statutory fort. All of which can co-exist in the field and the time has come for India to have uniformity and consistency across the board.”
For creating a legal regime overarchingly you need power but leading it for different sectors to create their own body within an overarching legal principle and they have a statutory flavor; good for the sector and good
From an enforcement and compliance point of view, creating a legal overarching regime generates confidence in stakeholders. He shares, “It should be unlike a press council which is a toothless tiger so it must have teeth but these teeth can be used to give guidelines and advisory because there is a lot of rich learning which comes from intra-stakeholder engagement consultation. Those learnings can also be codified.”
Laying emphasis on the need for flexibility in the interpretation, he shares, “I would strongly support the codification of principles and guidance mechanism rather than the hard and fast black and white letter of the law because you require flexibility in a growing sector and there could be situations which could not be contemplated which need to be addressed. I call it dynamic course correction with the larger interest that the sector grows with stability and certainty.”
Citing more examples, Jain compared the journey of other sectors like Telecom infrastructure and the Ministry of Information & Technology. He shares, “All states and stakeholders were able to evolve certain common guidelines and luckily over 15 states followed it. There was a collective participation process so I think this is a very important thing and again the industry and stakeholders can partner with the government think-tanks and states to shape the narrative.”
The Future Of India’s Online Gaming Industry
Jain suggests that the trajectory of all new age sectors is impressive and while there are ‘turbulence, cyclones and sometimes dust-storms’, all are bound to settle over a period of time.
Invoking the example of Telecom which has gone through its own share of disputes and uncertainties, Jain notes, “Telecom is back on track. So it is a question of how much skill we have in dousing the roadblocks and obstacles and I think that’s when mature and responsible industry and stakeholders rise to that occasion and make a strong connect with the stakeholders; the ethos of today. If you’re there for the users, then all their concerns must be addressed.”
Law gives a framework; and within that framework, businesses must have the flexibility to grow and realize their potential.
“I definitely think that as things settle down and we get greater clarity, the process can be accelerated with a collaborative effort. As far as the sector is concerned, you can see the Manhattan skyscrapers coming up and the past record shows that it has been exponential so there is no reason why you shouldn’t reach Himalayan heights,” Jain concludes bullishly with a smile.