Karnataka’s bill to ban online gaming will hurt start-up ecosystem, gamers: CAIT
20th September 2021
Confederation of All India Traders ( CAIT), the powerful trade body representing eight crore traders and over 40,000 trade associations, has expressed concerns about the recently proposed bill in the Karnataka assembly that is aimed at banning and criminalizing online gaming.
According to CAIT, the provisions in the Bill will harm the Indian startup sector, the Indian gaming and animation industry, and millions of Indian gamers and esports players.
The Karnataka Police (Amendment) Bill, 2021 was tabled in the Karnataka assembly on 17th September. The bill is yet to be discussed in the Karnataka legislative assembly this week.
For the unversed, the objective of the bill is to make effective enforcement of provisions of the Police Act by making provisions as cognizable offenses and non-bailable, except Section 87 (gaming in public streets), which is made cognizable and available.
According to the bill, online gambling includes the use of cyberspace, including computer resources or any communication device as defined in the Information Technology Act, 2000 in the process of gaming, to curb the menace of gaming through the internet and mobile apps.
The draft Bill defines online games as, games involving all forms of wagering or betting including in the form of tokens valued in terms of the money paid before or after the issue of it or electronic means and virtual currency, also electronic transfer of currency in connection with any game of chance.
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While this bill proposes to ban online gambling, the bill has also introduced a clause that will ban all online games of skill. The enforcement of this bill will have an adverse effect on Indian startups like Dream11, Nazara, MPL, Games 24×7, and Paytm First Games
Data platform Tracxn reported that there are 623 gaming startups in India. In a letter addressed to Basavaraj Bommai, the Chief Minister of Karnataka, the National Secretary General of CAIT, Praveen Khandelwal said: “Unfortunately, the Karnataka bill does not distinguish between a game of skill and a game of chance. Game of chance is pure gambling and should be rightfully banned. However, by including games of skill in the ambit of the bill, it has not only gone against established jurisprudence but threatens the thriving Indian gaming startup sector.
Investments have been pouring into the gaming sector in India by millions over the past year, making it one of the most successful avenues however the specter of criticism, litigations, and bans have been haunting the online gaming segment for quite some time now.
While stakeholders and experts have dubbed it as a knee-jerk reaction by the government, many are hoping to prescribe regulations instead of outright bans. In this case, India, which is only beginning to understand the real money gaming sector in its entirety, can look at western models.
OpenPlay Technologies founder Sreeram Reddy Vanga, who has endured a successful real money gaming journey, recently spoke to G2G News about how the UK has regulated the sector. He argued that the UK is one of the world’s best-regulated markets, with mature jurisprudence, and a country with stringent licensing policy along with set codes of conduct when it comes to the online gaming sector.
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Describing the stringent terms of licensing procedures in the UK, Sreeram said, “They first identify the company and to apply for a license.. you may get it but even the principles of the company have their own license so you have to make sure that pretty much all these licenses are in good standing.”
In addition to the need to comply with online gaming regulations which prescribe detailed terms with respect to underage gaming, one also has to adhere to the processes and procedures which determine that players are over 18 years of age.
Sreeram shared that the UK laws also include income verification. “Anybody who is gaming needs to have enough evidence to show that whatever limits you gave them to play every month or every rolling 30 days is within their affordability and then you have to understand and run a lot of algorithms around problem gaming because typically when they lose money, they may chase money or they may be spending money which they borrowed so you have done all those algorithms to ensure that they are not chasing money that they don’t have”.
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He informed that companies need to give players self-exclusion or a cool-off period so they realize they have a real problem. Apart from prerequisites like KYC and strident conditions, gaming standards that are certified and tested, companies in the UK are expected to comply with the entire EU regulation around anti-money laundering.
“Most importantly, the UK advertising standards in terms of how you advertise; for example saying ‘you could win up to’ or you may win up to’. All those things are not allowed. You have to be very very specific in terms of what the offer is that you have and nothing should be tempting or alluring,” he added.
CAIT also said that this bill will end up encouraging illegal offshore gambling and betting apps that operate in the online grey market. Thousands of common Indians have lost their life savings to these illegal casino apps.
“Once the bill bans online skill gaming, law-abiding Indian companies will exit the market and users will turn to harmful offshore and betting apps,” Khandelwal added.
Like many stakeholders of the Real Money Gaming sector, CAIT also supports a “strong and stable regulatory mechanism for online skill games.” They implored the Karnataka government to protect the interests of Indian companies and developers.