Real Money Gaming operators in India and way ahead
1st November 2021
Let us begin with some facts. As per Business Insider, India’s online gaming industry is presently around $1 billion and has the potential to generate $2 billion by 2023. When it comes to online real money game players, the projections expect them to grow from 80 million in 2020 to 150 million by 2023. This is a drop in the ocean considering that the online gaming industry is already close to approx $40 billion.
As is the case with any global fad or consumerist trend, India features as the hotspot due to its large population and heavy penetration of the internet. With hundreds of millions of mobile users in our country, it should come as no surprise that the numbers are doubling and tripling each year for online gaming sites as well as their users.
The Moral And Legal Dilemma: Real Money Gaming
Gambling or similar games which are deemed to be based on luck and chance are largely illegal in most states of India. There is also a social stigma attached to such games and activities. But, in India there is no central law or regulation for this activity, instead, it is up to the respective states to formulate their own laws.
It is ironic that a substantial part of the user base of most online real money gaming sites were coming from the southern region of India, yet in the recent few months, several south Indian states like Andhra Pradesh, Telangana, Tamil Nadu, Karnataka and Kerala have made serious attempts to prohibit real money games. Or maybe it is not ironic but the very reason why these states have taken measures to curb this popularity. While a state may have banned real money games, it cannot stop users from giving a different address to subscribe to the platform.
Gambling and other games are differentiated by the preponderance of skill. Games that substantially depend on skill are not considered as gambling. A set of decisions by Indian High Courts gave credibility to fantasy sports operators like Dream 11 by ruling that these activities fall under games of skill and not luck. The Supreme Court upheld some of these rulings paving the way for a plethora of real money gaming operators which involved games featuring online rummy, online poker et al.
What Is The Impact?
Most of these sites have received substantial funding from large venture capitalists and funding houses. The valuation of some of these companies has gone through the roof. Many companies prefer to operate in the grey areas of the ambiguous laws and regulations in place today. Take, for example, the concept of a ‘rake fee’. Using this mechanism the real money gaming platform charges a fee for facilitating games or making the basic level of gaming free but other additional and more attractive features usually require users to pay for it. The revenues being made are staggering. It comes as no surprise that some of these gaming sites have developed enough clout to become sponsors of the IPL or the Caribbean Premier League. This surely is a sign of the things to come in the future.
With the influx of so much subscription fees and user data, real money online gaming companies need more compliance monitoring and regulation than ever before. They cut across several legislations, rules and acts covering overlapping state and central areas of administration like Information Technology, User Data Protection, Gambling; just to name a few. Presently, most of the online gaming companies are working in this matrix of confusing techno-commercial laws and jurisdictions.
Way Forward for RMG sites
There have been suggestions to the government and the NITI Ayog to include the real money gaming industry under a central regulatory framework. Most likely, it is a way of safeguarding the personal and financial rights of the gamers involved, because once under the industry level regulation, these gaming operators can be better monitored and enforced to follow the rules of black and white, instead of operating in the large grey areas that are presently preferring to work in.
By establishing a formal structure for these companies to operate in, the government can also protect users from other online threats such as phishing, identity theft, etc. It may also make sense to formulate central level laws, instead of the current disparate ones which are created at individual state levels. Central laws will bring homogeneity in the operations of these companies, while the state governments can take control of the implementation and administration aspects. The need to have research-backed bills introduced in the legislature to formalize the governance of the online gaming industry is urgent.