It Is Time for the Central Government to Clear the Regulatory Muddle
Srinagar, June 15: A recently published opinion article by public policy analyst and former financial services professional Manavendra Prasad describes the “complex regulatory muddle” that the Indian online gaming industry is forced to navigate through and concludes that “It will be appropriate for the Central government to step in to create an omnibus regulatory framework for the industry.”
Technological advances of recent years, combined with the effects of the global pandemic, have led to a “massive boost” of online gaming. The author quotes data from a recent report by financial consultancy KPMG showing that 43 crores of Indians have been enjoying online gaming and their number is projected to reach 66 crore by the Financial Year of 2025.
The expansion of the sector is expected to create thousands of new job opportunities, attract increased levels of Foreign Direct Investments (FDI), boost the economy and raise tax collection, with the online gaming industry reaching revenue generation of Rs 29,000 crore by FY2025.
At the same time, the growth of the sector is being restrained by a patchy and ambiguous legal framework that varies from state to state, including even bans on online gaming and a general unclarity of the boundaries that separate games of skill and games of chance.
Numerous litigations have been instigated over the years seeking clarity of classification for certain games, including online fantasy sports, rummy and others, as skill- or chance-based, or challenging state-imposed bans on gaming.
For example, in August 2021, the High Court of Madras quashed one such prohibition enacted by the Tamil Nadu government as contradictory to the Union Constitution for violating fundamental right by banning games of skill.
“The disparity in regulations poses a compliance burden for the gaming companies. This ambiguity can lead to users having varied rights,” Prasad writes. In addition to that, it is only the national parliament that can enact laws with extraterritorial effect that can apply to companies and persons based outside of India.
Thus, state-level legislations cannot affect the operations in India of offshore platforms offering casino gaming, sports betting and sale of lottery tickets online, resulting in the siphoning of funds outside the country. This, combined with the pan-Indian reach of online gaming, calls for a national-level regulation over the sector.
Such a regulatory framework would have numerous benefits and mitigate a variety of problems, as Prasad points out. Indian businesses will be able to attract investments, raise revenues and rope in new talent. Societal issues such as gaming addictions, problem gambling and other mental health impacts would be addressed. Other problems including match-fixing practices and gambling by underage citizens can also be curbed.
Dedicated Real Money Gaming and Gambling Need Regulation the Most
Another recently published opinion article discusses the pitfalls of the newly-proposed Indian gaming bill. The main concern expressed there is that the law, in the form it was introduced, fails to distinguish between casual games with real money elements and dedicated real money gaming over sports betting and online casino India platforms, which need regulation the most.
The Online Gaming (Regulation) Bill, 2022, was tabled at the Lok Sabha on the 1st of April this year providing for the establishment of a central regulator in the face of the Online Gaming Commission by the Union Government and the enactment of a licensing regime over gaming across the whole of India.
However, as the article points out, “It’s clear that M.P. Dean Kuriakose, who introduced the bill, could use the help of people experienced with regulated markets to gain a better understanding of how vastly different a game with real money features is from a game entirely based on real money activity.”
“In short, an online casino shouldn’t be regulated in the same way as, for example, a gaming platform offering a first-person shooter game with optional real money features. These games are widely different, and trying to fit them under one umbrella is a recipe for disaster,” writes Felicia Wijkander, Chief Editor at ENV Media, a real money gaming industry expertise company.
As a whole, the article welcomes the introduction of the bill and the moving away of state-level laws and blanket bans as “a great step in the right direction, showing all the things India has to gain from online regulation.”
