Online gaming

If digital India is to progress, the online gambling industry needs corrections, not punishments

There is a booming new India that boasts the right infrastructure, talent readily available to hire, and an audience that is an early adopter of new technology and innovation. (More sports news)

The year 2021 saw that every 8 days a start-up became a unicorn in the country and now, since the start of this year, it is every five days. It is the enabling ecosystem that has developed in India in recent years that has ensured this, coupled with the culture, creativity and relentless commitment of young Indian entrepreneurs.

In the true spirit of our nation and which can only mend Karnataka’s image as the start-up capital of the country, the Karnataka High Court has overturned the blanket ban imposed by the state government on all forms of online games involving monetary transactions. calling it “ultra vires” (beyond the powers of governmental bodies) to the Constitution of India.

The divisional bench issued a writ of mandamus restraining the respondents from interfering with online gambling businesses and related activities. This came after the high courts of Kerala and Madras had previously overturned similar bans by their respective state governments.

This is a great moment for the gaming industry as well as for India as a budding start-up nation. Start-ups in Karnataka must be delighted with the decision, while for other start-ups in the country and global investors, the court ruling will affirm their faith in the Indian legal system.

A digital India cannot be one where disinformation drives policy and the High Court ruling makes that abundantly clear. While we need central, progressive and pervasive policies for online gambling in India, local governments and enforcement bodies need to work with the industry to establish best practices and promote responsible gambling.

The Universal Service Obligation Fund (USOF), to which the telecommunications industry contributes, is a good example of how the regulator has used industry contributions to effectively empower the consumer and improve awareness and acceptance. access.

Blanket bans are uninspired and ineffective ways of dealing with perceived problems and have no place in the India of 2022. “Youth innovation” and ill-informed decisions cannot go hand in hand. If the dream of a truly digital India is to be realized, innovative solutions must be found everywhere, by all stakeholders, through constant collaboration and creative problem solving.

DESI-CULTURE

Prime Minister Narendra Modi recently called for more games made in India and to bring our nation’s history and culture to the world. Two key factors that can further be a boost include policies that support the growth of start-ups and new businesses and a consistent industry engagement process that gives these businesses a chance to realize their potential, maximize revenue and grow exponentially.

The growing attention comes on the heels of a massive growth spurt seen by the sector during the pandemic. The need for interactive entertainment due to lockdown measures has driven the growth of online gaming in India at a compound annual growth rate (CAGR) of 38% in 2019-2020 and 37% in the next fiscal year. This growth was faster than social media which grew by 11% and 26% during the same periods, according to a report by Boston Consulting Group (BCG).

The differences between games of skill and games of chance are significant. While the former heavily depends on a person’s skill and practice to win, the outcome of the latter depends solely on luck. For a layman, a game of skill is a game where a person can choose to win or lose, for example, chess, and a game of chance is a game whose outcome does not depend on any manual intervention, for example , a draw. .

Why the online gaming industry and what it brings to the table is unclear is becoming more and more unclear with each passing day. However, it is clear that everyone is attentive to the sector and successive judgments have confirmed the preponderance of know-how as a legitimate activity.

INVESTOR PLEASURE

The sector’s growth has also caught the attention of investors who invested $549 billion in the first three months of 2021, more than the amount raised in all of 2020. To understand how investor interest in gaming has grown over the past five years, think of the money gaming startups raised in 2016 – a paltry $34 million.

Naturally, policy makers also saw the potential of the “infant industry” and reacted differently to the interest and time spent on games. Like when social media was introduced, online gaming has met with opposition from some quarters, with Karnataka’s ban being an extreme reaction to a popular medium of entertainment and engagement.

Fantasy rigs, heavily involved in Indian cricket, have been bold in their operations. Photo: BCCI

In less than a decade, social media has led to a creator economy and easy-to-manage online marketplace that is propelling us toward our dream of a trillion-dollar digital economy. The gaming industry looks set to take over in the next phase of innovation and growth.

It is estimated that there will be around 700 million gamers in India by 2026 and the market size will be close to $7 billion. This would make gaming one of the biggest sectors in terms of scope and market size in India and also put us on the global stage as a frontrunner in game development and design.

FRIENDLY ECOSYSTEM

This will require more investment, more local talent and even more support from all stakeholders. Startups, in particular, will need progressive policies that can create an atmosphere of certainty and reduce risk for investors and new entrepreneurs. Policy predictability while creating an ecosystem that champions innovation and disruption is key to retaining great talent and improving the ease of doing business.

Indian start-ups have had to relocate or explore other geographies like USA, UK, Ireland, UAE, Singapore for their headquarters with greater frequency. Growth-friendly policies and an ecosystem that continues to promote investment and entrepreneurship is the need of the hour.

Although we have made progress in this direction, there is still a long way to go. In India, for example, the distribution of dividends is taxed while Singapore avoids this taxation. A capital gains tax of around 15-20% is applied here, which can be seen as a penalty for choosing entrepreneurship.

Meanwhile, the capital gains tax rate in Singapore is 0%. The politics system could also do with a do-up. Startups are still finding their feet in the corporate world and can’t be dragged into long, drawn out and expensive legal battles every time something goes wrong.

A lighter regulatory framework would be ideal for dealing with start-ups where corrections work better than penalties. As cities like Tel Aviv and countries like Singapore do their best to promote start-up growth, there is room to improve India’s ecosystem for start-ups, starting with creator-friendly policies. jobs today.

NEED CENTRAL PLANNING

Along with a central, pervasive and progressive policy framework under a progressive ministry like MeitY, the ministry and Niti Aayog can work together to formulate a central policy framework and oversee nationwide execution.

As the whole framework will depend on whether the game in question has a preponderance of skill or luck. In this regard, a Skill Gaming Council (SGC) can be used to make the differentiation between skill and luck possible through audits and certifications.

Gaming companies should appoint residential complaints officers to handle consumer complaints. Companies may be given time to act on the resolution of complaints received.

In the event of non-compliance with laws, failing companies may be reported to the state police for consumer legal action. The idea is to get policy makers, industry and all relevant stakeholders on the same page and work for the benefit of users.

PokerPoker remains a huge driving force, especially in Goan casinos. Courtesy: Twitter (@PokerStars)

With this in mind, the Animation, Visual Effects, Games and Comics (AVGC) Task Force, announced in the budget, is a positive step towards its realization and can also help recommend ways to strengthen national capabilities to serve the Indian markets as well as the world. demand.

ONLY

The Karnataka High Court judgment was welcomed and celebrated by the industry and millions of gamers, but the reasons that led to such bans have yet to be addressed. The intervention of the Supreme Court on the differentiation between “games of skill” and “games of chance” has already clearly indicated that the former are legal in India.

And yet, time and time again, skill-based gaming companies have found themselves unfairly disadvantaged and prevented from realizing their full potential. Policy unpredictability is often cited as the biggest hurdle for an industry that currently employs thousands of people and is expected to create more than 200,000 new jobs over the next three years if the right policy impetus is given.

The gaming industry is still in its growth phase and there will be challenges along the way. Only by doing can we learn what needs to be done. Quoting a famous video game, Dragon Age II, “We stand on the precipice of change… Watch for this moment and when it comes, do not hesitate to leap. The IT industry in India was that leap of faith and today today an equally bright future invites this new and transformative India of tomorrow to become a brave new world.

(Dr. Subi Chaturvedi is a former member of the United Nations Internet Governance Forum and currently chairs FICCI’s Committee on Technology, Policy and Leadership. Opinions are personal)