Online gaming

India needs regulation for its online gambling industry

Huge economic potential can be unlocked through regulation

A recently published opinion piece by prominent civil servant Dhanendra Kumar highlights the huge economic potential of the Indian online gambling industry and the need for a comprehensive regulatory framework hosted by a central nodal ministry for the sector to achieve this. potential. Kumar was the first Chairman of the Competition Commission of India (CCI) and former Executive Director for India at the World Bank.

“The biggest problem is that the industry suffers from a lack of regulatory ecosystem, with blurred jurisdictions between the center and the states, leading to confusion and loss of revenue for both,” Dhanendra Kumar points out.

The high potential of the Indian online gambling industry Sunrise

The unofficial term “rising industry” is used to refer to a sector of the economy, usually at an early stage of development, which promises a rapid boom and generally has high growth rates, generates the creation of many startups and attracts companies massive. capital funding. India’s online gaming sector, with its enormous potential, is a great example of such a budding industry.

In his article, Dhanendra Kumar cites figures drawn from several industry studies, all highlighting the exciting prospects for online gambling in India, driven by the country’s young demographics, rapid penetration of affordable smartphones and mobile data plans. inexpensive, and the development of new game genres.

With 43 crore desi gaming app users and the highest number of game downloads in the world, estimated at 76.1 crore by Sensor Tower Research, online gaming in India is poised to grow further. KPMG assesses the industry at ₹13,600 crore in FY 2020-21 and projects its size to reach ₹29,000 crore (approximately $3.8 billion) by 2025. Another report by BCG and Sequoia forecasts even higher growth to ₹38,200 crore ($5 billion) by the same year.

In her budget speech for the financial year 2022-23, Union Finance Minister Nirmala Sitharaman announced the establishment of the Animation, Visual Effects, Games and Comics Task Force ( AVGC) aimed at promoting the sector. According to data cited by Kumar, India holds 10% of the current global AVGC market and is on track to reach a 25% share by 2027.

Regulatory architecture can make online gambling a major contributor to the quest for the $5 trillion economy

However, for the huge potential of online gaming to be realized and the high growth forecasts to be realised, India needs to emerge from the current legal environment of regulatory uncertainty, ambiguity, confusion, inconsistency between states and many disputes in the legal system. Online gaming and esports are “in urgent need of regulatory architecture and can contribute significantly to the creation of new jobs and exports, increasing India’s quest for a $5 trillion economy,” says Dhanendra Kumar.

On April 1, the Online Gambling (Regulation) Bill, 2022 was introduced in the Lok Sabha as a Private Bill. This national-level project aims to regulate the country’s entire cyber-gambling space involving real money, ranging from Indian online casino games to fantasy and e-sports, abolishing the traditional distinction between gambling. skill and games of chance.

The bill envisages the establishment of the Online Gaming Commission which will be given powers to oversee the industry, make rules and grant, suspend or revoke the licenses of website and gaming server operators.

If passed by parliament, the bill could solve many of the problems currently facing the online gambling industry, but it is unclear whether the Lok Sabha would proceed with the bill.

Another approach, propagated by a number of stakeholders, would be a system of self-regulation adopted by the gaming industry combined with proactive education efforts by gaming companies teaching users how to protect themselves against cheating and abuse.

Such a system may include KYC and age restriction mechanisms based on Aadhaar cards, bans on in-app purchases and in-game chat without parental consent, and other measures. Nevertheless, Dhanendra Kumar advises that the regulation of online games should be placed under the supervision of a nodal ministry, and not delegated to a self-regulatory body, in order to “inspire confidence and credibility”.

For the development of a comprehensive regulatory framework on online gambling, India can draw on the many examples of successful legal practices in the field around the world. Many countries, including the UK, France, Denmark, Sweden, Spain and others, have regulated online gambling in order to increase tax collection and protect the public from various associated risks. gambling and betting.

The measures adopted by these countries include the introduction of a national self-exclusion system, which allows players to press a button and be immediately excluded from play at any site in the country, and to strong responsible gaming requirements that operators must follow.

Banning credit games, introducing spending limits, eliminating fast play on slot games, VIP and loyalty programs, marketing and advertising restrictions are some of the rules that Indian legislators can copy from global regulatory practice and implement.