Online gaming

Online gambling apps will be categorized into games based on skill or luck – Trak.in – Indian Business of Tech, Mobile & Startups

A government panel has suggested that India form a regulatory body that would categorize online gambling based on skill or chance.

Other than that, the body can introduce rules to block prohibited formats and take a stricter stance on gambling sites.

How do these games work

For online games such as fantasy cricket on Dream11, paid contests remain a popular attraction.

Users can create their teams by spending as little as Rs 14 rupees, with a total prize pool of Rs 7 million ($88,000) up for grabs by winners.

The top-ranked artist can win 2,75,000 rupees ($3,462).

The government panel said online gambling companies should be required to report any “suspicious transactions” to the government’s financial intelligence unit.

lucrative industry

Overseas investors such as Tiger Global and Sequoia Capital have backed hugely popular fantasy cricket gaming startups Dream11 and Mobile Premier League.

The report is seen as shaping the future of India’s mobile gaming industry, which is expected to reach $5 billion by 2025 from $1.5 billion this year.

A 2020 report by Indian trade group FICCI and consulting firm EY said that of the 65 billion rupees ($817 million) raked in by the online gambling industry last year, games based on transactions including real money contributed 71% or Rs 46 billion.

However, gaming companies are now facing growing concerns about addictive games and “inconsistent state laws” disrupting business.

forming laws

In its confidential draft report, the panel of government officials calls for the creation of a new regulatory body under India’s IT ministry.

They are responsible for determining which online games qualify as games of skill and then “seeking compliance and enforcement.”

To streamline the legal framework, the 108-page report says India needs a new federal online gambling law.

The law would provide regulatory flexibility “with penalty provisions, as well as blocking powers, for the government against prohibited gaming formats.”

Although the panel only considered online games of skill, not gambling, it noted that many illegal offshore betting and gambling websites in India have become popular among Indian users.

dark consequences

The government report noted that the proliferation of such games among young people had led to addiction which often caused financial loss, with some reported cases of suicide.

The report calls for laws and rules to include “detox measures” such as periodic warnings and notices and setting deposit and withdrawal limits.

It also calls for “responsible advertising”.

Dream11 is valued at $8 billion, while Mobile Premier League is valued at $2.5 billion.

Lives are lost but valuations are soaring.

New legal framework

The new legal framework would apply to free and paid games of skill.

The report states that the Digital India Bill may include prohibition of playing gambling (e.g. gambling websites or apps) online in the list of “prohibited harm to users who do not will not be allowed”.

The IT ministry will finalize the report after receiving further comments from panel members such as some of Modi’s top bureaucrats, including heads of revenue and sports ministries.

The next step is to send it to the cabinet secretariat for approval.

However, there is no timeline for finalization.

Advantages and disadvantages

A senior gambling industry executive said the recommendation that a regulator assess different online gambling formats could raise barriers to entry for new companies.

It would also increase the scrutiny of companies’ current offerings.

However, the executive said the new regulations will bring “regulatory clarity, certainty and investment for the sector”.