By Devanshu Jain
The Covid-19 pandemic may have crippled certain industries, but it has also catapulted and breathed new life into certain others – particularly in the digital ecosystem. The online gaming market – projected to yield global revenues of $300 billion by 2026, up from $62 billion in 2020 – has truly come of age in India during the pandemic. The industry has spurred a whole universe of ecosystem players, and the brightest star has been fantasy sports. The market has expanded tremendously – in 2020 alone, 100 million users in India joined various fantasy gaming platforms, and they currently engage 14% of all smartphone users in the country. Their revenue jumped threefold in a year to $340.5 million in 2020. Needless to say, fantasy gaming has come into its own during the last two years.
But policy is often a laggard where technology-driven innovation is concerned, and fantasy gaming is no exception. Its exponential rise in popularity, particularly in the midst of a pandemic that demanded every available iota of resources to battle, has meant that it hasn’t received the kind of policy and regulatory attention it deserves. Here’s the primary roadblock: all online gaming that involves real money, including fantasy sports, is governed by a nineteenth century gambling legislation that couldn’t have possibly accounted for dynamic present-day avatars of real money gaming. This, coupled with the fact that states are free to regulate (or altogether ban) gambling and betting activities, means that fantasy sports are unable to escape a regulatory limbo that severely restricts their potential. There’s a whole host of economic and cultural benefits that we can unlock if this segment is brought into the ambit of a new-and-improved, uniform legislation that governs its practice.
Fortunately, policymakers are sitting up and taking notice. In December 2020, Niti Aayog released draft guiding principles for regulating fantasy sports – flagging lack of uniform rules as the most significant barrier stifling innovation in an industry teeming with lucrative opportunities. Amongst other things, they recommended formal and legal recognition of the fantasy sports industry and a light-touch self-regulatory body to oversee operations pan-India.
If such a legislation were to be enacted, the sporting ecosystem in India – both online and offline – stands to witness a revolution. Even with the regulatory hurdles and grey areas, the industry has spurred a host of unicorns in a relatively short time, with cumulative valuations of $7 billion – imagine the impetus to Indian sports if the policy environment were to actually incentivise innovation and investment in the field.
The focus on fantasy sports is not without cause – they are, in fact, distinctly unique in the online gaming universe because conquering them requires skill and knowledge. The Public Gambling Act, 1867, which currently governs them, even makes an exception for skill-based activities, and several legal rulings in the recent past have categorised fantasy sports as such. Because outcomes depend on real-life games and player performance, they incentivise deeper engagement with and analysis of the sport in question, directly driving not only higher revenues but also new customer acquisition. Even then, they’re largely slotted within the ambit of gambling – with a few states banning them outright – and a policy push both in terms of regulation and public communication is indispensable in shifting that perception.
The case for fantasy sports isn’t just the low-hanging economic incentives – regulating the sector could propel foreign investment, innovation, and employment across the sporting industry in India. Niti Aayog’s discussion paper cites the example of regulation in the United States that has helped it become the largest market for fantasy sports in the world. Faced with many of the same hurdles that now confront India, several players in the ecosystem banded together to form a participatory and representative industry body called the Fantasy Sports and Gaming Association. The FSGA now functions as a uniform, nation-wide organisation for the entire ecosystem in the US, engaging with companies both small and large, helping to foster and expand the market, supporting legal formats of fantasy gaming, and ensuring protection and lawful participation for consumers.
Despite not having this infrastructure in India, our fantasy sports user base has already surpassed that of the US. According to Niti Aayog’s estimates, with the right policies in place, fantasy sports have the potential to garner FDI of more than 10,000 crores in the coming years, generate 1.5 billion transactions by 2023, and create 5000+ direct and 7000+ indirect jobs in the next couple of years.
Furthermore, the ancillary effects on niche sports, such as volleyball and kabbadi, are likely to be significant. With greater consumer interest in various sporting events, the revenues coming in from fantasy gaming could not only drive investment into these niche sports but also help make them more popular and integrated into the mainstream – a clear win-win for our athletes, spectators, and the sporting industry at large.
We don’t need to look further than our homegrown Dream11 to demonstrate this domino effect. What started as primarily a fantasy gaming platform (which now boasts more than 11 crore users) has evolved into the Dream Sports Group, a full-stack, end-to-end sporting giant enabling infrastructure and services across multiple sports and revolutionising the way they’re consumed in India. Their businesses encompass a whole spectrum of sporting services – including an accelerator for sports businesses, a payment gateway, a venture capital arm, a curated tours and experiences vertical, and a non-profit foundation. It is clear that with a favourable policy environment and adequate investment, an innovative fantasy gaming ecosystem has the potential to change the face of Indian sports as we know it.
The Niti Aayog guidelines are just the beginning, and we have a long road ahead of us to actually witness this potential materialise. They are, however, a step in the right direction – hopefully towards drafting and enacting a dedicated legislation that provides uniform governance and oversight for the fantasy gaming industry. The market is undeniably enormous in India, and the industry requires a strong but collaborative and self-regulatory model to be able to truly tap into it in its entirety.
(The author is a policy consultant and advisor to India’s former minister for IT and Communications. Views are personal.)
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