India’s domestic gaming market is expected to grow to over $2 billion by 2023, with more than 400 million Indian gamers. We have already seen the emergence of multiple unicorns in this segment—Dream11, MPL, and Games24x7. In fact, Prime Minister Modi himself has endorsed India’s gaming industry as a potential world leader, highlighting their socio-economic and cultural significance in today’s globalised and digitised economy. The Indian gaming industry is way behind global leaders Microsoft, Sony, Tencent, and Nintendo, whose combined revenue for FY21 is $90 billion. India is in a unique position to build a global leadership position in the mobile gaming industry.
However, the industry is hamstrung by disparate and archaic laws and is subject to uncertainty and lack of uniformity. So far, online games have been assessed against gambling laws like the Public Gambling Act, 1867, whose primary intention was to prohibit gambling and betting in the physical world. Despite court rulings to the contrary, online games of skill have faced restrictions on grounds of being synonymous with gambling and betting—a misconception.
Courts at various instances relied on the ‘dominant factor test’ to uphold different formats as games of skill. For instance, the Punjab and Haryana High Court in the case of Varun Gumber v. UT of Chandigarh opined that fantasy sports require a considerable amount of skill, and winning a game is not simply a matter of chance—a complete contrast to the idea of gambling. This view has also been echoed by other High Courts, including the Bombay High Court’s decision in Gurdeep Singh Sachar v. Union of India, and the Rajasthan High Court’s decision in Chandresh Sankhla v. State of Rajasthan.
Further, in Ravindra Singh Chaudhary v. Union of India, the Rajasthan High Court pointed to the Federation of Indian Fantasy Sports’ (FIFS) self-regulatory efforts and said that operators in compliance with the FIFS charter were offering a game of skill. Finally, in Avinash Mehrotra v. State of Rajasthan, the Supreme Court dismissed a petition which claimed that fantasy sports were games of chance, and held that this particular question is settled in law. Despite such favourable jurisprudence, fantasy sports and other games of skill were banned in Tamil Nadu and Karnataka. Eventually, the Madras and Karnataka High Courts overturned these bans and criticised them as overboard and unconstitutional. They cited the operators’ rights to carry on their trade and profession under Article 19(1) (g) of the Constitution and the users’ right to be entertained under Article 19(1) (a) and Article 21 of the Constitution of India. Further, these courts highlighted that the legislative entry empowering the State Government to regulate gambling and betting can only be interpreted to mean game of chance and cannot be extended to games of skill.
The misidentification of online games of skill as gambling points to the obvious problems of regulating online gaming under “betting and gambling”. First and foremost, anything that is purely internet based is a prerogative of the central government by virtue of it being inter-State in nature. Further, the online gaming platforms are intermediaries and hence are governed by the central government under the Information Technology Act, 2000 and its allied rules. Second, the lens of betting or gambling has a myopic view of only a limited set of issues that may stem from gaming. Therefore, in order to unlock its true potential and thrive, India’s gaming industry urgently needs a uniform, light-touch regulatory framework created by the central government.
Recent reports of an upcoming Digital India Act suggest a Centre-led overhaul of digital regulation, progressing from the 22 year old Information Technology Act. This is an opportunity to create evidence-based, forward-looking policies for the digital economy, of which gaming will constitute a significant part. This can be attained through consultative processes that involve a variety of stakeholders and experts with an interest in the field— from gaming companies and technologists to legal professionals, educators, and mental health specialists. Such cross-cutting expertise will help tackle issues like gaming addiction, age-gating content and financial fraud in online games.
Rather than resorting to extreme measures by imposing bans and disrupting the growth of a dynamic segment, the need of the hour is to create a gaming ecosystem with a national level uniform regulatory framework that would thrive under rational regulations and vigilance. The challenge is real but not a dead end.
The writer is senior advocate, Supreme Court.