Regulating online gaming | The Financial Express

Regulating online gaming

Self-regulation is a great initial step, but better to house progressive policies on regulation under a nodal ministry rather than an SRO

Regulating online gaming
Growing at a CAGR of 38%, the industry is poised to reach approximately $5 billion by 2025. (File)

By Sameer Barde

A far cry from the days of Mario, simple quiz-based and Snake games, the Indian online gaming industry has grown exponentially, fostering an attractive domestic market. Thanks to new-age technologies, the mobile-first phenomenon, higher internet penetration, increasing disposable income, and growing demand for more immersive entertainment, online gaming has become a lucrative destination for developers, investors, and players alike, offering immense opportunities. 

Growing at a CAGR of 38%, the industry is poised to reach approximately $5 billion by 2025. At the cusp of this exponential growth, the sector continues to draw interest from domestic and global investors. Between January-September 2021, the investors poured in a whopping amount of $1.6 billion in funding and mergers and acquisitions, with Real Money Games attracting ~$700 million. 

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However, the industry in India suffers from inherent perception challenges—online real-money gaming is often conflated with gambling. While games of skill such as fantasy, chess, rummy, poker, and so on are legal and protected under the Constitution, games of chance like roulette, teen patti, etc, are gambling and hence deemed illegal.

A glance at the rulings of the Supreme Court and several High Courts clearly establishes ‘Games of Skill’ as legitimate business activities protected under Article 19(1)(g) of the Indian Constitution. These rulings have also emphasized a clear distinction between ‘Games of Skill’ and ‘Games of Chance’. Despite these court rulings, online skill games have faced restrictions and ban in a few states. 

For a dynamic industry like online gaming, a robust and enabling regulatory framework is the most effective way to allow players to enjoy online gaming responsibly and safely while deterring unscrupulous operators. Such a framework would enhance operator accountability while ensuring transparency. 

A well-defined regulatory structure encompassing responsible gaming policies and requirements will further help in encouraging appropriate gaming behaviour among players.  Moreover, it will also provide the required impetus to the overall gaming sector like driving entrepreneurial ambition, propelling more unicorns, boosting investor confidence, enabling job creation, and generating revenue for the government. 

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The online gaming industry has unanimously been vocal about the need for a regulatory structure defined by progressive policies to standardise the policies governing the entire industry. The industry has adopted self-regulation and proactively educates users on how to play responsibly.

Most gaming operators have implemented innovative initiatives such as imposing KYC, SSL level encryption, RNG certification, and other risk-flagging mechanisms to promote responsible gaming. Self-exclusion, time and money limits, and other messages and programmes are a few other methods that gaming operators have employed to protect players and encourage healthy gaming habits. 

While self-regulation is undoubtedly a great initial step, to enshrine greater regulatory acceptability it would be advisable to house progressive policies under a nodal ministry, rather than a self-regulatory organisation (SRO).  

Globally, gaming is a well-regulated industry, and many countries have regulations in place to ensure that gamers enjoy this form of entertainment responsibly. Based on these global best practices, the E-Gaming Federation (EGF) has created a self-regulatory framework in the form of a code of conduct to ensure player safety and address societal concerns around gaming gaming-related disorders.

Prime minister Narendra Modi has recognised the vast potential of the Indian gaming industry too. On multiple occasions, he has called on the gaming developers and the gamers to promote ‘Made in India’ and ‘Made for India’ games. Delivering the inaugural address at the post-budget webinar in February 2022, the PM stated—“The gaming market is huge internationally and the number of youth connected to this market globally is increasing. In order to give a chance to our country’s talent to innovate – there is tremendous potential for Create in India and Brand in India.”

These statements made by the prime minister have translated into action as well. The government is shaping up its opinion on how to bring order and regulation to the online gaming sector. The formation of AVGC (Animation, Visual Effects, Gaming, and Comics) Task Force and the recent initiatives by the ministry of electronics and technology to hold consultations with all stakeholders on regulating the space are signs that the Indian government has taken notice of its potential.

The government has also set up an inter-ministerial task force (IMTF) to come up with a framework to regulate online gaming. The seven-member panel formed earlier this year has proposed the creation of a central regulatory body for the sector, clearly defining what games of skill and chance, as per media reports.

Online skill gaming is a sector that directly benefits many industries, including finance, sports, animation and graphics, semiconductors, edtech, and software development. It has become a growing force in the Indian economy in the recent years. Given how deeply the industry is woven into the economic fabric and growth story of the nation, it is absolutely essential to proceed based on evidence-backed policymaking. 

We are celebrating the 75th year of India’s independence with a future-forward vision for the next 25 years. For a flourishing sector like online gaming, a soft-touch regulatory framework will bring more order and safety to player protection and pave the way for higher investor confidence, support the government’s Digital India initiatives, and improve the country’s reputation for ease of doing business.

About the author:

Sameer Barde, CEO, E-Gaming Federation

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First published on: 06-12-2022 at 04:30 IST