Sports

Weighing the odds in the world of online gaming: Ban or regulate?

Updated : January 12, 2021 08:24 PM IST

Are we ready to risk a growing industry as we look at blanket bans on online gaming?

“It is the prohibition that makes anything precious,” said Mark Twain. A clear vindication of policies that start with the intent called ‘control’ are more likely to encourage, not otherwise. The online gaming industry, which is valued at Rs 62 billion, and a projected CAGR of 47 percent by 2022, is under the scanner with different states pledging to ban online gaming. Bringing the curtains down, Andhra Pradesh recently amended the AP Gaming Act 1974 to “include online gaming, online gambling and online betting as an offence through Andhra Pradesh Gaming Amendment Bill 2020”, as on December 1, 2020. The Andhra Pradesh and Tamil Nadu governments had also decided to ban online games like Rummy and Poker “to protect the youth”, on account of the suicides of some online games. For an industry that was thriving during the lockdown, when the economy came to a screeching halt, maybe it’s time to take a step back and weigh the ban.

The recent report by Niti Aayog recommends single self-regulatory body for Online Fantasy Sports in India, which is a step in the right direction however, why single out a single game without a rationale. When Niti Aayog is considering games of skill, it should consider the complete ambit of the online gaming ecosystem.

The Economics of Online Gaming

With a projected user base of more than 628 million gamers, the online gaming industry brings much-needed impetus to the economy. The year 2020 crafted a new chapter in the world of online gaming with global spending on games shooting between 17 percent to $10.5 billion during March-April 2020. Closer home, in India, during the lockdown, the gaming economy rose at a CAGR of 21 percent. When you talk about a consumer base, this industry has crossed over 300 million users and as per a Google-KPMG report, is projected to be worth $1.1 billion by 2021, attracting 310 million online gamer(s) by 2021.

Online gaming has also spurred investments. This has been on the back of penetration of the smartphones into every corner of the country. In India, active smartphone users are projected to cross 470 million by 2021. This will also mean a surge in internet users, and likely an improved playing propensity. In accordance, industry watchers have predicted the online rummy industry to be worth potentially to about Rs 2,000 Crore. Companies like Octro have seen a major upturn in incoming as well as loyal user rates, with record triple-digit revenues in 2020.

Thus the question-— are we ready to risk a growing industry as we look at blanket bans on online gaming?

India has close to 400 start-ups actively investing in the e-gaming arena, with a growth of $450 million in investments in the last six years. It is important to understand how this growth benefits many other segments. As the user base of gamers increases, the growth will lead to a wider digital payment user base, which in turn will give impetus to affordable technological inventions. In parallel, there will be an increase in local content among the masses, which in turn could lead to ‘Make in India’ even in the digital space. Not only does it offer opportunities in technology but also help the Indian gaming industry compete at a global level.

Delving Deeper into the Regulations: Will the Ban Benefit?

A recent Oxford University study has found out that in contradiction to the common perception that playing video games over a long period of time is bad for one’s physical and mental well-being, the activity can actually be beneficial. The study published earlier this month and led by Professor Andrew Przybylski, director of research at Oxford Internet Institute, University of Oxford has mentioned that video games are not necessarily bad for health, while other psychological factors can affect a person’s well-being. The playing itself can relate positively to a person’s well-being.

While the government considers on a ban on a game, classifying that it falls under the ambit of betting or gambling, it is imperative to understand the meaning of “game of skill”. For e.g Rummy has been a part of our culture for decades and many of us have learnt it from our grandparents. It has been a family game for years. Today, when people have access to these games on a digital platform, a ban does not do justice to these users. It has led to discontent among India’s gamers and even been questioned by self-regulating bodies such as The Online Rummy Federation and the All India Gaming Federation. The principle of this challenge being that the Supreme Court has classified rummy as a game of skill therefore it is entitled to protection under law, like any other e-commerce business.

Rather than a ban which disrupts the online gaming industry and deflates investors, there is a need for a comprehensive regulatory mechanism to ensure that the online gaming investments happen within a designated framework. It is nobody’s contention that online gaming providers should be immune from any regulatory framework. Not only will regulations encourage certainty and investment in the sector, but also generate revenue and employment. An unregulated gaming environment indicates potential revenue losses which could well be gained by taxing this segment. Further by a ban gaming is unlikely to stop, it will be merely be pushed into the unregulated sector, which is controlled by unscrupulous elements. This will only push up crime as well as vulnerable will be exploited.

The sector itself has been seeking boundaries and regulations recently, to help streamline its service in India while also servicing and engaging customers in the most authentic way including (a) Setting time and monetary limits for players on a daily/weekly/monthly basis, (b) Stronger KYC (know your customer) checks and social profiling of users to ensure that players are financially stable adults, (c) Strict advertising standards to promote gaming as entertainment and not a way to earn money and (d) Player support contribution to help vulnerable players. Most companies usually also allow the option of playing free games with virtual money.

Over the last few years, we have witnessed the world take interest in India’s gaming industry, something that could further boost the market. We must not forget that India is a favourable demography due to its young population. This demography brings a wide window of opportunities across value chains. The choice is ours— will we choose prohibition over a robust regulatory framework that encourages responsible gaming?

The author, Vidushpat Singhania is Managing Partner, Krida Legal & Consultant UKIBC. Views are personal

Weighing the odds in the world of online gaming: Ban or regulate?

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