Gaming: The New Frontier

India’s online gaming market has grown incredibly in recent years. The industry in India is expected to reach Rs. 290 billion by 2025, supported by a rapidly rising consumer base of over 420 million users.

11 December, 2021 Article, Policy
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India’s online gaming market has grown incredibly in recent years. The industry in India is expected to reach Rs. 290 billion by 2025, supported by a rapidly rising consumer base of over 420 million users. While India is poised to become one of the world’s largest gaming markets, there is a growing demand for solid and efficient regulatory and legal frameworks to help the industry realize its full potential. Only joint efforts from industry and government can set the groundwork for a long-term regulatory system. 

 

Lessons from the Crypto Mess

The startup ecosystem has evolved into the upstart ecosystem, particularly in businesses such as cryptocurrency, gaming, and so on. The more the virtualization of the firm, the greater the share of ambition, while the inspiration comes down to nothing. The crypto industry’s approach perfectly illustrates how not to do business in India. The industry’s main problem is retired bureaucrats, lawyers, and lobbyists. These stakeholders are satisfied by false profits as they are driven by money and do not pay heed to democracy. Gaming provides an appealing option to bridge the gap between whether India would exist in a pre-1800s India or whether it will move into the model economic order, especially given the financial constraints. It can be considered a source of employment for geographically challenged states.  Ambition and inspiration must coexist, so public policy professionals in the gaming industry with less experience should seek assistance from organizations or individuals who understand the art and science of policymaking in India.

Industry Perspective 

From the perspective of the gaming industry, one collaboratively needs to look at the experience of public policy, culture, and the opportunities that are perceived, along with taking into account the economic component. It should also follow a sense of uniformity. State governments should have national legislation that is uniform in nature. As many states are promoting gaming, but some of those states are second-guessing it, there must be no doubt or instability in the minds of investors and industry. There should be regulations across the board to ensure our uniformity.  Therefore, it is essential to consider all of these factors. When an investment or gaming technology park is made in a state, it benefits not only that state but also the surrounding region because people from other parts of the state and neighboring states travel there to take advantage of the benefits.

Sin Industries and State Finances 

The state applies a portion of the GST to the sin industries and must determine what kind of tax it can impose on these sectors. The federal nature of the nation is respected, and Article 1 of the constitution specifies that India should be a union of the states. Given India’s federal physical structure, the state government is genuinely trustworthy in transferring funds from the federal government while also managing most expenditure duties. As per the rough estimate, the union government collects 63 percent of the aggregate resources, whereas other states collect just about 37 percent. On the other side, the state takes 63 percent of the expenditure responsibilities, and the rest is by the union government. So, which means there is a vertical imbalance that necessitates the orderly transfer of the union government to the state government. If we look at the sin industries, sin uses unwanted, socially, and adaptively harmful behavior. This applies to taxes on alcoholic beverages and foreign alcohol created in India, opium, ganja, and other substances. We must keep in mind that we produce and use these products in India. We certainly can make goods of a global nature, which we can then export from here.

Should Gambling be Legalized 

There are several examples of gaming and gambling in Indian mythology and history, from the game of pachisi created by Lord Shiva to the well-known Bengali game known as Ganjapaa. Indians have historically engaged in gambling, making gaming regulation and supervision crucial. Cyberspace can be managed with confidence because it is a controlled environment. The players should be compelled to present a valid government identification document before being allowed access. It will guarantee adherence to age verification requirements, current laws and prevent identity theft and phishing attempts.  The online fantasy sports industry in India has the potential to generate between 3000 and 3500 crores in GST revenue, according to a 2019 report titled “Federation of Sports Gaming Report and Taxation of Online Fantasy Sports on the Gaming Market in India.” 

 

Policy, Economy and Gaming 

Although the media and the law have used the terms interchangeably, gambling and gaming are not synonymous. With up to 700 million gamers worldwide, the gaming industry has enormous economic potential. The desire to play games professionally was stated by 70% of AIGF respondents. There are 15,000 independent game developers when you consider the increase in employment. A skill games council exists, and all kinds of game forms are represented on it. The gaming sector is significant and needs to be taken seriously because it has grown by 22% in a year. A framework is crucial since there has always been a partnership model where it is understood how all seven Internet layer functions on mobile access. And this is important because without it, Jan-Dhan, the Aadhaar mobile that is attempted to be designed, cannot reach its full potential. Essentially, there is a need for a policy mechanism that is gentle in its application. We owe it to the upcoming generation of business owners. 

Odisha Perspective 

There are three lists for power distribution and responsibilities: a state list, a centralized list, and a concurrent list. Most items related to individual decisions are either in the concurrent list or in the state list. There is a three-tiered government structure, and only locally can these things be controlled, observed, and fostered. It is impossible to achieve uniformity in the gaming sectors. In India, one norm does not apply to all situations. The second issue is digitalization; there is widespread online fraud today, and cyber security is rife with problems. Although it is carried out in the States, cybersecurity is governed by central government regulations. So, similarly, whether digital, virtual, or real, actual things can be managed as per the rule and the constitution. Legal acceptance, social acceptance, and government acceptance can occur through persistent demands, and no government can outlaw an industry if there is enough demand over an extended period.

 

Telangana Views

The official view in Telangana is that gambling and any money-based internet gaming were outlawed in the state’s introduction of a law in 2017. After consideration, it has been determined that taking an extreme measure, such as banning, is incorrect. Extensive consultations have been held between the state government and several business organizations, including AIGF, FIS, FIFS, and others. The government is creating an online gaming committee to oversee gaming companies, scrutinize scripts, and perform audits. Additionally, there will be a self-regulatory organization that will make sure that the licensed games rigorously follow their rules and do not endanger players. The government has established a center of excellence that encourages the development of game creation talents.

Assam Perspective

Assam has not made much progress in this area, although the government is currently engaged in estate planning and is studying other states. There are five different sorts of gaming structures that are distinguishable. Assam is moving quickly toward digital transformation and investing in software in this nation’s region. Gaming Industry holds a lot of potential for Assam. The government is looking at big data analytics, artificial intelligence, and machine AI that can be utilized for game creation in augmented and virtual reality. The government has put in place US-specific infrastructure, is negotiating with Bangladeshi authorities to boost bandwidth, and is also putting together a cutting-edge data center and tech package. 

Jammu and Kashmir Perspective 

J&K looks forward to adding a gaming perspective to its tourism sector. The government welcomes incubators and those working in the software industry, and incentives are allowed because the new industrial strategy is very profitable. J&K and the Government of Dubai recently signed an MOU, and they plan to build two software parks there: one in Jammu and one in Srinagar. Therefore, several excellent opportunities are coming ahead, including opening international airports in Jammu. Such discussions and arguments, which are taking place nationwide, will matter if the state creates a solid central law or policy relating to gaming decorum.

Competitive Issues 

As it has been for so many years, conversations, deliberations, and consensus are the best course of action for public policy discourse rather than litigation. There cannot be a single regulatory framework because the perspectives and interests of the many states differ. However, it might be possible to make a logo or red list. Defining the issues properly before drafting the regulation to address it could be a step in the right direction for this industry. To prevent regulatory overlap, various governments develop their policies while considering the opinions of multiple stakeholders. To have a more well-informed opinion on this, there is a need for a more compelling approach to regulation in which all state organizations, both at the federal and state levels, can communicate with one another as well as with other stakeholders like the industry, and people who contribute to policy. For forming a regulation, the first step is to check whether the goal is legitimate or not. The second is whether the instrument itself is appropriate. The third phase is necessary, which involves knowing whether any restrictive alternatives are available to achieve the same goal. The fourth and final test is proportionality, which determines whether there may be significant adverse effects on stakeholders or those trying to regulate.

Defining E-sports

Since the word “gaming” will cause several misunderstandings regarding the legislation, it should be eliminated from the specific statute. Online gaming and esports are often used interchangeably. Esports, which stands for electronic sports, is a type of competition that utilizes video games. Additionally, there is a need for clarification on what defines the law and what is online vs. offline. It is a comprehensive perspective, and providing a clear description is challenging. Banning internet gaming could confuse Esports being outlawed, preventing applications for eSports championships from being approved. As a result, when we discuss eSports mainly, IT and sports components are involved in both. However, because this is a sport recognized by the Council of Asia and the IOC, two of the highest sports governing bodies, there is a need to be recognised by other states.

Legal Perspective

No matter the area of online gaming they operate in, whether it is fantasy sports, casual games, or card games, the fundamental problem is the same for all of them. There is a need for regulatory certainty and predictability. Currently, the general guiding concept for internet gaming, namely real money online gambling, is a patchwork of legislation. Any game that reaches this skill requirement of at least 51% is considered skill-based. Several states around the nation have created a patchwork of different types of legislation, and navigating through them becomes problematic. The need for the parliament and the federal government to intervene is one of the things that has been consistently advocated for a very long time. As long as different states regulate, this is the only way to offer regulatory consistency and predictability to the industry. Other line ministries will continue to oversee various components. A mathematical foundation that is objective and universally accepted is required to judge whether a given situation is a game of chance or a game of chance on a transparent basis.

Recommendations

 

  • The gaming industry should refrain from attempting to seek federal legislation on the issue because it is a state issue.
  • Through a group of business executives and legal professionals, betting and gaming, a part of Indian culture, should be regulated and made legal.
  • Law, rules, and regulations in the gaming sector should be uniform, and distinct game categories should be identified.
  • Forming an online gaming committee, which will oversee the regulation of gaming businesses, perform script scrutiny and audits, and provide licenses to companies that desire to operate their gaming industries 
  • Establishing a self-regulatory agency that will ensure that games granted licenses fully comply with their terms and do not endanger people.
  • Need for a more compelling approach to regulation, whereby all state agencies at the federal and state levels can communicate with one another, stakeholders, and the general public.

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