India has Recognized the Gaming Industry Potential, but Needs a Legislation Update

 

Recognizing the enormous potential of India’s rapidly growing gaming industry to attract foreign investments, create jobs and provide desi business with global market opportunities, the Centre will include the sector in the scope of the new special taskforce that will be created with the mandate to research and learn more about the Animation, Visual effects, Gaming and Comics (AVGC) industries in order to help stimulate their growth.

 

The announcement was made by the Union Finance Minister Nirmala Sitharaman during her budget speech at the Rajya Sabha. “The animation, visual effects, gaming, and comic (AVGC) sector offers immense potential to employ youth. An AVGC promotion task force with all stakeholders will be set-up to recommend ways to realize this and build domestic capacity for serving our markets and the global demand,” Sitharaman said.

 

A primary report from last year by global advisory firm KPMG estimates the size of the Indian online gaming market across casual, real money gaming (RMG), online fantasy sports and esports genres for FY21 at ₹13,600 crore serving the needs of 43.3 crore gamers. The report projects a 113 percent growth in revenues to ₹29,000 crore and a 52 percent growth in user base to 65,7 crore by FY25.

 

Reportedly, the number of people directly employed by the Indian gaming sector is around 50,000, but job opportunities, especially for young tech-savvy Indians, are expected to expand multifold if a suitable investment and regulatory environment is created for the industry. The upcoming 5G roll-out and the increasing advances in technological development and innovations will give a further push to the gaming sector, while spillover effects will expand employment offered by connected industries like telecommunications, banking, fintech and hi-tech manufacturing.

 

 

Over the last several months, three separate High Courts had to pronounce verdicts to strike down recently adopted legislation over gaming in their respective states as contradictory to the Union Constitution. These developments clearly show that the age-long distinction between games of skill and games of chance remains unclear to this day even to the country’s policymakers, and the answer to the question of how legal it is to play blackjack online or any other game remains complex and even obscure.

 

The legality of gaming in India is based on the Victorian-era Public Gambling Act of 1867 which prohibits gambling and public gaming houses, but exempts “games of mere skill” from its purview. The Constitution of India grants states the power to implement their own legislation concerning betting and gambling, or games of chance, otherwise states can choose to be ruled by the still active Act of 1867.

 

At the same time, offering and playing games of skill is protected by the fundamental rights of free artistic expression and free practice of any trade or profession guaranteed by the Constitution of India, as exemplified by numerous judgments of the Supreme Court and High Courts. The  most recent judgment was delivered by the High Court of Karnataka on February 14, quashing all sections of the Karnataka Police (Amendment) Act of 2021 that had clubbed games of skill together with games of chance under a blanket ban, which the court found contradictory to the Constitution.

 

Previously in August, the High Court of Madras struck down the ban on online gaming contained in the Tamil Nadu Gaming and Police Laws (Amendment) Act of 2021, and in September, the Kerala High Court quashed a similar ban on online rummy in the state.

 

 

Regardless of how fast the Indian gaming market is growing, the internet and online gaming are global, and not an Indian-specific phenomena. Any risks and societal problems associated with gaming and gambling online must be present everywhere, and not just on the subcontinent. Taking a look around and making a selection of the best solutions to address these issues that have been found around the world is a vital strategy. This is exactly what Sweden did not a while ago, copying a lot of Denmark’s gaming regulations.

 

Up to the end of 2018, a state monopoly regime concerning gaming was in force in Sweden, but the influx of foreign operators offering their services to Swedish citizens had policymakers rethink the country’s position. Instead of attempting bans which are not very effective in cyberspace, the country opted to regulate, license and tax these platforms.

 

Copying a lot of Denmark's policies which were implemented in 2017, the focus of Sweden’s new regulation fell on gamer protection with comprehensive self-exclusion, responsible gaming and bet limit rules aimed to shield users from various risks including addictions and problem gambling, large financial losses, privacy breaches and fraud by operators.

 

For an India-specific solution, a National Gaming Authority can be created and mandated to categorize games according to the preponderance of skill or chance in gameplay and end ambiguity over this distinction for good.

 

“This authority could be made responsible for the online gaming industry, monitoring its operations, preventing societal issues, suitably classifying games of skill or chance, overseeing consumer protection, and combatting illegality and crime,” writes Rajya Sabha member Sushil Kumar Modi in his recent article titled “ Why online gaming in India needs regulation.”