India’s Online Gaming Industry Needs Effective Regulation

The Indian online gaming sector is one of the fastest growing sectors with numerous investments, huge employment opportunities and revenues that eclipse many other forms of media such as movies, television, music and print. According to a KPMG report, this industry is expected to generate more than Rs 29,000 crore by 2025 with over 65 crore of users, employing more than 70,000 highly qualified technologists and many others who are indirectly dependent on the industry.

Despite regulatory uncertainty and people returning to work as the pandemic eased, the online gaming segment grew 28 percent to Rs 10,100 crore in 2021. It is India’s enabling ecosystem that has fueled this tremendous growth, coupled with the culture, creativity and unwavering commitment of young game developers.

As the industry turns the spotlight on itself due to its massive growth, successive court decisions have confirmed online gaming as a legitimate business. Recently, in India’s start-up capital, Karnataka, the Supreme Court issued its verdict to lift the blanket ban on online gaming, reaffirming the game industry’s trust in the Indian legal system. In October last year, the government of Karnataka gave notice of the law prohibiting betting and wagering in online games. This came after high courts in Kerala and Madras previously overturned similar bans by their respective state governments.

Prior to the Karnataka ruling, the High Courts of Punjab and Haryana, Rajasthan and Mumbai recognized fantasy sports as games of skill and a legitimate business activity protected under Article 19(1)(g) of the Constitution of India. These statements have made it amply clear that blanket prohibitions are not an effective way to address perceived problems.

While we have made strides in this direction, there is still a long way to go. While these positive reviews have been praised by the industry and millions of gamers, the reasons that led to blanket bans have not yet been addressed. However, this booming industry of online gaming suffers from a lack of regulatory oversight. Ambiguity in the legal regime poses a challenge for investors and a significant compliance burden for game operators.

Globally, online gaming is a fairly well-regulated space. Many countries, including the UK and US, and the EU have regulations in place to ensure that users can enjoy this form of entertainment responsibly. Similarly, in India too, there is a need for constant collaboration and creative problem solving from all stakeholders.

Given the complexity of this industry, I believe there is an urgent need to address the perception and uncertainty surrounding it to avoid extreme reactions. A well-regulated online gaming industry will provide compelling benefits as well as economic benefits. Regulation would enable government-imposed operations to ensure the safety of players while increasing revenues and employment in the sector, culminating in healthy ecosystem growth.

The Indian e-gaming industry needs robust policy frameworks and digital infrastructure to unleash its potential, maximize revenue and attempt to become a global leader. A government body that supervises business operations, draws up progressive policies to prevent social problems, properly classifies games of skill or chance, ensures consumer protection and combats illegality and crime. Gaming companies should also continue to work with the government to promote responsible gaming by educating gamers and establishing best practices such as conducting KYC checks, user authentication, etc. to prevent illegal activity and financial transactions on their platforms .

What it comes down to:

In the near future, the industry’s rapid growth is expected to boost the total media and entertainment industry by 4-5 percent. To deliver on this and many other future growth forecasts, the online gaming industry needs sound policies, legal framework and data privacy practices. Not limited to just economic benefits, the online gaming sector has the power to support government initiatives under Digital India and Make in India campaigns, propelling India towards its dream of being digitally independent.

(The writer is the chief executive officer of the All India Gaming Federation)

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