Central Govt Set to Ensure a Responsible Gaming Environment

Moved by growing concerns about spreading online gambling problems and addictions, and even reported cases of gambling-related suicides, the Central Government is set on a course to ensure a “responsible, transparent and safe” online gaming environment. 

An Inter-Ministerial Task Force (IMTF) composed of PM Modi’s top bureaucrats was set up earlier in 2022 and tasked to consult stakeholders, experts and global best practices in order to prepare a new law on online gaming to replace India’s outdated colonial-era legislation on gaming.

Initially, the scope of the IMTF was limited to regulating online games of skill including games for real money as the Union Constitution has given states the power to decide their own legal stance on games of chance and gambling. However, as per news agencies reports, PM Modi’s office has insisted that the new central law should cover all forms of gaming.

In this way, India’s upcoming central law on online gaming and the new gaming authority will regulate the functioning of all skill-based and chance-based gaming activities in India, but states will be able to allow or ban the regulated chance-based and casino online games.

The various responsible gaming and “de-addiction” measures, like periodic warnings, advisories, limits on spending and log-in times that the new rules are to contain, will be applicable across all gaming varieties.

Covering the whole gaming spectrum with regulations is crucial as recent studies on responsible gaming policies by SevenJackpots have shown that “all games involving real money can generate potentially sensitive conditions that may be harmful to minors or vulnerable players. Getting carried away, chasing losses or “rematch” sessions is no different between skill and chance genres.”

People in Lockdown Turned to Online Games

The Central Government’s concerns and plans for action come after the massive surge in online gaming registered during the long months of the pandemic. People who found themselves in lockdown looked for new ways to entertain and socialise and found them online, often in games.

The Covid-related hike in online gaming was a global phenomenon, but in India the sector experienced one of the fastest growth rates in the world, fueled by rapidly increasing penetration of affordable smartphones, cheap mobile data, and the country’s young population.

According to the latest edition of Lumikai’s report on the Indian online gaming market, the sector reached a size of $2 billion in FY21 and expanded further to $2.6 billion in FY22 at a CAGR (Compound Annual Growth Rate) of 31 percent.
 

The report expects the industry to keep growing at a CAGR of 27 percent throughout FY27 when the market will likely be valued at $8.6 billion.

Real money games (RMG) make up 57 percent of the current sector revenues, and their share is projected to remain as high as 53 percent in FY27, while revenues from in-app purchases (IAPs) are expected to grow fastest over the forecast period.

Problems Arrived with Unchecked Spread of Digital Games

The rapid spread of digital games across large sections of the Indian population over the last couple of years started bearing some of its fruit in an unwanted direction, as it became clear that online gaming was coming with a cost to society. Unfortunately, however, the country had no tools prepared to address and at least mitigate these social costs.

The basis of Indian legislation on gaming, the Public Gaming Act, was enacted in 1867 against physical gambling and “public gaming houses”, and now has no worth against online gambling platforms based offshore.

Moreover, the Act exempts games of skill, and numerous court decisions have recognised games such as rummy and fantasy sports as legitimate business activities due to their skill-based nature.

As a result, platforms dedicated to online skill games involving real money could proliferate free from the scrutiny, checks and independent testing that are normal for, Casino Days India and varying licensed online casino sites currently operating internationally.

“We saw that online gaming and gambling rose during the pandemic, and we have seen the mental health impacts and other effects on vulnerable people, even children,” Unmesh Joshi, co-founder of Mumbai-based advocacy group Responsible Netism, comments.

Many States Reacted with Blanket Bans

The situation prompted a number of state governments to act and do something to protect their citizens from the ill effects of the unchecked spread of online gaming, knowing that this is what the Constitution expected them to do.

Most cases resembled Tamil Nadu, where the state government reacted to reports linking 17 suicides in the last three years to online games, and particularly to rummy, by trying to just ban the activity.

A number of these bans didn’t survive challenges in court as benches found that banning free business activities in the form of playing or offering games of skill was a disproportionate and unconstitutional measure, struck down the bans, and recommended regulation to be implemented instead.

Even if not voided by the judiciary, a state-level ban can achieve little more than block the activities of Indian online skill gaming operators that follow self-regulatory charters by industry bodies such as the All India Gaming Federation (AIGF). Offshore gaming and gambling sites and apps are not affected by such prohibitions.

“A ban on legitimate Indian operators will have an adverse effect, and push more and more people towards illegal offshore websites,” AIGF CEO Roland Landers points out. “Any regulation should be light touch, and allow for innovation while safeguarding users and preventing malicious games and companies from operating.”

“There is definitely a need for regulation, but we also need education of users, rules on advertising, age verification and better monitoring of apps by platforms. An outright ban is not the solution, as bans don’t work,” Responsible Netism’s Unmesh Joshi adds.

The Long and Winding Road

While India travelled the long and winding road to the realisation that all online game types involving real money should be regulated, the pandemic reached its final stages and the number of desi gamers exceeded 50 crore, according to Lumikai.

One might wonder what it might have been like if India had met the outbreak of Covid and the surge in online gaming prepared with proper safety nets around online gaming laid by national regulation focused on responsible gaming policies.

However, as online gaming is here to stay, and projections show it is set to keep growing, implementing a sensible regulatory framework over online gaming now is better late than never.