Moneycontrol Masterclass | Why a central law is needed for skill-based gaming industry

The industry has grown from 150 million gamers to 450 million gamers in the last two to two and half years, said Manish Agarwal, CEO of Nazara Technologies at a recent masterclass episode on ‘Gaming Or Gambling? Future Of The Gaming Business In India’ moderated by Moneycontrol's Chandra R Srikanth on October 22.

The overall gaming market was estimated to be at Rs 13,600 crore for the financial year 2021 and is expected to touch Rs 29,000 crore by the financial year 2025, according to a KPMG report.

However skill-based real money gaming, which accounts for a significant chunk of the industry's revenues, is in the crosshairs of several state governments including Tamil Nadu, Andhra Pradesh, Telangana, Kerala and more recently Karnataka who have banned or tried to ban them.

Can governments be more specific in curbing games that encourage betting instead of a blanket ban on all money-based games? Can there be a middle ground between a thriving industry and user protection? What are the various roadblocks that could come in the way of this sunrise industry?

These questions were discussed during a panel discussion that also included Penta Esports founder Anurag Khurana, All India Gaming Federation CEO Roland Landers, and Nishith Desai Associates partner Gowree Gokhale. Key Excerpts:

Distinction in online games

Manish Agarwal: At a very fundamental level, gaming is being broad-brushed. There are games which you play for entertainment and those you play for money, which is skill based real money gaming.

Playing for entertainment itself is a strong consumer trend and a large business opportunity, which continues to grow very fast. In-app purchases are almost crossing $500 million in India on Google Play and Apple app store, a 10x growth from $50 million three years back.

The discussion around regulatory uncertainty happens in the skill based real money gaming segment. My view is these are all emanating from a very fundamental perception and deep rooted societal issues where we as a country are driven by Gandhian values, where anything that is about greed and manifestation of greed to make money is seen as a vice. Therefore, the perception among the society is that this (real money games) is not good and hence, it should be curtailed or banned.

Watch the full video of Moneycontrol Masterclass | Why a central law is needed for skill-based gaming industry here

A very strong dialogue accompanied by self regulation, and player protection will happen over a period of time to really improve the engagement between the industry as well as the decision makers.

Anurag Khurana: The definition of online gaming should be very clearly communicated, even when the government comes out with any regulation. Online gaming is a very wide term and real money gaming is only part of it. For instance, Esports is also part of online gaming itself but what they're targeting is a very different market.

Why self-regulation is important and what the industry can do

Gowree Gokhale: One bad apple in a particular industry creates an issue for the entire industry and leads to over regulation. When you are in a grey area like gaming, it is important that all firms come together and self-regulate. Then you are telling all stakeholders that you are responsible. These self regulatory guidelines help the industries to have a common plan and a common path.

Anurag Khurana: What's required of industry associations such as AIGF is much stricter guidelines on skill-based real money gaming. Why don't we impose these norms ourselves before state governments ask us to. Why don't we let them play on a lower denomination or fix a limit.

Manish Agarwal: We should really remove any kind of promise that you can win so much cash because that really gets amplified and spoken about. It has been removed from television ads but it should be removed from the digital medium also. We have been discussing internally to remove any cash rewards or winnings from our ads.

Another thing is incorporating a cool off period. If somebody is kind of losing X amount of money or creating a streak of losses, you can create these cool off periods so that the guy cannot come back and play. But the challenge is not on a single platform. The consumer behavior is when I lose on one platform, I move to the next platform to recover that money, which is something you cannot control through technology.

We should control the stimuluses for inviting people through things like the cool-off period or the whole cash ads thing but an individual's self control is also important.

Need for a central regulation

Gowree Gokhale: We have always been advocating for a central law through AIGF and otherwise, at least for online gaming. This is because state by state implementation of the law becomes very difficult in an online space. Also, a state law cannot be enforced against a foreign operator, but if you have a central law, you can have an enforcement outside India. This way, we will have a level playing field for all the gaming operators whether in India or offshore. We have even made recommendations to the Law Commission and MeitY around it.

I think the UK and some of the other European countries could be a good model overall as a licensing regime.

Roland Landers: As the industry, we are asking for a central framework. Either they can look at recognizing the self regulatory mechanisms already in place, like they have done for OTT, and then having like a dotted line, and building on it through some ministry. The problem however is that we fall in between three or four ministries - MeitY, MIB and sports to a certain extent. So it's really about finding the nodal ministry for this sector.

Otherwise, while we are proactive in a lot of states, we end up being reactive, and then looking at whatever is the best remedy, given the scenario at that point in time.