Nazara Technologies is eyeing a larger presence in the skill-based real-money gaming business, with regulatory clarity appearing to emerge in the space, founder Nitish Mittersain told Moneycontrol.
The real-money gaming vertical reported revenues of Rs 57 crore in FY23, accounting for a modest 5 percent of the company's revenues for the financial year.
"We've not had a very large business in the real-money gaming (RMG) sector. It is therefore an opportunity where we can now start investing and grow that business to a meaningful scale and the opportunity is there in the real-money gaming segment" Mittersain said.
The real-money gaming segment accounted for 77 percent of India's gaming sector revenues in 2022 which stood at Rs 13,500 crore, as per a recent FICCI-EY report. Nazara Technologies currently operates titles such as Classic Rummy (online rummy) and Halaplay (online fantasy) in this space.
In April 2023, the Ministry of Electronics and Information Technology (MeitY) notified new gaming-related amendments to the IT Act 2021, that will allow multiple self-regulatory organisations (SROs) to determine whether a real-money game, where the transfer of money is involved, is permitted to operate in India or not. The Union Budget 2023 also brought in TDS-related changes to the Income Tax Act.
"I think the only big bottleneck still left in real-money gaming is GST clarity" Mittersain said, adding that he is hopeful it will get resolved in the coming months.
What’s the plan?
Nazara Technologies is taking a three-pronged approach to growing its footprint in the burgeoning skill-gaming segment: scaling up its current offerings, publishing new real-money games and acquiring companies to drive consolidation in the sector.
Mittersain said they are working with local and international developers to publish new real-money games that target Indian audiences.
"RMG is today dominated by fantasy sports, rummy and poker. We think a lot more innovation can happen in the kind of games offered to the users. We are just seeing what fresh things we can bring to the market so that there is a differentiator also and we get better traction" he said.
Impact of Tamil Nadu ban
In the short term, however, Tamil Nadu government's recent ban on online rummy and poker in the southern state will have a negative impact on its revenues from the segment, since Tamil Nadu contributed about 20 percent of the company's revenues from the real-money gaming sector in FY23.
Several companies including Nazara Technologies have barred users from playing paid contests on these games in Tamil Nadu, after the state government's online gambling law came into effect last month.
On April 27, Madras High Court refused to grant an interim stay on the law, after multiple gaming startups and industry associations approached the court challenging it.
The legislation will also likely set the stage for a dispute with the Centre over regulating the skill-based gaming industry in the country.
On April 14, Minister of State for electronics and information technology Rajeev Chandrasekhar said the internet cannot be regulated by states, hence it is "meaningless" for a state government to try and legislate sectors such as online gaming.
The new gaming rules essentially lay out a clear crystal framework for states, courts and gaming companies about what is permitted online and what is not, the union minister said.
"Based on the MeitY guidelines, I think these ad-hoc state-level bans are not something that should be done," Mittersain said.
In the meantime, he said that Nazara Technologies will focus on growing its real-money business in other states and opening up in new states.
