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Why online rummy and other ‘skill-based games’ need to be regulated in India

Moneycontrol delves deep into the murky world of online rummy, which is claiming more and more victims by the day

October 27, 2020 / 04:31 PM IST

Three years ago, Siva*, a techie, started playing rummy online to supplement his income. In no time, he was addicted and began to spend way more than he was earning. What was supposed to be fun and a way of earning money soon turned into a nightmare as he accumulated a debt of Rs 1 lakh. “I had to take a loan to repay the debt,” he recounted. Siva learned his lesson and stopped playing the game.

Others haven’t been as fortunate as Siva. Covid-19 has rendered millions jobless, and many are looking at various avenues to get rich quick or at least make a little money. Some have chosen to play rummy online. Some decided to play the stock market. And, now, with the IPL on, millions put millions every day into fantasy cricket, which is considered a game of skill and has top cricketers endorsing various platforms. Many have little interest in the game’s actual outcome and are more concerned about the performance of their 11 players, chosen from the 22 who take to the field.

Unfolding tragedy

The online addiction has broken many a household. Rummy platforms enable payment through credit card, debit card and internet banking. Many have stolen money or digital banking credentials or borrowed from their family and friends to play the game.

In Andhra Pradesh, a cashier embezzled Rs 1.5 crore from his bank to play the game. A college student in Chennai stole Rs 20,000, while a 26-year-old police inspector borrowed Rs 43,000, kept losing and could not repay the debt. In another case, a 12-year-old boy spent Rs 90,000 over three months using a parent’s debit card to play rummy.

Close

As many as half a dozen people have taken their own lives in some southern States because of the havoc online rummy wreaked on their lives.

The tragedies it helped script have led to the multimillion-dollar online rummy industry facing a backlash. Two petitions filed in the Madras High Court earlier this year demanded that the game be banned. They also called for the arrest of celebrities such as cricketer Virat Kohli and actress Tamannah Bhatia, who endorsed them. The outcry has led politicians in Karnataka and Andhra Pradesh to demand a ban on the online game.

Big business

According to estimates by industry watchers, the online rummy industry is worth about Rs 2,000 crore and is expected to be worth Rs 4,500 crore by the end of this year. There are close to 6 crore rummy players vying with each other on 15 online rummy platforms across India, say those who track the business.

The top platforms are Ace23, Rummy Circle, and Rummy Passion. Over the last few years, these companies have attracted investments from India and overseas given the growth the sector has witnessed over the last few years.

Ace23 registered revenue of Rs 346 crore and a profit of Rs 94 crore in FY19. For FY20, the company said growth is likely to be 60 percent over FY19. It, however, did not share numbers for FY20 since they are under audit.

According to data provided by Tracxn, which tracks startup funding, Ace23, Rummy Circle and Rummy Baazi have raised close to $17,540,327 from three investors. In 2017, Canada-based Clairvest acquired a majority share in Ace23 for $73.7 million, with Matrix Partners India exiting. Sequoia Capital has invested $15 million in Octro, another online gaming platform, in Series A funding.

Vague legal framework

A 2015 Supreme Court judgement ruled that online rummy is a skill-based game and not one of chance. A game of chance depends on luck and is hence illegal.

“There is not enough of a legal framework for online rummy. The current Information Technology Act is silent on online gaming, with only Section 87 of the Act covering some aspect of it. As the platform grows and generates huge interest, there is a need for a separate rule to address issues arising from it,” said Pavan Duggal, a Supreme Court advocate who practices cyber law.

As things stand, online rummy players are able to advertise as they please and attract players.

Luring in the gullible

Those messages come thick and fast via SMS, email, WhatsApp, Facebook and other social media, and as ads flashing brightly on web pages that millions go through each day.

The messages aim to lure in players by promising quick money: “Tired of lockdown, play online rummy & earn real money in real time.”

“Earn money instantly and easily by playing online rummy game.”

“How to win real cash on PlayRummy and invest wisely?”

Jay Sayta, a lawyer who specialises in gaming-related policy and regulatory issues, said such communications mislead and lure people into believing that they can solve their financial issues by playing Rummy online.

The net is cast wide and even if a small fraction of the audience takes the bait, online rummy has its next players/victims.

In an order dated July 24, a judge of the Madurai bench of the Madras High Court noted: “Not only in the State of Tamil Nadu, but also in the entire Country, online games such as Rummy Passion are mushrooming and there are so many advertisements appearing in almost all the social media and websites. It appears these advertisements are mostly targeting the unemployed youth, inducing them to play such games, on the pretext of earning money comfortably from their home.”

It added that the ads do not comply with techno-legal requirement of different laws in India and are leading to a growing addiction to online gaming/gambling, particularly among youngsters, causing financial crises in families.

“This Court is not against virtual games, but, the anguish of this Court is that there should be a regulatory body to monitor and regulate the legal gaming activities, be it in the real world or the virtual world,” the judgement read.

Blame game

Earlier, close to a dozen online rummy companies had come together to form The Online Rummy Federation (TORF), a not-for-profit organisation. Any rummy company can join it and get a TORF seal as long as it meets the standards set by the body.

The federation, in an email interview, said its 10 members account for 90 percent of the total online rummy market in terms of revenue and players.

The public backlash has led to divisions within the industry, with “self-regulated” platforms blaming the ones that are not. “It is frustrating,” said Bobby Garg, CEO of Rummy Passion, a TORF member. “It is frustrating because, due to these companies, people like us who want to do business ethically are affected.”

Garg said rummy companies can be divided into three categories: those that are part of TORF, those that are not TORF members but offer skill-based games, and those who operate a game of chance, which is not legal. According to Garg, the third category is the one creating problems as people fall prey to these “rogue players”.

The fact is, however, that people can just as easily addicted to a skill-based game and lose a fortune in the process. Two online rummy players Moneycontrol spoke to admitted that addiction can be a real issue.

Prashant Ratan, who lost close to Rs 80,000, and even sold his land to continue playing the game, used the skill-based platform Rummy Culture. The company did not respond to questions sent by Moneycontrol on skill-based games. However its website details standard protocols a skill-based game follows.

Siva (cited at the beginning of this story), who ran up a debt of Rs 1 lakh, used a TORF affiliated platform.

While TORF members claim to have high standards and regulate themselves, that self-regulation fails on several counts.

Firstly, while there is KYC to ensure that underage players (below 18) are not allowed, it is impossible to verify if the player is really of age or not. A player can be 9 years old and register easily using his elder siblings’/parents credentials.

Garg asserted that TORF members have airtight KYC procedures that ensure no underage players can join the platform, by using various checks such as IP address tracking and address proof verification. Legal experts, however, say that it is not impossible for underage players to register.

Secondly, while joining the federation may give rummy platforms credibility, it offers nothing else. The federation has no power to punish offenders except barring them from being members.

However, Rummy Passion CEO Garg says a ban is not the solution. His rationale: “If you are banning, it is players like us who are willing to comply with laws who will shut shop. Others, who are operating illegally, will continue.”

Deepak Gullapalli, CEO, of Ace23, an online rummy platform, also blamed the illegal sites. “As the news of the number of suicides due to rummy surfaced, we decided to look into the issue,” he said. It was found that there are many illegal websites operating as a game of chance rather than skill and people are losing money because of this.”

These websites present themselves as e-commerce sites, he added. “We are working with a government agency to get most of them removed. If there is regulation, it will help in regulating these illegal platforms,” said Gullapalli.

“What we need is for the sector to be properly governed and third parties to step in. Because what we as a company/Federation do could be looked at with a lens of bias,” said Garg.

In its email, rummy federation TORF said: “Not only will this (regulation) help to weed out nefarious fly-by-night operators but also ensure that players will be protected and experience a safe, transparent and responsible form of entertainment.”

Experts say there are multiple examples from across the world, including the UK and EU, that the government can look at while framing the rules. It is also a fact, however, that for all the regulation in these regions, addiction is an issue there as well.

Some Indian States do have regulations. For instance, the government of Telangana prohibits online gaming/gambling of any sort, including online rummy. Sikkim and Nagaland require online gaming firms to get a license to operate.

Countries and regions have their own regulations for skill-based gaming. For instance, European Skill Gaming laws prohibit online games in the EU unless they are licensed. In the US, skill-based games have to adhere to prescribed rules.

Lawyer Sayta, cited earlier, said the central government needs to set up a body that will monitor all websites, block fake ones, and keep a check on the limit for a player.
Swathi Moorthy
Maryam Farooqui
first published: Oct 27, 2020 04:31 pm

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