Regulating online games with skill, chance and FDI considerations

A Skill-Chance statistical framework can now be used to decide that too, making them true silver bullets for online game regulators.

By Amrit Kiran Singh 

In India, our Constitution mandates that we differentiate between Online Games of Skill and Games of Chance. A Game of Chance is "gambling," and "gambling" falls under Entry 34 of List II of the Indian Constitution. List II lists subjects that fall under the jurisdiction of the States. Games of Skill, on the other hand, are not gambling and hence fall under the purview of the Central Government.

What is also absolutely clear is that if you look at the spectrum of Online Games, you have Chess, Rummy, Bridge, Poker, etc., on one side, which are Games of Skill (and even the Indian courts have held them to be Games of Skill repeatedly), and on the other side, you have Casino Games like Baccarat, Roulette, Slots, Craps, etc., which have no component of skill and therefore are purely Games of Chance.

The challenge is that Games of Skill also have a component of chance. Take cricket, for example — it is clearly a Game of Skill. Successful cricketers like Virat Kohli are very skilled, but they can also get out for a duck, which shows that although cricket is a Game of Skill, it also has a component of chance. Now, what needs to be decided by regulators is what component (percentage) of chance should be permitted in Online Games of Skill.

While there are several instances in India itself where the judiciary has stepped in and decided whether a game is one of Skill or Chance, statisticians across the world have been working on a statistical framework that provides a tool to do this.

The most recent statistical framework in India is a model to differentiate Games of Skill from Games of Chance, developed by Padma Shri Professor Bimal Roy of the Indian Statistical Institute, but there are a few others available internationally too.

Such a statistical framework is a silver bullet for regulators. MEITY has created a set of "rules" for online games. These "rules" refer to "permissible games and non-permissible games." But the challenge has been determining who and how to decide what is permissible and what is non-permissible. One of the statistical frameworks referred to above could now be used by the regulator (either through a "TRAI-type" agency or SRB) to address this challenge. Online Skill Games would then be "permissible games," while Chance Games would be "permissible or non-permissible," depending on whether they are permitted or banned by each state within the geographical boundaries of that state.

Further, it needs to be understood that all Real Money Games (RMG) are not gambling. Monetary rewards are given for achieving certain levels in different traditional games, competitions, or tournaments, with even Wimbledon or the World Chess Federation or Bridge championships offering cash awards. This is not gambling, and neither are all Skill Online Games with monetary rewards. While there are RMG that are gambling, many RMG are not. A Skill-Chance statistical framework can now be used to decide that too, making them true silver bullets for online game regulators.

The Prime Minister has been categorical in stating that India should be a leader in the online games sector. This can become a reality if we show leadership and create a model regulatory framework for this nascent industry that the rest of the world can adopt.

(Amrit Kiran Singh, Founder President, Skill Online Games Institute (SOGI).)

Views are personal, and do not represent the stand of this publication.