SEBI-like regulator is key for growth of India’s real-money gaming industry: Dream Sports CEO Harsh Jain

Dream Sports co-founder Harsh Jain said that 2023 has been an "amazing year" for them in terms of regulations

The emergence of a regulator like SEBI will be key for the fast-growing real-money gaming sector, as it would provide clear guidelines on what companies are allowed and not allowed to do, said Harsh Jain, the co-founder of Dream Sports that operates the fantasy sports major Dream11.

"The Government has appointed the IT ministry (MeitY) as the 'Nodal Ministry' for the gaming (sector), which is going to pass regulations sometime soon. That will help expedite innovation in sports and sports engagement, because we will have not just the legality, but also a regulated way in which we can have a SEBI" Jain said at a recent industry event in Bengaluru.

In April 2023, MeitY had notified gaming-related amendments to the IT Act 2021, that will allow multiple self-regulatory organisations (SROs) to determine whether to permit real-money games to operate in India. The ministry is however yet to notify SROs for the sector.

According to reports, the government has now formed a group of ministers (GoM), including home minister Amit Shah, finance minister Nirmala Sitharaman, IT minister Ashwini Vaishnaw and information and broadcasting minister Anurag Thakur, to formulate a comprehensive regulatory framework for the sector.

Jain said that 2023 has been an "amazing year" for them in terms of regulations. "We've been doing this for 15 years but now it's going to a scale and size where we are very fortunate to have the government come in and regulate this industry" he said.

"Gaming will finally have a body, which can regulate what we can and cannot do in sports to help the sports fan engage with the game in an official manner and allow that to grow even further" he added.

Jain, who is also currently serving as the chairperson of the premier industry body Internet and Mobile Association of India (IAMAI), drew a comparison to the market regulator SEBI because he believes that fantasy sports is more akin to the stock market than gambling or betting.

"You can put in money, pick a portfolio of stocks like a team of players and then based on relative performance of that portfolio or that team, one can win or lose money. Betting and gambling is usually based on the outcome of an event. Will India win, or will Australia win?  Will Virat Kohli score 50 or 100. Will Shami take five wickets?  That's a different genre altogether" he said.

For the fantasy sports unicorn Dream11, which recently clocked a milestone of 200 million users, regulations will play an important part in the company's ability to "continue pushing the envelope" to get to the next 200 million users, he said.

Jain's comments come at a time when the country's real-money gaming industry is navigating through a turbulent period posed by the government's new 28 percent goods and services tax (GST) regime which became effective from October 1. The new tax rates are expected to hit the revenues and profitability of many companies in the sector.

Dream Sports is expected to witness a revenue drop of 40-50 percent in the current financial year while the operating profit may drop by about 80 percent, sources have told Moneycontrol.

Indian tax authorities have also served show-cause notices to Dream Sports and other skill-based firms such as Gameskraft and Games24x7 for alleged tax evasions to the tune of Rs 1 lakh crore, Moneycontrol reported on October 25, citing a senior government official.

Dream Sports has filed a writ petition in the Bombay High Court challenging a show cause notice issued by tax authorities for alleged GST evasion and non-payment of 28 percent GST on the face value of bets, Moneycontrol reported on September 26.