India Development Foundation launches method to distinguish games of skill from chance

India Development Foundation (IDF), publishes ‘Modeling the Role of Skill in Online Games’ report.

The India Development Foundation (IDF), a private, non-profit research organization, unveiled a report titled ‘Modeling the Role of Skill in Online Games’ during the Indian Gaming Convention 2024, which commenced on October 14.

This report offers a quantitative framework for statistically assessing the significance of skill across various online gaming formats. According to the IDF, this is the first study to establish a theoretical framework for understanding how skill is developed through experience, ultimately influencing the likelihood of winning in online games.

The paper introduces a generalized scoring framework and employs it to evaluate skill dominance using seven statistical tests. This comprehensive approach will enable a thorough analysis of skill predominance in any online game, regardless of whether real money is at stake.

“Distinction between games of skill and games of chance is critical to safeguarding legal online gaming and mitigating the risks stemming from the proliferation of betting and gambling platforms," said Professor Shubhashis Gangopadhyay, Research Director of India Development Foundation.

He added that establishing an objective game-testing framework to distinguish games of skill and games of chance is critical to protecting Indian gamers and, enabling the growth of an innovative industry. "In this context, we have developed a comprehensive objective framework to assist policymakers in distinguishing between these two categories through a statistical methodology.”

●       Test 1: A skilled contestant always beats a contestant, opting for a random strategy.

●       Test 2: Contestants have an opportunity to lose a contest deliberately.

●       Test 3: Higher skill reflects better winning probability in online games.

●       Test 4: Relative superiority of skill remains consistent across non-overlapping time intervals.

●       Test 5: Experience helps in attaining skills.

●       Test 6: Similar skilled players have similar win percentages.

●       Test 7: Consistent winning is not an event of chance.

According to the study, an online game that satisfies any of these tests should be classified as a game of skill.

These tests take a 'black-box' approach to develop a game-agnostic framework, allowing for player scores to be summarized without explicitly using a game’s structure or modifying game rules for the tests, IDF said.

The report highlights the need for a theoretical framework that will help policymakers coherently distinguish skill-based games from chance-based ones in an evidence-based and data-driven manner. This will enable effective governance and consumer protection in the long run. At the same time, this framework will help regulators identify and safeguard legitimate online gaming activity and curb the proliferation of illegal gambling platforms.

The findings of this study can further ensure that policies for the online gaming industry are consistent with ground realities and established legal norms, reinforcing the case for recognizing skill-based games as a legitimate business activity, IDF said.