The central government released draft regulations for the online gaming and gambling sector on January 2. Union Minister of State for Electronics and IT Rajeev Chandrasekhar said the government has begun consultations to frame detailed guidelines and regulations for India’s nascent gaming sector, which has registered impressive growth both in app downloads and revenues. The draft guideline proposes a Self Regulatory Organization (SRO) to certify and recommend what kind of online gaming intermediaries should be permitted to operate in India. Online gaming intermediaries are online platforms that offer players online games produced by gaming software developers. These games often have betting and wagering options, which the online gaming intermediaries use to make an income for themselves.
“The rules regulate betting. It is a prohibition of wagering on any game. The SRO will determine whether it is a permitted game or not… The online games that offer winnings, any game that allows wagering on the outcome is effectively a no-go area. If you bet on the outcome of a game it is prohibited under 3(b) 10 of the IT rules,” the minister told a press conference. Kids below 18 will need their parents’ consent to access online gaming platforms. Recognizing that online gaming is an important piece in India’s growing startup ecosystem, the electronics and IT minister hoped that the new rules would be in place by February 2023. Last week, the government placed online gaming under the jurisdiction of the Ministry of Electronics and Information Technology (MeitY).
India’s gaming sector clocked $2 billion in revenue in FY21 and $2.6 billion in FY22. It’s expected to grow at a CAGR of 27% to $8.6 billion by FY27.
There is a thin line of distinction between online gaming and online gambling. Each online game contains an option of online gambling without doing much. For example, an online game is accessed by paying money or what you call in its native terminology — Deposits. Winning and losing are part of any game so players win or lose when they play online games. Knowing that it’s not just the kids who are playing, we can safely assume that at least adults, if not the kids too, playing online games would like to be rewarded for their wins. On the internet, there are thousands of gambling options available and they are made possible by integrating a system called — Withdrawal. Once people can withdraw, the stage is ready to play games with real money, win, and withdraw. But when you play, you lose, too. And, when you play against the house (the platform or the software maker), the house has an edge. You lose more often!
For instance, Australians love gambling like no other people in the world. As much as 80% of the adult population tries out gambling at least once a year, with about 1.5% of people suffering from acute problem gambling symptoms. Australians lose about AUD25 billion in gambling every year. It works out to be AUD1200 for each Australians. Before the pandemic, slot machines, also called pokies, could be found in every pub and club in Australia while there was a strong presence of internationally-recognized brick-and-mortar casinos.
It’s almost a routine for Australians to put a few coins or bills into the slot machine after dinner at a restaurant and try their luck. When the pandemic-related lockdowns came, people could no longer access those public venues, with the result that most of them switched over to betting apps without the government having any clue about it, leave alone a strategy to deal with the emerging situation. In Australia, online sports betting is legal but online casino games including online slot machines are not. Traditionally, Australians are too enamoured with their slot machines and physical casinos to think of other options.
Online casino games made big inroads into Australia’s gambling culture during the pandemic and the shift in gambling behaviour among the people stayed on despite lockdowns having been removed over a year ago. Online gambling is hard to regulate as it takes just a few hours for a new gambling site to be put together and made live. In July 2021, Australia enacted The Interactive Gambling Act (2001), which banned online gambling services and their advertisements in the country. Despite the laws, online gambling is increasingly becoming popular, forcing the government to look at enforcement more proactively.
Given the international experience in online gambling and how it can become an obsessive behaviour among a large population, it’s important to effectively regulate this sector. Gaming is a money-minting niche in the startup world and there are hundreds of fabulous success stories. But when gaming becomes gambling under one pretext or another, it becomes a problem. It’s worth watching out how India deals with this challenge. (IPA Service)