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Skill Over Chance: Indian Gaming Industry at A Cusp of Transformation

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~By 2024 the online skill gaming industry is expected to employ around 2 lakh people~

~The move by the Karnataka government is a setback to the state’s reputation of being a tech-hub and start-up capital~

Background: Karnataka Assembly has passed an amendment to the Karnataka Police Act, 1963, which seeks to ban online gaming and curtail online gambling. Chief Minister Basavaraj Bommai said the proposal is not valid for online games that strictly comply with “game of skills”.

23rd September 2021:  The Indian online gaming industry is at cusp of transformation, looking at a growth trajectory over US$3.9 billion in 2025 according to KPMG. During the unprecedented time of the pandemic, the online gaming sector was one of the fastest growing industry as the sector attracted significant investments of around $500m.

Online gaming today has emerged as an important avenue due to a multitude of favourable factors such as young and tech-savvy population, affordable availability of feature-packed smartphones, better internet connectivity, increased awareness and development. Therefore, the domestic industry has the potential to scale quickly and become a meaningful contributor.

In the recent light of events, with the Karnataka Police (Amendment) Bill 2021 being passed, the gaming industry stands at a crossroad. On one end the progressive path encourages innovation, scientific temper and change in a lightly regulated policy ecosystem, the other end of the regressive path, shuns progress and change. This path advocates these bans being easier to implement than finding solutions that can give India a chance to lead the gaming space globally. However, the industry players are optimistic that right regulations will lead to better outcomes for the industry. Most of India’s unicorns are based in Bengaluru, it’s due to it has progressive policies for start-ups, regulatory certainty and a young and skilled workforce. Hence, the Karnataka government may hamper this image of Bangalore and probably the overall gaming ecosystem of the country by introducing a law of not prohibiting the online real money skill gaming in its State.

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Mr. Roland Landers, CEO, All India Gaming Federation states, “India is the fifth largest online gaming market globally and skill-based gaming, a sunrise sector, is giving birth to an increasing number of unicorns within the country, especially Karnataka. The sector has been a strong financial contributor to the Indian economy even during an unprecedented period of slowdown and is further expected to generate revenues in excess of $ 3.9 billion by 2025. The expansive growth also means generation of employment opportunities. The industry currently employees 40,000 people in direct jobs, out of which 5000 are employed in Bengaluru alone. By 2024 the online skill gaming industry is expected to employ around 2 lakh people. In a post covid world where global economies are clutching at straws it is not prudent to be against a sunrise sector. The move by the Karnataka government is a setback to the state’s reputation of being a tech-hub and start-up capital.”

“The ban in Karnataka is disconcerting for this sunrise sector in India, particularly at a time when higher judiciary has reiterated the difference between games of skill and games of chance. That Karnataka, which is a tech and start-up capital of India, should take such a step is all the more distressing because a lot of other states realize gaming’s potential and working on policies to attract investment from gaming companies- in view of sector’s immense multiplier benefits”, says, Dinker Vashisht, Vice President, Corporate Affairs, Games24x7

Skill-based gaming cannot be compared with gambling, and banning is not a solution. Elaborating this further Justice Vikramajit Sen, a former Judge of the Supreme Court & former Chief Justice of the Karnataka High Court, added, “The Indian regulatory framework has clearly differentiated between games of skill and games of chance in India. Just because games of skills may involve an entry fee they cannot be considered gambling. Games of chance are considered gambling as it involves luck rather than skill and thus it is expressly prohibited by the law, wherein games of skill are considered legal across most states including digital & online. The sector needs the support of state governments to promote initiatives towards responsible gaming and recognition of the AIGF ‘Self-regulation Framework’. AIGF and its advisory members look forward to an opportunity to engage stakeholders within the state government to make an industry representation on the matter.”

With serious concerns looming from the Karnataka Government’s move to ban online gaming, PK Misra, President Players’ Association – AIGF and former senior IAS said, “The move will affect the online skill-based gaming sector, putting an end to player’s right to earn their livelihood. There is no clarity on the scope of this law. Around 10-12% of India’s gaming community is based in Karnataka, and many of these players who compete at the international level are afraid for not only their livelihoods, but also their ability to pursue their dreams of becoming professional players on international platforms. I certainly hope the state government draws a clear distinction between gambling and games of skill. Since 1957, the Supreme court has reiterated games of skill as a legitimate business protected under article 19(1)(g) of the Indian Constitution, also supported by the Karnataka High Court in multiple judgments.”

As an industry we need to make sure that they are nurtured while ensuring that players have an enriching and unique experience. Expressing her views, Muskan Sethi, Responsible Gaming Ambassador of All India Gaming Federation said, “Every professional gamer devotes his or her time and effort in improving their skills and gameplay to perform better at any domestic or international gaming tournaments, and now as the decision to ban the online skill gaming across the state of Karnataka may affect the livelihoods and income of the these gamers living in that state, instead of banning such games from the market, as a player I would suggest the government should seek to devise a regulatory framework in consultation with the industry stakeholders so that it encourages professional gameplay and control the rise of grey market of gambling.”

According to a FICCI statement, it is believe that a prohibition on games of skill apart from being unconstitutional will also lead to massive loss of revenue and jobs and opportunities for users to develop their skills. The statement further suggests that if the bill bans online skill games, the law-abiding Indian companies will exit the market, and the users will turn to harmful offshore and betting apps, which are harmful and dangerous. There are other big offshore and Indian gambling players, which are currently offering their services in Karnataka despite being illegal. Some of them are endorsed by big Indian celebrities, are advertising heavily, and once the skill gaming platforms exit, even more users will turn to these websites and apps.

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Avatar of Rahul Roy
Rahul Roy
I am a computer guy by profession and a sports fanatic by choice.

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