India's online gaming industry needs effective regulation

The Indian online gaming sector is one of the fastest-growing sectors with numerous investments, enormous employment and revenue eclipsing many other forms of media like movies, television, music, and print. According to a KPMG report, this industry is expected to generate revenue in excess of Rs 29,000 crore in 2025 with over 65 crore users, employ over 70,000 highly qualified technologists and many others indirectly dependent on the industry.

Despite the regulatory uncertainty and people going back to work as the pandemic subsided, the online gaming segment grew 28 per cent in 2021 to reach Rs 10,100 crore. It is the facilitative ecosystem in India that has ensured this massive growth, coupled with the culture, creativity and relentless commitment of young game developers.

As the industry draws the spotlight on itself due to its massive growth, successive court judgements have upheld online gaming as a legitimate business. Recently, in the start-up capital of India, Karnataka, the High Court pronounced its verdict to lift the blanket ban on online gaming, reaffirming the gaming industry’s faith in the Indian legal system. In October last year, the law banning betting and wagering in online games had been notified by the Karnataka government. This came after high courts in Kerala and Madras had previously struck down similar bans by their respective state governments.

Prior to Karnataka’s verdict, the High Courts of Punjab and Haryana, Rajasthan and Mumbai recognised fantasy sports as games of skill and a legitimate business activity protected under Article 19(1)(g) of the Constitution of India. These judgments have made it amply clear that blanket bans are ineffective ways of dealing with any perceived problems.

Although we have made strides in this direction, there is still a long way to go. While these positive judgments have been celebrated by the industry and millions of gamers, the reasons leading to blanket bans are yet unaddressed. This flourishing industry of online gaming however suffers from a lack of regulatory oversight. Ambiguity in the legal regime poses a challenge for investors and a significant compliance burden for game operators.

Globally, online gaming is a fairly well-regulated space. Many countries including the UK and the US, and the EU have regulations in place to ensure that users can enjoy this form of entertainment responsibly. Similarly, in India too, there’s a need for constant collaboration and creative problem solving from all stakeholders.

Given the complexity of this industry, I believe there’s an urgent need to address the perception and uncertainty surrounding it to avoid extreme reactions. A well-regulated online gaming industry will present compelling advantages and economic benefits too. Regulations would enable the government-mandated operations to ensure player safety whilst increasing the revenue and employment in the sector culminating in healthy growth of the eco-system.

India’s e-gaming industry needs robust policy frameworks and digital infrastructure to fulfil its potential, maximise revenue and foray toward being a global leader. A government body that oversees operations, drafts progressive policies preventing societal issues, suitably classifies games of skill or chance, ensures consumer protection and combats illegality and crime is required. Gaming companies should also continue to work with the government to promote responsible gaming by educating gamers and establishing best practices like conducting KYC checks, user authentication, etc to prevent illegal activities and financial dealings on their platforms.

Bottom line

In the foreseeable future, the sector’s rapid growth is expected to boost the total media and entertainment industry by 4-5 per cent. To make this, and many other future growth projections a reality, the online gaming industry needs a proper policy structure, legal framework, and data privacy procedures. Not limited to just economic benefits, the online gaming sector holds the power to support the government's initiatives under Digital India and Make in India campaigns, and propel India to its dream of being digitally independent.

(The writer is the chief executive officer of the All India Gaming Federation)