Skill or chance: Indian panel calls for regulator and new law for online gambling
Prime Minister Narendra Modi’s panel of senior officials has been drafting regulations for the country’s online gaming sector for months, where foreign investors such as Tiger Global and Sequoia Capital have backed gambling startups Dream11 and Mobile Premier League, very popular for fantasy cricket.
The highly anticipated report is seen as key to the future of India’s mobile games industry, which is expected to reach $5 billion by 2025 from $1.5 billion this year. It comes amid growing concern about addiction to gambling and inconsistent state laws that disrupt business.
The simple definition of games has been controversial. India’s Supreme Court says rummy and some fantasy games are skill-based and legal, but at least one state court has classified games such as poker as luck-based, or related to gambling, which is prohibited in most states.
In its confidential draft report dated August 31, the group of government officials calls for the creation of a new regulatory body under India’s Information Technology Minister to determine which online games can be qualified as games of skill, then « to ensure compliance and enforcement ».
To streamline the legal framework, the 108-page report says India needs a new federal online gambling law, which will provide regulatory flexibility « with penalty provisions, as well as blocking powers, to government against banned game formats ».
Although the panel only looked at online games of skill, not gambling, which are state-run, it found that many betting and gambling sites Offshore money, illegal in India, has become popular with Indian users. The new legal framework would apply to free and paid games of skill.
« With regard to the prohibition of games of chance (e.g. gambling websites or apps) played online, the proposed Digital India Bill may include it in the list of harms prohibited to users who will not be authorized, » the report said.
A senior government source said that while the federal government may classify gambling as harmful, it would let the states make the final decision on whether or not to allow gambling.
The report noted that state governments already find it « difficult to implement and monitor go-fencing measures » to ensure that no user in their region is accessing an illegal form of gambling or gambling. by chance.
The IT minister will finalize the report after receiving further comments from panel members, who are some of Modi’s top officials, including heads of revenue and sports ministries. It will then be sent to the cabinet secretariat for approval, although there is no timeline for finalization.
The IT minister did not respond to questions from Reuters. Panel members did not immediately respond to requests for comment.
A senior gambling industry executive said the recommendation that a regulator should assess different online gambling formats could lower barriers to entry for new players and increase scrutiny of companies’ current offerings.
Nevertheless, according to the framework, the new regulations will bring « regulatory clarity, certainty and investments for the sector. » The executive declined to be named due to the sensitivity of the issue.
A 2020 report by Indian trade group FICCI and consultancy firm EY indicates that of the 65 billion Indian rupees ($817 million) made by the online gaming industry in the previous year, games based on transactions including real money contributed 71% or Rs 46 billion.
The support of India’s top cricketers and other marketing efforts have increased investor appeal and interest in real money gambling applications. Dream11 is worth $8 billion, while Mobile Premier League is worth $2.5 billion, according to PitchBook data. By 2021, India will have 95 million paying gamers.
The government’s report obliges us to note that the proliferation of these games among young people has led to an addiction which often causes financial losses, with certain cases of suicides reported.
For online games such as fantasy cricket on Dream11, paid contests remain the popular attraction. Users can create their teams by paying from 14 rupees (17 US cents), with a total prize pool of 7 million rupees ($88,000) to be won for winners. The first in the standings can win 275,000 rupees ($3,462).
After receiving suggestions from India’s revenue department, the government panel said online gambling companies should be required to report any « suspicious transactions » to the government’s Financial Intelligence Unit.