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‘If a state bans e-games, its ability to enforce that ban is zero’

‘If a state bans e-games, its ability to enforce that ban is zero’
Sameer Barde
3 May, 2022
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With the Rs 15,000 crore gaming industry growing at 35% and several states like Andhra Pradesh, Telangana and Odisha having banned gaming, Sameer Barde, CEO of E-Gaming Federation said there’s an urgent need for regulation and an evolved mechanism to ensure the industry operates smoothly. E-Gaming Federation is a not-for-profit organization set up to develop and self-regulate the e-gaming industry in India. Gaming firms like MPL, Games24X7 as well as companies like Paytm are members of the federation. Barde said the need of the hour is to have an overarching law that will protect players from fly-by-night operators. Edited excerpts from an interview:

How much do Indians spend on e-gaming annually?

We have probably one of the largest user bases of people gaming. But these are most of those who are playing for free so they’re not really generating revenue in that sense. But the potential is vast. The growth rates are over 35% CAGR, the fastest when compared to any entertainment business, even OTTs. And while we already see OTTs beginning to flatten out in growth, there’s a long way to go as far as gaming goes.

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Which gaming categories are considered problematic? 

There are largely three categories in online gaming. Casual games like Candy Crush or Ludo or Gardenscapes are games which can be played by anyone starting from a three-year-old to a 90-year-old and that segment is largely free to play or have ad-based revenues or operate on a freemium model. 

The other end of the spectrum, which is eSports, which is now Asian Games sport in which players can win medals.  Fantasy games allow players to create make-believe teams of real players of a given sport.

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Is fantasy sports considered gambling?

There is so much talk about it being close to gambling. Governments have gone up in arms against this.  The Supreme Court essentially categorizes them as games of skill versus games of chance.  Essentially any game where gamer skills influence the final outcome of the game far more than an element of luck or chance is called a game of skill. And any game where the skills of the gamer have a very insignificant amount of impact on the outcome is considered a game of chance. And that is considered as gambling and so illegal. The Supreme Court does, though, recognize that in any game, there is an element of chance. This jurisprudence goes back 70 years and very clearly establishes that games of skill are legal, can be played for money, and add protection under Section 19 of the Constitution.

Have some states banned these games? 

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Yes. Now, in a few of those cases, where industry has litigated, the high courts in those states -- in Kerala, Karnataka, Tamil Nadu -- clearly said that the ban is illegal. They’ve turned down the ban. Karnataka and Tamil Nadu appealed the high court decision in the Supreme Court. The matter is yet to be heard.

Isn’t there a risk of players getting addicted to games of skill too? 

Yes, there is. There is a small percentage of players that tends to get carried away and they might be playing for too much money. And of course, these players need to have protection afforded to them so that they can play more responsibly. But can you do that just by banning these games? The fact is that in today’s day and age, if a state bans these games, their ability to enforce that ban is zero. Every person in town knows how to use a virtual private network (VPN). So how are you going to enforce that? Fundamentally, when you ban something what happens is that the legitimate players essentially will exit leaving the space open for fly by night operators and illegitimate players to then occupy that entire space.

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Have states faced issues despite these bans?

Telangana is a classic case of that. We’ve seen a Rs 1,000 crore scam that has happened in 2020 and this was three years after that state had imposed a ban with zero ability to enforce it. 

Does the federation have any specific suggestions as far as the law is concerned?

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It would be ideal for this to be a central regulation, multiple state regulations just don’t work. Also, there needs to be industry participation in the regulatory structure because the realities on the ground don’t get reflected. The current OTT regulation structure is very good because it took views of those concerned.