A national lockdown triggered by the COVID-19 pandemic, combined with an
increase in work-from-home practices, has resulted in an increasing number of
people spending more time online in search of new forms of entertainment,
whether it's consuming music and entertainment on OTT platforms or playing
online games, giving the segment a new lease on life.
India's internet gaming
business has a lot of promise. Gaming has increased in India during the
pandemic. People's time spent online gaming has increased by nearly 65 percent
since pre-Covid levels. It is one of the sectors with great potential and has
already started increasing.
Online gaming is divided into three categories:
- fantasy e-sports, and
- online casual games.
Over 275 gaming
firms, over 15,000 game developers, and around 300 million gamers make up
India's online gaming sector.
A member of Parliament recently pushed the
government to develop a comprehensive framework for regulating online gaming.
The amount of time that children spend online gaming has significantly
increased. Online gaming has numerous negative effects on children. Recently,
China restricted the time limit for children below the age of 18 on time spent
on online gaming and reduced it to 3 hours only.
In India, PUBG, the online
multiplayer game that got banned in September 2021 due to its violent nature,
Online games not only cause addiction but also stress, anxiety, and
nearsightedness. There is a lack of regulatory oversight in this thriving
industry. Even while the proper tax rate is being contested in relevant circles,
online gaming is in a regulatory grey area with no complete legislation
regarding its legality or borders with gambling and betting.
gaming business has a lot of promise. It is a valuable source of revenue
production as well as a producer of highly skilled jobs in fields such as
graphic design, coding, marketing, management, and auxiliary sectors, with a
compound annual growth rate of over 40% in India.
Given its large pool of enthusiasts and growing availability of digital
infrastructure and engineering talent, India is well positioned to give this
industry a huge boost and turn it into a growth engine that will generate both
money and jobs, much like the software sector's first wave of massive growth.
The online gaming industry in India began in the early 2000s, when console and
PC gaming introduced countless middle-income Indians to digital gaming
platforms. During the mid-2000s, the majority of internet gaming was in the form
of social games. This adoption was aided mostly by multinational developers'
worldwide games. The Indian development ecosystem predominantly served
multinational developers as service providers. Since then, India has become a
volume-driven market, thanks to increased internet penetration and smartphone
About Online gaming Industry
By 2023, India's online gaming sector is anticipated to be worth Rs 15,500 crore,
according to the All India Gaming Federation. According to a 2019 survey
conducted by Limelight Networks in the United States, India has the
second-largest number of gamers behind South Korea. While online time spent in
India is still lower than in other nations, the poll discovered that over a
quarter of adult Indian gamers have missed work while playing games.
The gaming industry is now being seen as an important pillar of the economy.
This emerging industry has the potential to generate thousands of new jobs in
the country. Several gaming startup firms are expected to firm up their hiring
plans to support growth in the next few years. With India being the world's
fifth-largest gaming market, regulating online gaming will benefit the economy
and generate more than $3 billion in revenue by 2025.
Various emerging job sectors are coming to the online gaming industry that will
create employment. The online skill gaming and e-sports industry is one of the
few that has not only weathered the pandemic's slump but has also experienced
exponential growth. The business is expected to expand even further, providing
new career options for both players and game producers, as well as assisting in
the globalisation of Made in India titles.
The addition of e-sports as a medal
event in the Asian Games will provide numerous opportunities for young e-sports
professionals. Now that online gaming is getting recognition from the government
time and again, the industry will continue to evolve. India currently has over
400 gaming firms, including Infosys Limited, Hyperlink InfoSystem, Fgfactory,
and Zensar Technologies, to name a few.
According to the WEF, the rise in gaming
is due to a growing need for virtual entertainment among friends, family, and
peer groups, as well as an increase in influencers urging Indians to play more
Various reports suggest that the online gaming sector will reach $1 billion by
the end of 2022.
Recent developments in Online Gaming
The NITI Aayog also recognises gaming as a category in which the development of
indigenous applications is to be encouraged and celebrated. Also, PM Narendra
Modi has recognised online gaming as one of the emerging sectors that has the
potential to solve problems like unemployment, poverty, etc.
The government will
set up an Animation, Visual Effects, Gaming, and Comics (AVGC) sector and a
promotion task force to employ youth and build domestic capacity to serve Indian
markets as well as cater to global demand, according to Finance Minister Nirmala
Sitaraman's announcement in this year's Budget.
Gaming is one of the
fastest-growing industries, and India, with its large user base, can do wonders
in this field. Creating a task force would undoubtedly boost the economy, create
new jobs for the youth, and contribute to overall economic growth.
If India wants to become a worldwide leader, it is critical that we take gaming
seriously, especially given the fact that it covers numerous distinct sectors
such as privacy problems, online safety concerns, and data transfer, where the
central government must have a significant role. Recently, the Karnataka High
Court overturned amendments to the Karnataka Police Amendment Act of 2021 that
prohibited certain online gaming activities.
This move was welcomed by the
gaming industry. "As the main industry group for online skill gaming, AIGF
welcomes the ruling delivered by the court that strikes down the statute
outlawing online games," Roland Landers, CEO of the All India Gaming Federation,
said in a statement. This is a step in the right direction for the developing
gaming sector, following the favourable verdicts for online skill gaming by the
Kerala and Madras High Courts in 2021.
Recent judgments of the Madras High Court have stressed the need to have a
proper regulatory framework to regulate modern and online games in India that
are luring unemployed youth to bet and lose all their money. A clear and
structured set of regulations is the need of the hour, and with that, India's
online gaming sector looks set for an incredible growth story going ahead.
Legal framework of online gaming in India
Online gambling is now in a regulatory grey area, with no comprehensive
legislation addressing its legality. In most regions of the country, skill-based
games are permitted, whereas games of chance are classified as gambling, are
considered immoral, and are forbidden in most areas. Because betting and
gambling are state-regulated activities, each state has its own set of rules.
Except for Goa, Sikkim, and the Union Territory of Daman, every state outlaws
any form of gambling, betting, or wagering on games of chance. The states of
Assam, Andhra Pradesh, Nagaland, Odisha, Tamil Nadu, and Telangana have also
imposed limitations on skill games. However, the Kerala High Court has agreed
with the industry that games of skill should not be banned. India's gaming
regulations are out of date, and as a result, their application to online
structures is complicated. The conflict between the Center and the states, as
well as the differing perspectives of various Indian courts, makes it difficult
for businesses to understand what activities are permissible in the sector.
The Public Gambling Act, 1867 ("Gambling Act"), which dates back to British
administration in India, and the Prize Competitions Act, 1955, are the two most
important central gambling regulations in India ("Prize Act"). The anti-gambling
discourse prevailing at the time of the Gambling Act's implementation is
reflected in current Indian jurisprudence. The Gambling Act applies to 16 states
and union territories, although it does not apply to skill games. List II of the
Indian Constitution's Seventh Schedule gives state governments the authority to
control betting and gambling regulations.
The plethora of laws in the country is currently proving to be a burden for both
gamers and gaming corporations. Because all that is required for online gaming
is a phone, tablet, PC, or laptop, as well as access to the internet, the
location and legality of various state laws is an annoyance and a deterrent to
many. This is not encouraging, and it makes it difficult to foster growth in a
sector that can generate money both as a source of employment and as a source of
professional gaming income—a rich new-age job. Subjective tests exist for poker,
rummy, bingo, horse racing, fantasy sports, and other games.
With the evolution of television, digital, and internet gaming models, the
gaming industry is undergoing a paradigm shift.
Need for regulating online gaming in India
Many people confuse online gaming with online gambling, which sometimes results
in the banning of online gaming. Recently, the Madhya Pradesh government has
planned to ban online gaming in the state. Home Minister of MP stated that
online gaming would be included in the online gambling laws soon by amending the
law that currently prohibits online gaming in India.
It is illogical to include
online gaming in online gambling, which will not only affect the careers of many
gamers in India and various gaming industries but also affect the GDP of the
country. The need of the hour is a comprehensive online gaming law that protects
players and ensures that only legitimate, skill-based online gaming industries
are protected and those with games of chance are banned under online gambling
Another aspect is that the online gaming law will help regularise the online
gaming industry in India. Sometimes foreign companies that invest in online
gaming in India not only harass Indian gamers by making one-sided contracts, but
they also have an impact on other stakeholders in India.
A lot of people are becoming addicted to internet gaming. This is claiming lives
and wreaking havoc on families. Children's compulsive gaming is harming their
academic achievement as well as their social lives and interactions with family
members. Many countries have enacted various regulations to limit the amount of
time children spend playing online games. Games like PUBG, FreeFire, and CODM
are the most addictive games played by a huge number of youngsters in India.
regulatory framework is needed so that addiction to online games can be tackled.
The Union Government has issued a warning to parents and teachers about the
dangers of online gaming, noting that school closures as a result of the
lockdown have resulted in an increase in youngsters utilising cell phones and
Gaming addictions disrupt sleep, eating, careers, and social
lives, causing physical, social, and emotional harm. Insomnia, nearsightedness,
isolation from social interactions, academic failure, and severe wrath and
irritability are all symptoms of addiction. For example, following incidences of
violence and suicide, online games like PUBG and the Blue Whale Challenge were
outlawed. In 2018, the World Health Organization classified gaming illness as a
mental health issue solely for these reasons.
There are some positive reasons for the regulation of online gaming. With over
65.7 million players, the online gaming sector is estimated to earn revenues in
excess of Rs 29,000 crore by 2025. More than 15,000 direct and indirect jobs are
expected to be created. 2. The GST and income tax money generated by this
industry will contribute to the government's revenue; 3. The industry has the
potential to attract major international investment. These economic benefits
will definitely help the country in the long run.
Threats like data privacy, betting, and gambling pose a threat to children.
Also, data privacy has become one of the major concerns of our time. Protecting
the interests of gamers should be the priority of the government.
Other areas of concern include the lack of safety for gamers and precautions
against unlawful conduct. There have been reports of gamers being exploited,
with some losing their lives, prompting several jurisdictions to prohibit online
gaming. However, this isn't the only option. Limits on the amount of money a
player can bet could be considered.
The Niti Aayog has advocated for a minimum
gaming age as well as the fairness of game terms and conditions, disclosures,
and responsible advertising. ASCI has also advocated that real money game
advertisements be self-regulated. Not just for OFS games, but for all games,
these steps are required. To avoid criminal actions and money dealings, game
operators should conduct KYC checks, user authentication, and other procedures.
There are some suggestions that should be taken to make online gaming a safe and
secure sector so that its positive effects can be utilized. Under Section 69 of
the Information Technology Act, games that promote gambling or are harmful for
children's mental health should be banned immediately so that any harm can be
At the central level, a gaming authority should be established. It could be in
charge of overseeing the internet gaming industry's activities, preventing
societal concerns, properly classifying games of skill or chance, ensuring
consumer protection, and combating illegality and crime.
India, like advanced jurisdictions, can take a hands-off attitude. In the United
Kingdom, skill games are exempt from the same licencing rules that apply to
games of chance. Similarly, the Unlawful Internet Gambling Enforcement Act in
the United States creates a safe haven for fantasy sports. Children's internet
gaming hours can be regulated by the government. For example, China recently
prohibited players under the age of 18 from playing online for more than three
hours per week. The limit is also in effect during specific periods. China
assigned the task of implementing the limitation to the industry.
It is not only the responsibility of the government but also of gaming companies
to help regulate online gaming. The gaming companies should take measures to
reduce the toxicity of online gaming to make it a better place. Companies should
prioritise mental health as well, so that children do not suffer from the
negative effects of online gaming.
Real-money gaming enterprises must also
consider difficulties such as:
- foreign exchange restrictions,
- setting up and managing a payment gateway,
- data privacy requirements for collecting data on their platforms,
- goods and services tax issues, and
- artificial intelligence in gaming.
All of these challenges should be addressed in one framework by the unified
gaming regulations. It's important to remember that gaming-related concerns
aren't just about games.
Gaming firms can work together to build a sense of responsibility and adhere to
self-regulatory body norms, such as the AIGF's Charter, which is both
comprehensive and objective and focuses on responsible gaming company growth.
Perhaps the government might explore pursuing a trust-building strategy with the
business, similar to how India's advertising industry operates and ASCI's role
in regulating its members. Validation of payouts in the industry would result in
the adoption of best practices.
The industry might take the lead in being compliant with societal interests
while generating a profit and growing by adhering to specific self-established
norms. If gaming firms achieve this goal, the government will not need to be
overly paternalistic in its attitude.
Efforts should be made for the online gaming industry to make India one of the
biggest countries in terms of online gaming. AI in gaming also aids online
platforms in preventing cheating, and AI in immersive gaming has proven to
improve plots and characters. Surprisingly, AI can also be utilised to combat
the problem of gambling addiction.
As strange as it sounds, it works in the following way: when a person is
gambling online, the AI may detect addiction difficulties and, depending on the
software, either prohibit the player from playing the game or display a warning
to make the player aware of his or her activities. This is a forward-thinking
approach to internet gambling addictions that removes the need for government
laws to keep addictions in check. E-sports should not be compared to online
gambling. E-sports is one of the most recognised sectors in the world.