Up until now, we have discussed the general overview of the RMG. Our discussion involved the core meaning of RMG and the several modes of RMG. Further, we have also discussed the legal mechanism in India that governs the RMG. Now, it is crucial, for the comprehensive assimilation of various facets of RMG, that we must analyse the socio-economic impact of RMG. This is crucial because only upon analysis of the socio-economic impact of RMG, we can be absolutely and fully equipped with enough understanding of RMG and the pros and cons of its legalisation upon the society. Following are the socio-economic impacts of RMG in India;
The Ministry of Electronics and Information Technology (MeitY) will now oversee the skill gaming sector, according to a recent announcement by the Union government. With this step, a consistent and specific law for India’s online gaming business would be closer to completion, which will encourage investment and safeguard players’ rights. India is one of the four largest gaming marketplaces in the world, and there have been increasing incidences of money laundering and addiction brought on by skill gaming. The action was hailed by the gambling sector since it will give it legitimacy due to regulatory stability. While protecting the interests of expert gamers, whose number has increased from 360 million in 2020 to 510 million in 2022 and generating an expected revenue of INR 154 Billion by 2023, it will also increase investment opportunities.
The market value of the Indian skill gaming industry, according to Statista, was about INR 79 billion in the financial year FY 2021–2022 and is projected to reach INR 150 billion in FY 2023–2024, representing a CAGR of almost 15%. Based on an alternative study from Mordor Intelligence, the Indian gaming industry was anticipated to be worth 79 billion INR in 2020 and is projected to grow to 374 billion INR by 2026, with a CAGR of 20.83 percent over the projection period 2021–2026.
The user base of online gamers in India is quickly growing, with the mobile gaming industry dominating the market. India has the second-largest internet customer base in the world, with more than 560 million users. An overwhelming 85% of the sector is made up of mobile phone users, with personal computer users coming in second place with 11% and tablet users coming in last place with 4%. While Invest India estimates this figure to be 303 million, Mordor Intelligence revealed that in 2021 India had over 220 million gamers who spent an average of 42 minutes per day playing mobile games.
The World Economic Forum (WEF) claims that mobile is the main platform for the Indian gaming sector, with availability to reasonably priced smartphones rising at a rate of 15% per year over the previous five years. Additionally, this tendency has been strengthened by the widespread use of high-speed 4G internet, which is supported by the lowest data rates in the world. This pattern intensified during the Covid-19 crisis, when several lockdowns and limitations altered the Indian online gambling market’s layout. According to a study quoted by Invest India, during the crisis, approximately 45% of mobile users in India started playing games on their cellphones.
The expansion of the gaming industry in India has been made possible by a supportive legislative environment that permits 100 percent foreign direct investment (FDI) in gaming and government initiatives like the “Digital India” program. IBEF reports that since 2010, the number of gaming businesses with operations in India has increased by about 10 times, reaching 275 in 2020. The Mobile Premier League (MPL), Dream11, Nazara Technologies, Halaplay, and Electronic Arts (EA) Sports are all significant participants. A total of 3,000 to 4,000 persons are employed by these businesses directly and indirectly. According to a research by The Economic Times, the gaming sector may generate hundreds of thousands of employments in the near future. There are 920 gaming start-ups in India right now, with Mumbai (Maharashtra) acting as the headquarters for the major companies in this industry.
Gaming-related investments summed up to $544 million in India between August 2020 and January 2021. Growth capital firms like Chrys Capital and TPG have taken part, according to a study by Maple Capital Advisors, and many more have begun to investigate the RMG sector. The Asian e-sports and mobile gaming platform MPL, which is supported by Virat Kohli, just secured US$95 million in a Series D round headed by Composite Capital and Moore Strategic Ventures at a US$945 million valuation. Other major investments include US$68 million made in January 2021 and US$225 million invested in Dream11 (both in September 2020). In September 2021, GameEon Studios acquired funding of INR 25 million to work on Mumbai Gullies, India’s first triple-A game.
In a Nutshell, the summation of aforementioned evidences points towards singular conclusion, i.e., the RMG has been responsible for a substantial upheaval in the Indian Economy. RMG has contributed tremendously to the Revenue and thereby has elevated India’s status in the Global Market.
Direct Employment Opportunities:
Real-money gaming has created a considerable number of direct employment opportunities in India. These opportunities range from software development and game design to customer support, marketing, and management roles within gaming companies. For instance, companies like Dream11, India’s leading fantasy sports platform, employ a large number of professionals to manage operations, develop software, and engage with users. These positions provide stable employment and contribute to the growth of the gaming industry in India.
Indirect Employment Generation:
The expansion of the RMG industry has also led to indirect employment generation in various sectors. This includes the growth of ancillary industries such as payment gateways, IT infrastructure, cybersecurity, and content creation. Gaming companies require reliable payment solutions, which in turn creates opportunities for payment gateway providers. Additionally, the need for robust IT infrastructure and cybersecurity measures has resulted in the creation of jobs in these domains. Furthermore, the industry’s demand for engaging content has fostered employment opportunities for content creators and influencers who cater to the gaming community.
Skill Development and Training:
RMG has contributed to the development of specialised skills and expertise in India. The industry requires professionals with knowledge of game development, data analytics, marketing strategies, and customer engagement. As a result, individuals are motivated to acquire these skills through formal education or specialised training programs. Institutes and training centres focusing on game development, analytics, and related disciplines have emerged, providing employment opportunities for trainers and educators. This skill development trend positively impacts the overall employability of individuals in the gaming and tech sectors.
Entrepreneurship and Start-up Culture:
The rise of real-money gaming in India has encouraged entrepreneurship and the development of start-ups. Several successful gaming companies in India have been founded by entrepreneurs who identified opportunities within this growing industry. These start-ups not only create job opportunities for founders and employees but also drive innovation, attract investments, and contribute to economic growth. RummyCircle and MPL (Mobile Premier League) are examples of Indian gaming start-ups that have gained significant traction, generating employment and expanding the gaming ecosystem.
Localization and Regional Employment:
Real-money gaming platforms have realised the importance of catering to regional preferences and cultural diversity in India. They have actively localised their platforms by offering games and content in regional languages. This localization effort has opened avenues for employment in translation, localization, and customer support services, enabling individuals with regional language proficiency to participate in the industry. Consequently, the industry’s expansion has reached rural areas, creating employment opportunities and contributing to regional development.
All in all, RMG has had a multifaceted impact on employment in India. It has not only created direct employment opportunities within gaming companies but has also fostered indirect employment generation in ancillary industries. The industry’s growth has facilitated skill development, entrepreneurial ventures, and the localization of gaming platforms, leading to employment opportunities in diverse sectors. However, it is crucial to balance the positive impacts with regulatory measures to ensure responsible gaming practices and minimise potential negative consequences. By understanding and harnessing the potential of the real-money gaming industry, India can continue to leverage its economic and employment benefits while promoting sustainable growth.
Gambling Addiction and Mental Health:
RMG carries the risk of fostering gambling addiction among individuals. The easy accessibility of online platforms and the potential for substantial financial gains can lead some players to develop unhealthy gambling habits. This addiction can have severe consequences on individuals and their families, including financial strain, strained relationships, and mental health issues. Practical examples include cases where individuals have accumulated significant debts or experienced emotional distress due to excessive gambling. The social implications involve the strain on personal relationships, potential loss of productivity in work or studies, and increased burden on mental health support services.
Financial Instability and Disparities:
Real-money gaming has the potential to exacerbate financial instability and widen socioeconomic disparities in India. While some players may experience significant financial gains, many others may suffer financial losses beyond their means. This can lead to financial distress, indebtedness, and further marginalisation of vulnerable individuals or communities. Practical examples can be observed in cases where individuals, especially those with low income or limited financial literacy, become entangled in a cycle of debt due to excessive gambling. The social implications include increased poverty levels, strain on social welfare systems, and disparities in wealth distribution.
Youth and Underage Gambling:
The widespread availability of real-money gaming platforms poses a significant risk of youth and underage gambling in India. Young individuals, including minors, may be attracted to these platforms due to their engaging nature and potential rewards. This can lead to a variety of social problems, including addiction, academic underachievement, and strained family relationships. Practical examples highlight instances where minors have accessed real-money gaming platforms either knowingly or unknowingly, leading to negative consequences such as financial loss or compromised personal development. The social implications include the need for increased awareness, education, and regulatory measures to protect vulnerable populations.
Cultural and Ethical Concerns:
Real-money gaming may raise cultural and ethical concerns within Indian society. Traditional cultural values often discourage gambling, viewing it as a vice that can disrupt social harmony and stability. The normalisation of real-money gaming can clash with these values and generate societal debates. Practical examples can be seen in instances where religious or cultural groups express concerns about the impact of real-money gaming on individual behaviours, family dynamics, and community integrity. The social implications involve the need for ongoing dialogue, responsible gaming practices, and culturally sensitive approaches to address these concerns.
Criminal Activities and Fraud:
The online nature of real-money gaming platforms creates opportunities for criminal activities and fraud. This can include instances of hacking, identity theft, money laundering, and unfair practices within the gaming ecosystem. Practical examples include cases where individuals fall victim to fraudulent schemes or become involved in illegal activities associated with real-money gaming. The social implications involve distrust in the online gaming environment, compromised user safety, and the need for robust regulations and enforcement measures to protect players and maintain the integrity of the industry.
Conclusively, Real-money gaming in India carries significant social implications that must be carefully addressed to ensure a responsible and sustainable gaming environment. The risk of gambling addiction, financial instability, and youth gambling requires proactive measures such as education, awareness campaigns, and robust regulatory frameworks. Additionally, cultural sensitivities, ethical concerns, and the prevention of criminal activities should be considered to maintain social harmony and protect individuals from harm. By striking a balance between entertainment, individual well-being, and societal considerations, India can realise the potential benefits of real-money gaming while mitigating its social implications.
Summing up the entire discourse on the socio-economic implications of RMG, we find that RMG has proved both positively and negatively impactful on the socio-economic status quo of India.
Real money gaming has emerged as a significant contributor to India’s economic growth. The industry has witnessed substantial revenue generation, leading to increased tax contributions to the government. Moreover, real money gaming platforms have created numerous employment opportunities, particularly in the fields of game development, technology, marketing, and customer support. This has not only boosted the job market but has also fueled entrepreneurship and innovation in the gaming sector.
Furthermore, the research indicates that real money gaming has brought about social transformations, both positive and negative. On one hand, these platforms have provided a means for social interaction and community building, fostering connections among players and the formation of gaming communities. Additionally, real money gaming has contributed to digital inclusion by reaching remote areas and promoting technological advancement, empowering individuals to explore the digital ecosystem.
However, it is crucial to acknowledge the negative implications of real money gaming on social life. Excessive participation in these games can lead to addiction, financial risks, and strained interpersonal relationships. The addictive nature of real money gaming poses challenges for individuals in maintaining a healthy balance between gaming and other aspects of life.
To mitigate these risks and maximise the positive impact, it is essential to implement responsible gaming practices and regulations. Government authorities, gaming industry stakeholders, and the players themselves need to prioritise measures that promote responsible gaming, such as age restrictions, monitoring and control mechanisms, and educational campaigns on the risks associated with excessive gaming. Overall, the research underscores the complex and multidimensional impact of real money gaming on India’s economy, employment rate, and social fabric. As the industry continues to grow, it is crucial to strike a balance between its economic benefits and the potential negative consequences, ensuring that the development of the real money gaming sector aligns with sustainable and socially responsible practices. By doing so, India can harness the potential of real money gaming while safeguarding the well-being of individuals and society at large.
Real-Money Gaming (RMG) is basically the act of betting or wagering or investing, money or any other monetary entity, on any sort of contest in which one party wins while the other one loses, so as to claim the winners prize and earn more than what was originally invested or betted or wagered. So it is quite imperative that RMG is a sophisticated business structure. In a normal and typical RMG setup, there is a manager or operator who overlooks the entire setup, a pool of investors who are hoping to maximise their profits, a pool of money that contains all the investments from each investor. Now, the investors, as well as their investment, are divided into different groups based upon the contestant they wager upon or the outcome of the contest that they wager upon, depending upon the situation. Finally, when the contest is complete and the winning contestant has been announced, the entire pool of investment money is divided among the investors who had wagered upon the winning contestant, proportionate to their wager amount. Thereby, the investors who had wagered on the losing contestant lose the entirety of their investment. The most common examples of such a setup include, Horse race betting, Poker, Cricket betting, Football Betting, Online game betting, etc.
It is critical to understand here that the RMG has several angles. Upon preliminary glance, it might seem that RMG is just another gambling contraption. This view might be substantiated by the fact that RMG shares many features of typical gambling mechanisms like winner-takes-all, pool of money, addiction to earn-money-fast idea, etc. , however it is crucial to understand and analyse the concept of RMG without being obliged to any such prejudices.
RMG may be classified into 2 divisions depending upon the factors that determine the outcome of an RMG. The First division includes the concept of ‘game of chance’ in RMG, wherein the RMG involves such a contest, the outcome of which is totally dependent upon the sheer luck of the investor. For example, Roulette, slot machines, etc. The Second division includes the concept of ‘game of skill’ in RMG, wherein the RMG involves such a contest, the outcome of which is possible to be calculated and predicted out of sheer skills, intuition, experience and aptitude of the investor. For example, Poker, Fantasy sport betting, etc. Therefore, we can see that, RMG does not absolutely imply a setup based upon the principles of gambling, it can also include a mechanism of business that rewards the investor who has higher skill or aptitude in that particular game.
It seems, therefore, that imposition of any restrictions upon RMG would not be a reasonable choice since the same might hamper the opportunity of many skilled and able investors to earn what they deserve. The same logic has been adopted by many countries worldwide including USA, EU, UK, and subsequently they have legalised the business structure of RMG by adding certain regulations and safety measures for the investors. RMG operators go above and above to safeguard the user when it comes to “trust” and “bots,” employing “Random Number Generation” (RNG) methods that have been independently verified by a third party as a standard instrument for guaranteeing procedural fairness of cards. They also include very powerful machine learning-based “anti-fraud” algorithms that ensure high game integrity and player safety against intra-player collusion. Every participant’s KYC has been verified, and the industry is moving to “video KYC,” which will verify the end user’s identity and age.
Further, Skill-based games like “Poker” are gaining in popularity, says Shivanandan Pare, Executive Director & CEO of Gaussian Networks, since they have a good possibility of making some money. It truly is a component of a bigger ecosystem. According to him, the scale of the global gaming market has already surpassed that of the music and film industries combined. I think the decade for streaming websites would be 2010–2020, while the decade for gaming would be 2020–2030. According to a joint report by Sequoia India and BCG, the market for mobile gaming now generates around $1.5 billion in revenue, and by 2025, it is anticipated to reach $5 billion. Given that it has shown the aptitude and skill sets necessary to meet international gaming standards, India will soon be seen as one of the industry’s leaders. Gamers are progressively entering competitions to showcase their gaming prowess and to represent their nation internationally. Mobile gaming has enabled many Indian players and streamers to support themselves and mix their interests with their jobs.
Therefore, it is quite reasonable that India must step into the shoes of aforementioned countries and become a leading player in RMG. Under the Section 30 of The Indian Contract Act, 1872, any agreement made by way of wager is void in nature and unenforceable in the Indian Courts of Justice. However, the same section provides an exception to the wagering on horse racing. This shows that the enactment is strictly in favour of the second division of RMG that includes the concept of ‘game of skills’. Being a matter of the State List according to the Schedule 7 of The Constitution of India, gaming and gambling laws in India are governed by regulations that vary from state to state. This would imply that something that is legal in one state may be illegal in another. Gambling is severely banned in India, with the exception of a few specific activities like lotteries and horse racing. While proponents of regulated gambling contend that it may be a significant source of state revenue, critics of gambling assert that it promotes crime, corruption, and money laundering.
In India, there are two types of games: games of skill and games of chance. The state of AP vs. K. Satyanarayana case from 1968 found that rummy is a game of skill. However, the Court stated in its ruling that it might constitute a crime under AP legislation if there is gambling present or if the gambling establishment is profiting from the game of rummy. SC also noted that the three-card game, often known as brag, flush, and other names, is just a game of chance. This rationale was reflected further in the judgements, M.J. Sivani v. State of Karnataka (1995) and Dr. K.R. Lakshmanan v. State Of Tamil Nadu And Anr (1996).
Further, In the matter of G. Network Private Limited vs. Monica lakhanpal, the Delhi District Court, after relying upon order 36 rule(1) of CPC, declared that:
Up until December 4, 2017, the question of whether poker is a game of skill or chance was never raised in court. According to the Gujarat Prevention of Gambling Act of 1887, poker is a game of chance and is, thus, considered gambling in the case of Dominance games pvt. Ltd. v. state of Gujarat. Due to the fact that poker evolved from the chance-based game teen patti. Poker wagering or betting entails a stake because it is an essential component of the game.
In a recent case, Justice Sanjay Kishan Kaul and Justice Dinesh Maheshwari, members of the Supreme Court’s review panel, had approved Dream11’s fantasy sports structure as a game of skill. Varun Gumber had filed a review case, which the court summarily dismissed, asking for the reopening and review of the Supreme Court’s dismissal order relating to the 2017 Punjab & Haryana High Court decision declaring fantasy sports to be a game of skill.
The Supreme Court ultimately rejected seven petitions. Three of these petitions centred on the question of whether the GST should be applied based on determining whether fantasy sports qualify as betting and gambling. The Supreme Court determined in one decision that only the question of whether GST should be applied by courts can be raised in relation to fantasy sports’ legitimacy as a legitimate company and game of skill.
Additionally, a court made up of Justice Nariman and Justice Gavai dismissed the petition on legality in July 2021 and stated that the problem of fantasy sports being a game of skill rather than gambling or betting is no longer res integra, meaning the legal issue has been definitively addressed. In September 2022, Justice Gavai and Justice CT Ravi Kumar issued an order based on the 2021 order to reject a further SLP on the subject. Varun Gumber filed a review petition, claiming that the Punjab and Haryana High Court’s decision contained an obvious mistake. After careful consideration, the petition was dismissed on the merits as well as for tardiness, with the bench observing that the judgements appear to be error-free. Accordingly, the order stated that no revisiting of the subject is necessary.
Senior Attorney Gopal Jain offered the following statement in response to the latest development: “It is crucial to note that the Supreme Court of India dismissed this review petition on the basis of merits and unequivocally said that there was no mistake apparent in the decision of the Hon’ble High Court of Punjab and Haryana. The legality of the fantasy sports format provided by Dream11 in the nation has now been examined by a total of 9 Supreme Court justices, who have all consistently concluded that it is an activity protected by Article 19(1)(g) of the Constitution as a game of skill. It should be emphasised that the argument against categorising fantasy sports as gambling for the purposes of taxation has already been resolved, leaving the court to consider simply whether or not the GST should be applied to fantasy sports as a legal form of commerce. As a result, any attempt to classify Fantasy Sports as “betting” in the eyes of the law is no longer under discussion because the matter has been decided upon based on both the facts and the law”.
The Rajasthan High Court decided that Fantasy Sports did not constitute gambling in 2019 in the Ravindra Singh Chaudhary vs. Union of India case since its players would require abilities like those of a genuine sports team management. The State’s prohibition on playing online card games like rummy, poker, etc. has been overturned by the Tamil Nadu High Court in a recent decision. These favourable advances about the distinction between “games of chance” and “games of skill” will go a long way toward establishing a narrative in favour of gaming as opposed to gambling.
The latest development in this regard is the amendment done by the Ministry of Electronics and Information Technology (MeitY) in the IT Rules, 2021, that were scheduled to be executed on April 6, 2023. The Amendments mark a turning point for India’s real money online gambling sector, which has long sought national regulations in place of state-specific legislation. While the Amendments offer centrally administered rules, they do not take the role of state-level anti-gambling legislation. As a result, State-level activity may continue despite the Amendments. In accordance with the Government’s overarching goal of eliminating prescriptive legislation and improving the ease of doing business in India, the Amendments propose a light-touch, co-regulatory framework between MeitY and registered self-regulatory bodies (SRB). The Amendments differ from the prior draft proposed by MeitY in January (“Proposed Amendments”) in that they weaken or loosen a few requirements for online gaming intermediaries (or “OGI”). However, other requirements that the sector had criticised in the Proposed Amendments, such strict KYC standards, have been kept.
Real money gaming providers are required by MeitY’s Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2023, to register with a self-regulatory body (SRB) that will evaluate whether the game is “permissible” or not. In a press conference on Wednesday, Minister of State for Electronics and Information Technology Rajeev Chandrasekhar said that three SRBs will shortly be acknowledged. “There will now be more governmental oversight on how SRBs function,” Shambhavi Ravishankar, an advisor at Ikigai Law, told The Hindu. Most of the standards in the guidelines are already included in the industry’s best practices for responsible gaming. According to Mr. Chandrasekhar, if these games are not declared “permissible,” they will not be covered by the amendment and the States may be able to retaliate against them for being betting or gambling sites. As a result, games that are approved will be permitted to function lawfully, even if they need deposits in the hopes of winning. Mr. Chandrasekhar stated that video games without monetary exchange do not require consulting an SRB, allaying the conventional gaming sector’s worries about the current form of the Rules. The real-money gambling sector embraced the change. Joy Bhattacharjya, the director general of the Federation of Indian Fantasy Sports (FIFS), described the Rules as a “pivotal moment” for the sector. As our members begin the compliance process, “We look forward to engaging with MeitY to seek necessary clarifications,” the speaker stated. The I&B Ministry’s advice should not apply to real money games that are validated by SRBs and are thus permitted by IT standards, according to Ms. Ravishankar.
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