India’s online gaming sector has tremendous growth potential and can contribute significantly to India’s goal of creating a $1 trillion digital economy by 2025-2026. The Observer Research Foundation’s (ORF) report “Harnessing the Potential of Online Gaming in India” explores the structure of this market, its impact on other complementary and supplementary sectors, the concerns and opportunities, and the regulatory challenges that impact its growth.
To take this conversation further, ORF organized the Roundtable “Unleashing India’s Online Gaming Potential” on 04 December 2024, to discuss how online gaming could further India’s digital economy, how the regulatory conundrum impacts this sector, and how to develop an enabling environment that can foster growth in this sector. The Roundtable was conducted under the Chatham House Rules and witnessed participation from policymakers, government, industry bodies, gaming companies, academia and policy professionals. Following are the key highlights of the deliberations:
- Online gaming and the Indian economy: The discussants agreed that online gaming must be viewed from the lens of regulating an emerging domain, considering the potential benefits of this sector. Promoting online gaming can help support the cybersecurity, data analytics, animation and special effects industry, amongst others. Apart from the massive revenue generation, the online gaming industry provides high-quality jobs. The growth of this sector allows India the opportunity to create globally dominant companies.
- Regulating the online gaming sector: Regulations need to consider the risks posed by online gaming while helping it achieve its true potential. Excessive regulation can harm the online gaming sector and cause an increase in the propagation of illegal gambling platforms. The rise of such platforms affects the consumers, as well as the GST revenue to the government. High tax rates and retrospective taxation can hamper the online gaming sector. Some of the discussants highlighted the impact of the GST on this sector and the possible degrowth as a result. Such degrowth can impact the businesses of several platforms and could cause a loss of jobs as a result.
- Implementation of the Information Technology Rules, 2021: The discussants highlighted the need to have predictable and stable policies around this sector. The need to implement the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 was highlighted several times. Non-implementation of the rules was against the interest of all stakeholders. The discussant agreed that the Self-Regulatory Body (SRB) must be designated at the earliest as such SRBs can play an important role in the growth of this sector. Industry groups can come together to promote responsible gaming, identify issues and help resolve them. It is also important to ensure that SRBs work in a unified manner without large companies influencing them.
- Distinguishing online gaming and gambling: The discussants agreed that there is often conflation between online gaming and online gambling despite there being a clear distinction. Often, gaming and gambling are used in the same sentence by people who do not understand the difference between the two. While gambling is completely illegal, online gaming is permitted and regulated in India. There is a need to spread awareness about this distinction and to create a positive image of the online gaming sector to correct the perceptions. The discussants agreed that whitelisting would be beneficial for the customers as it would allow them to identify legitimate gaming platforms.
- Game of skill / game of chance: The game of skill/ game of chance dichotomy was a key area of discussion. The discussants agreed on the need to develop frameworks or tests to distinguish between the two. Such tests can be based on the consistency of the result, predominance and persistence of skill, and skill and experience gap.
- Addiction and responsible gaming: Concerns around addiction were widely accepted, along with the need to put appropriate safeguards in place. The discussants highlighted the various measures being deployed by the gaming companies to prevent addiction. There were suggestions on using data analysis to identify problem cases and to deal with them appropriately. The role of the Code of Ethics in promoting responsible gaming was also discussed.
- National security and offshore betting platforms: The discussant highlighted the need to consider the national security impacts of offshore betting and gambling platforms. There is a need to study the national security, financial, economic and cybersecurity risks as there is a lot of ambiguity in terms of how the offshore platforms and gambling websites are operating.
- Need for studies focused on India: A key point that came out of the discussions was that a lot of literature and studies on online gaming came from the West and were not focused on India. There is an urgent need to develop such studies that capture and highlight India’s data. While we talk about evidence-based policy making, we don't have enough evidence to give us a clear picture of the risks and the gaming landscape in the country.
This event report has been drafted by Basu Chandola, Associate Fellow, Observer Research Foundation
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