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Business Gaming

FICCI-EY Report Claims Online Gaming to Grow at 40% CAGR, Reach Rs. 18,000 Crores in 2022

A 2020 report on India’s Media & Entertainment Sector titled ‘The era of consumer A.R.T. – Acquisition Retention and Transaction,’  released by the Federation of Indian Chambers of Commerce & Industry (FICCI) and consulting firm Ernst & Young (EY) claims that online gaming grew at a rapid 40% growth rate in the year 2020 and the total revenues generated by the sector in the year 2019 was Rs. 6,500 crores (Rs. 65 billion).

The report further claims that out of the Rs. 6,500 crores garnered by the online gaming industry in 2019, transaction-based (including real-money) gaming contributed about Rs. 4,600 crores, while the remaining was contributed by casual games. The total number of gamers in the country are pegged by the report to be around 36.5 crores (365 million).

EY also estimated that amongst various categories of real-money gaming, fantasy sports grew by over 100% in 2019, while poker and rummy grew by around 30%.

The report further forecasts that online gaming would continue to see robust compounded annual growth rate of about 43% over the next 3 years to become a US$2.5 billion dollar industry (about Rs. 18,700 crores) and would account for over 40,000 direct jobs in the country.

It is also reported that the total indirect tax contribution of the online gaming industry in 2019 was estimated to be around 9,800 crores, with the 2022 estimates pegged at around Rs. 28,600 crores.

The FICCI-EY report, which was supposed to be unveiled at the flagship FICCI Frames event this month, was released digitally due to the cancellation of the event in light of the Coronavirus crisis.

The report adds a caveat that its estimates and forecasts have not accounted for the economic impact and disruption caused due to the Coronavirus pandemic.

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Business

Delta Corp Approves Rs.125 Crore Share Buy-Back Plan

The Board of Directors of Delta Corp Limited has approved a plan to buy-back shares of the company as per a regulatory filing by the company.

As per the company’s update to the stock exchanges, the board of directors at the company meeting held on 28th March, 2020 approved a proposal to buy-back upto 1.25 crore shares of the company, representing 4.61% of the total paid-up capital of the company, at a price not exceeding Rs. 100 per share, through the open market route. As per the last close, the company was trading at Rs. 59.50 on the Bombay Stock Exchange (BSE).

The company has earmarked a total of upto Rs. 125 crores for the purpose of buy-back of shares and the promoters as well as persons in control of the company would not participate in the buyback scheme.

Delta Corp also indicated that it would utilise at least 50% of the total earmarked amount, i.e. at least Rs. 62.50 crores, for the buy-back. The company further announced that a Buy-Back Committee headed by Chairman Jaydev Mody would take all necessary actions and make appropriate announcements relating to the buy-back procedure.

The company has further stated that a public announcement with further details about the buy-back, including the opening and closing dates, would be communicated in due course.

Over the past one month, the company has seen a sharp fall in its stock price, mainly due to the impact of the Covid-19 virus as well as shutdown of all casinos ordered by the Goa and Sikkim government and the 21-day total lockdown announced by the Indian government.

Whilst all of Delta Corp’s offshore and land-based casinos are likely to remain shut at least until 15th April, 2020, the company has stated that the impact of the Coronavirus crisis on its revenues cannot be estimated at the moment.

Besides a buy-back plan to arrest the steep fall in share price of the company, Delta Corp had declared a Rs. 0.75 second interim dividend per equity share earlier this month.

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Legal & Regulatory Poker

Gujarat HC Once Again Adjourns Poker Matter to 5th May

A division bench of the Gujarat High Court comprising of Chief Justice Vikram Nath and Justice AJ Shastri could once again not hear letters patent appeals on the legality of poker in the state and the skill element involved in the game . The new date when the matter is likely to be listed for hearing is 5th May, 2020, when the matter might be heard by a new division bench of the court.

Earlier, the High Court had adjourned were scheduled for arguments on 8th January, 2020 to 17th February, 2020 and observed that daily hearings would be conducted from that date to expedite hearings in the matter, and that the matter could be mentioned to be taken up for hearing.

Again, on 17th February, the matter could not be taken up and was adjourned to 9th March, when it was once again adjourned by two months to May 2020.

The hearings on letters patent appeals filed by Indian Poker Association Secretary KN Suresh, Dominance Games Private Limited, Aman Chhabra and Hotel Ramada, Ahmedabad against a December 2017 single judge bench’s order of the High Court, ruling poker to be a game of chance have been pending for over two and a half years, with little progress and lack of clarity as to by when any decision on the matter would be likely.

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Gaming Legal & Regulatory

Goa Casino Policy not finalised yet: Report

Contrary to several previous assertions by the Goa government under erstwhile Chief Minister Manohar Parrikar as well as current Chief Minister Pramod Sawant, no final decision has been taken so far on shifting offshore casinos to an alternative location or notification of a Goa casino policy.

According to a report in local daily Navhind Times, no alternative site could be zeroed in on shifting offshore casinos from the River Mandovi so far due to strong opposition from all corners.

It was earlier reported that Ports Minister Michael Lobo had given permission to one of the offshore casinos, Deltin Caravela to shift towards the Vernem side of the River Mandovi from the Panjim side, where it is currently located.

The proposal to shift Deltin Caravela and two other offshore casinos to the Vernem side, however met with stiff resistance from opposition leaders and locals.

The Navhind Times report also indicated that the state government is still dithering on its plan to formulate a detailed casino policy to shift offshore casinos to an entertainment zone near the upcoming Mopa airport.

According to Navhind Times sources said the state government has asked the home department to set in motion the process for drafting a casino policy, but not much progress has been made on that front so far.

Chief Minister Sawant as well as previous state cabinets have granted successive six month extensions to offshore casinos to operate in the River Mandovi while giving an assurance that the final long term policy on casinos would be decided by the government in a short time frame.

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Gaming

What are the world’s biggest gambling countries?

Gambling is a pastime for many all over the world. With the thrill of gambling drawing people back in time and time again, it’s not surprising that it’s one of the highest grossing industries. The global gambling industry is estimated to reach 495 billion US dollars this year. So, where in the world is gambling the most popular? Here are the top gambling countries across the globe.

India

The internet becoming commonplace has seen a rise in gambling in many countries. None more so than India, which is now progressing its digital technologies faster than the USA. It’s no surprise that this has resulted in an increase of online gambling. Indians are most often found playing online poker games or fantasy.

United Kingdom

The UK steals the number one spot for the biggest gambling country. It may come as a surprise but under 21s are legally allowed to gamble in the UK. The legal age for gambling is set at 18 and many under 21s like to try their luck. Under 21s account for a massive 65% of the gambling population which has resulted in £14.4 billion as of December 2018.

Australia

A large percentage of the Australian population enjoy gambling. Whether it’s a habit or a one-off, Australia’s most popular game is machine poker. It’s estimated that each gambling adult spends up to $990 which in 2017 accumulated to $24 billion for the gambling industry.

China

It goes without saying that China would make the top five, since it’s the most populous country in the world. Even though online gambling and bricks and mortar casinos are prohibited in China, the population are still allowed to take part in lotteries, sports betting and Mahjong (a tile-based game). Unfortunately, this has resulted in a problem with children and teenagers gambling, which the authorities strongly advise against.

Ireland

Gambling has always been popular in Ireland. At the moment, gamblers in Ireland are most commonly betting on horse races, followed closely by card games. The Irish also like to try their luck on the lotteries. In 2016, Irish gamblers were spending an estimated $550 per adult per year. Gambling is often seen as a source of enjoyment and it’s not uncommon for gambling, like casino tables, to be present during special events in Ireland.

Finland

Gambling has become very popular in Finland. So much so, in fact, that their government has put in place a number of regulations to control the industry. As well as advertising restrictions, Finnish people can get free counselling if they’re considered to be addicted. However, for the most-part, it’s seen as a fun activity, especially for those over the age of 65.

The future of gambling

There’s one thing that all the top gambling countries have in common: the internet. It’s easier than ever to gamble whenever and wherever you want. It could be in your spare time, on the commute to work or as a guilty pleasure during a sporting event. All it takes is a device and an internet connection and you have the gambling industry at your fingertips. Always remember to gamble responsibly and seek advice if you feel like your gambling has become a problem.

Categories
Legal & Regulatory Poker

Another PIL filed against online poker in Delhi HC

After social activist Avinash Mehrotra’s PIL to ban online poker and offshore betting websites, another individual, Deepati Bhagat has filed a similar petition in the Delhi High Court seeking a complete ban on poker and similar card games, played online and offline.

According to media reports, Bhagat’s petition was heard by a division bench of the Delhi High Court, comprising of Chief Justice DN Patel and Justice C. Hari Shankar, who issued notices to the Delhi government and Union Finance Ministry.

The bench also ordered that the matter be tagged with the Avinash Mehrotra PIL and be listed for hearing on 28th November.

Last week, the bench had apparently declined to entertain the same plea by the petitioner as she had been unable to explain what a poker game was.

Subsequently, the petitoner, Bhagat, moved the plea afresh and explained how the card game is played. She has contended that as the player has no control over the kind of cards being dealt to him or her, poker was a game of chance and not skill and, therefore, playing it for high stakes or profit amounts to gambling and is illegal. Bhagat has also sought cancellation of the licences, if any, issued to any company for playing poker or similar card games.

The PIL has also sought a ban on advertising of such games. The petition has claimed that thousands of families face monetary crisis due to gambling activities of a family member.

In May 2019, social activist Avinash Mehrotra had moved the Delhi High Court contending that several online gaming and betting websites are encouraging the country’s working population to part with their hard earned money on games of chance such as poker, teenpatti, sports betting, election betting etc.

He sought blocking of offshore online betting websites such as Betrally, Bet365 and Betway as well as domestic Indian poker websites such as Adda52 and PokerStars.in as well as asked for a probe against the websites for tax evasion and money-laundering.

The court had declined to grant interim relief to Mehrotra and had asked the central government and RBI to file their responses. The court had also kept an intervention petition filed by All India Gaming Federation (AIGF) on hold and and kept the matter pending until the next hearing on 28th November, 2019.

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Business

Delta Corp quarterly profit sees 22% y-o-y growth

India’s only listed casino and online gaming company Delta Corp Limited, announced its quarterly results for the period July-September 2019 yesterday.

The casino company reported a total revenue (including GST) of Rs. 252.76 crores against a revenue of Rs. 236.78 crores for the last quarter and Rs. 254.13 crores for the September 2018 quarter.

Delta Corp reported a marginal increase in its online gaming revenues from online poker and rummy website Adda52 to Rs. 40.93 crores, which reflects around Rs. 5 crore increase against the online gaming revenues from the last quarter as well as the September 2018 quarter.

Despite a 0.1% in the year-on-year reduction in the net post GST revenue of the company, Delta recorded a 22% uptick in the profit after tax.

The profit after tax recorded by the company was Rs. 59.04 crores as against a PAT of Rs. 48.10 crores for the September 2018 quarter.

The increase in PAT despite flattish revenues is mainly attributed to the reduction of corporate income tax rates by the central government from 30% to 22%.

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Gaming

Goa Minister backs shifting offshore casinos to Mopa airport, urges govt to maintain status quo till then

Goa Ports Minister Michael Lobo once again came out vociferously in favour of the state government notifying a long-term casino policy to rehabilitate the offshore casino vessels and shift them to a gaming zone near the upcoming Mopa airport.

Lobo opined that the government cannot disturb any business overnight, which is legal and that the casino business has been established in Goa and they have already invested in it.

“We have told the Chief Minister Pramod Sawant that the casino policy has to be in place. As per my opinion, it should come out in next six months, while the government has given an extension to offshore casino vessels to operate in river Mandovi. And the Chief Minister is also of the opinion that the work of constructing Mopa airport has to start,” the state minister and senior BJP leader is quoted to have said as per media reports.

Lobo however added that the shifting of the offshore casinos would take place only four or five years after the Mopa airport has been established, with construction activities at the greenfield airport currently being stalled due to the Supreme Court suspending environmental clearance for the project.

Lobo further reiterated that an alternative spot had been found to shift one offshore casino to another river body within the state, until the casino policy is finalised. He added that the feasibility study for the same is currently being conducted.

Meanwhile, Panaji city mayor Uday Madkaikar rejected Lobo’s demand to maintain status quo and allow offshore casinos to remain in River Mandovi until the casino policy is finalised.

Madkaikar reiterated the Corporation of City of Panaji’s (CCP’s) resolution to not renew the trade licenses of the six offshore casinos once their current license period comes to an end in the April-June 2020 period.

He added that Lobo can shift and accommodate the casinos in the Aguada Bay near Calangute area, which is a tourism hotspot and also Lobo’s assembly constituency.

Categories
Legal & Regulatory

Gaming loot boxes: Understanding their legality and impact on the online gaming industry

This is a guest post by Sarthak Doshi, an Associate working at Ikigai Law, a Delhi-based legal and policy firm.

Digital gaming in the 21st century has been all about interactivity and in-game experience. Gone are the days when a schoolkid would buy a copy of GTA Vice-City and complete the entire game in a week. Today, due to constant updates and downloadable content, a digital game can never be completely consumed or finished despite the number of hours’ you put into it. In the past ten years, add-on content known as downloadable content (“DLC”) has become a key part of the digital gaming industry. DLC allows game publishers to constantly update the game; add new features; and increase complexities in gameplay to keep the users engaged.

Apart from the interactivity and game experience it provides, DLC has also significantly changed the way gaming companies approach their revenue streams. Studies state that in recent times much of the publisher’s profits have started coming-in from DLC (as opposed to selling the game itself) and it accounts for around 25-50% of a publisher’s total revenue.

There could be a variety of DLCs available in online gaming. Ranging from a minor glitch update to downloading new weapons, accessories, avatars, skins and seasons altogether; one can literally overhaul the entire game. Amongst these, loot boxes are one kind of DLC that has attracted significant attention of regulators around the world. The ban on gaming loot boxes in Belgium and Netherlands, and the recent bill introduced in the US Senate, has sent chills to the entire gaming community. Major players such as Nintendo, Electronic Arts and Square Enix have all withdrawn some of their games in these jurisdictions and fear similar actions in other countries. The United Kingdom, on the other hand, does not consider loot boxes to be illegal and has interpreted the law in favour of gaming companies.

It is in this context that this article will explain gaming loot boxes, analyze their legality, and understand the implications of foreign laws in India which is yet to have legal clarity on the subject.

Understanding gaming loot boxes

Life is like a box of chocolates; you never know what you’re gonna get

This memorable quote from the movie Forest Gump aptly captures the nature of gaming loot boxes. A loot box is a virtual package, chest or crate that provides a randomized reward to the player that could be used during gameplay. These virtual items can be used in the game to improve the aesthetics of the character or something more functional like in-game performance. For example, a loot box could contain a more powerful shield to use in-game, or some lesser reward like a new costume for your avatar.

Loot boxes can either be acquired by the player by spending time in completing in-game challenges, or by spending real money and making in-app purchases. The problem arises with the latter. For example, if a player purchases a loot box for Rs. 500, the player may receive randomized rewards which otherwise may be purchased for Rs. 10. Whether you are rewarded with a low-value reward or a high-value reward is your luck. Hence, loot boxes could sometimes be games of chance within a game of skill.

How are loot boxes akin to gambling?

Gambling is generally understood to be “staking or risking something of value with an expectation of reward” and most jurisdictions define it in such fashion. Putting this into context, a player risks real currency while she makes an in-app purchase for a loot box. The expectation of the player from a loot box is to receive a unique/rare virtual item (reward) which enhances her ability to perform in the game. The nature of loot boxes hence satisfies, at least, the literal interpretation of the term “gambling.” The discord is whether the reward from the loot box has ‘value’ or not, and this is where the opinion is divided. We take Belgium and United Kingdom as an example.

Belgium

In 2018, the Belgian Gaming Commission released a report (“Loot Box Report”) which classified gaming loot boxes as gambling. While discussing whether gaming loot boxes qualify as games of chance, the Belgium Gaming Commission stated that:

a wager (bet) of any type is sufficient to qualify as betting for these games. Use of money is not necessary. Just because virtual currency is used in a game does not mean that there is no wager. It must be possible to attribute a value to this wager, however. Value can be defined as the degree of usability. Specifically, items that the player finds useful or nice and for which he pays money.”

The manner in which Belgian laws define gambling is quite unique. The interpretation of value is not limited to monetary gain in terms of currency, but also includes what is valuable to the player during gameplay. As in-game currency and game coins give an advantage to the player in the game and hence create value for her, wagering/betting in such currency also constitutes gambling.

United Kingdom

The UK Gambling Commission has taken the position that loot boxes are not gambling. The Gambling Commission questioned whether virtual items obtained via. loot boxes can be considered to have money’s worth. The Commission concluded that virtual items obtained through loot boxes are confined for use within the game and cannot be cashed out and hence do not qualify as gambling. In a statement, the Commission said that:

Loot boxes are one way that players can enhance the experience that video games offer. Contrary to assertions, loot boxes are not gambling. They have no real-world value, players always receive something that enhances their experience, and they are entirely optional to purchase. They can enhance the experience for those who choose to use them, but have no impact on those who do not.

Therefore, in the United Kingdom, it is not illegal to offer loot boxes. The act does not constitute as gambling because the in-game items have no real-life value outside of the virtual game.

Would loot boxes qualify as gambling under Indian laws?

Gambling and betting under the Constitution of India is a state subject, and hence each state has its own legislation on the subject. While state legislations differ from each other to some degree, the definition of gambling across most states is characterized by the basic principles of “risk” and “reward”. Gambling is constituted if the player receives a reward, whether in the form of money or something of value. Hence, the definition in India could be subject to a similar interpretation as under Belgian laws.

Conclusion

The issue on the legality of gaming loot boxes creates understandable concerns for the gaming industry that is yet to reach its full potential. The jurisprudence around gaming loot boxes is still developing and it is only a matter of time when India is faced with a similar concern.

I agree with the UK Gaming Commission that in-game items have no real-life value outside of the game and should not constitute gambling. Of course, this logic turns when games permit a secondary market for these in-game experiences, features and rewards, something that may increasingly become possible with the advent of blockchain and ERC-721 (collectible token) based games. Keeping that exception aside, I believe that the Belgian approach to loot boxes is a bit of a stretch and takes the fun out of gaming! Any enactment of gaming law or policy on loot boxes needs to give careful consideration to the impact it could have on a growing industry, especially the repercussion it could have on smaller publishers.

The views expressed in this article are that of the author alone and are not necessarily endorsed by this website.

Categories
Business Gaming

GST council refers demand for lottery, casino rate cut to GoM

The Goods and Services Tax (GST) Council in its meeting held in Goa on Friday did not accede to demands made by the casino and lottery industries for reducing the applicable tax rates or change the manner in which GST should be applicable.

According to details emerging after the GST Council meeting, the issue of setting a uniform rate on lottery tickets has been referred back to a eight member Group of Ministers (GoM) panel formed earlier this year, headed by Maharashtra Finance Minister Sudhir Mungantiwar, that is reviewing the GST rates applicable on the sale of lottery tickets.

The GoM formed earlier this year could not form a consensus on the applicability of a uniform tax rate for lotteries, due to opposition from the West Bengal and Kerala governments, has been tasked with trying to get all member states onboard and has been requested to meet at the earliest and submit its recommendations to the GST Council.

Further, according to Goan daily Herald, the casino industry also made a representation to the GST Council submitting that the 28% tax rate is high and demanded hat the central government bring down the GST rates from 28% to 12% on gross earnings.

According to the Goan daily, Union Finance Minister Nirmala Sitharaman and most other GST Council members reportedly rejected the demand  keeping in view the sentiments of the people of Goa.

According to the news report, the council thereafter decided to refer the matter to the Group of Ministers (GoM) for consideration.

Commenting on the issues faced by the casino industry, who claim that the wording of the valuation rules requiring GST to be paid on the face value of bets is not feasible, Goa Chief Minister Pramod Sawant noted, “There was some issue on GST on gross revenue, which has now been handed over to the Group of Ministers for further discussion. It is for the GST council to decide.”