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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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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.

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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.

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Gaming Legal & Regulatory

Andhra Pradesh MLA calls for banning online rummy

After Chief Minister YS Jaganmohan Reddy’s assertion last month about banning online rummy in Andhra Pradesh, an MLA belonging to the ruling YSR Congress Party raised the issue of online rummy and its perils in the ongoing session of the legislative assembly of the state.

Malladi Vishnu, a YSR Congress Party MLA while speaking in the house mentioned that many families are being disturbed due to online rummy and that he was receiving requests from various people to bring a strict law against online gambling and rummy.

He further urged the government to seriously consider strict action against online rummy websites.

The speaker presiding over the legislative assembly called upon the concerned minister to reply to Vishnu’s suggestion. Since the minister concerned, i.e. the Home Minister was not present in the House, the Deputy Chief Minister responded saying he had noted down the request made by Vishnu.

Last month, it was reported that the state’s Minister for Tourism, Culture and Youth Advancement, Muttamsetti Srinivasa Rao alias Avanthi Srinivas had raised the issue of online rummy and gaming spoiling the lives of many educated as well as unemployed youth and demanded a ban on online rummy, at a conference of District Collectors and Superintendents of Police in the presence of Chief Minister Reddy.

On being told by the state’s Director General of Police (DGP) that, at present, Andhra Pradesh does not have any specific legislation against online rummy, Reddy reportedly stated that the state government will soon introduce a new law to ban online rummy.

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Business

Nazara invests in Sportskeeda and Qunami, ups stake in Halaplay

Online game publisher Nazara Technologies Limited is reportedly on the verge of closing a Rs. 36 crore deal to gain majority stake in Absolute Sports Private Limited, the parent company of leading online sports content and news website Sportskeeda.

According to an exclusive report on online news portal Inc42, Nazara is proposing to acquire 118,000 equity shares of Absolute Sports in a cash plus stock deal.

For the acquisition, Nazara is paying an issue price of Rs. 10 to purchase shares from existing investors, promoters and key managerial personnel and is additionally also offering the existing shareholders of the company a total of 491,100 shares of Nazara Technologies at a premium of Rs. 724 per share. 

According to the Inc42 report, Nazara is further planning to purchase equity shares worth Rs. 7.09 crores in Sports Unity Private Limited, the company that operates the real money quiz app Qunami.

The deal is proposed to be an all stock deal with Nazara allotting 34,900 shares to non banking financial company, Azimuth Investments, which had given a Rs. 6.25 crore loan to Sports Unity, apparently to convert Sports Unity’s debt into equity.

According to the regulatory filings to the Registrar of Companies (ROC) cited by Inc42, Nazara is also looking to increase its stake in fantasy sports HalaPlay to 52.53% by acquiring Kae Capital and Kalysta Capital Fund’s stake in the company in a share swap deal.

In exchange of Kae Capital and Kalysta Fund’s 26,080 shares in Halaplay, they are being offered 315,900 shares of Nazara Technologies, which will take their combined holding in the gaming publisher to 1.14%.

Earlier this year, Nazara had participated in a Rs. 40 crore Series A investment round in Halaplay, along with gaming and hospitality company Delta Corp. Delta Corp had also divested its fantasy sports portal LeagueAdda and transferred it to Halaplay as part of the deal.

In the past couple of years, Nazara has aggressively invested in real money as well as social gaming startups including CrimzonCode, Kenyan real-money betting company NZ World Kenya Ltd, NextWave Multimedia, MasterMind Sports, Truly Social, NODWIN Gaming and Moong Labs.

Nazara has also indicated its interest in either starting or acquiring online poker, rummy and other real money skill games in India.

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Gaming Legal & Regulatory

States free to decide on illegal betting websites, Delhi HC anti-betting PIL subjudice, says Minister

Union Minister for Law & Justice and Electronics & Information Technology Ravi Shankar Prasad tabled a reply to BJP MP Sudheer Gupta’s unstarred question in the Lok Sabha on whether the centre intends to ban online betting websites.

Responding to Gupta’s query, Prasad stated that “Betting and Gambling” are State subjects as per the Seventh Schedule to the Constitution of India. States/UTs are primarily responsible for prevention, detection, investigation and prosecution of crimes related to betting and gambling through their law enforcement machinery.

On the question of the Public Interest Litigation (PIL) in the Delhi High Court against online betting and poker websites filed by social activist Avinash Mehrotra, the Minister responded by stating that the matter was subjudice, with the Ministries of Information Technology and Finance and the Reserve Bank of India (RBI) being respondents in the case.

Prasad did not give any specific response on what the central government’s stand will be in the matter, but the reply in parliament indicates that the centre has effectively left it to individual state governments’ to decide on how they wish to tackle the issue of online gambling and betting.

Categories
Legal & Regulatory

Question on govt’s reaction to anti-betting PIL & plan to ban gaming sites reaches Parliament

Exclusive Sudheer Gupta, the BJP MP from Mandsaur (Madhya Pradesh) has raised an unstarred question in the Lok Sabha on whether the central government proposes to ban online betting websites.

The Member of Parliament has also raised a query on the Delhi High Court’s order last month declining interim blocking of online betting and poker websites and the government’s likely response to the notice issued by the High Court, in the PIL filed by social activist Avinash Mehrotra.

Gupta, in his query to Ravi Shankar Prasad, the Union Minister of Electronics, Information Technology, Law & Justice, has posed the following questions to the central government:

(a) whether the Government proposes to ban websites that encourage online betting, betting games, etc. and if so, the details thereof;

(b) whether the Delhi High Court has pronounced a judgement in which it refrained from a complete ban on such websites;

(c) if so, the details thereof and the reasons therefor; and

(d) whether the Delhi High Court has issued any notice to the Government in this regard, if so, the details thereof and the reaction of the Government thereto?

A response to Gupta’s query will be tabled in the Lok Sabha by the central government on 3rd July, 2019, as per details uploaded on the Lok Sabha website. Since the query has been marked as an unstarred question, the government is merely required to give a written response or a statement, without being obligated to answer any supplementary or follow-up questions.

The response given by the Minister will be keenly tracked since this will be the central government’s first official reaction to Mehrotra’s anti-betting PIL and will give an indication on whether the central government intends to impose a crackdown on online gaming and betting websites.

Read more about betting legal status in India.

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Legal & Regulatory

Will a 2010 CERT decision to not block Betfair aid Delhi HC in the anti-betting PIL?

A Public Interest Litigation (PIL) filed in the Delhi High Court by social activist Avinash Mehrotra last month, seeking banning of offshore online betting and Indian online poker websites has lead to much debate and speculation about whether the Indian government will crackdown on offshore betting websites that are available to Indian citizens.

The Delhi High Court in its order on 29th May issued notice to the central government and RBI, and listed the matter for hearing on 31st July, by which time it ordered that all counter-affidavits and rejoinders are to be filed.

Mehrotra in his petition has stated that the respondent (Ministry of Electronics and Information Technology)t should block illegal gambling websites, including BetRally, Betway and Dafabet from being accessed in India under Sections 67 and 69A of the Information Technology Act, 2000.

Interestingly however, the Bombay High Court addressed the issue of online betting website Betfair being available in India in its order in Abbas Shaikh v. Union of India & Others in 2010.

The court in its order dated 10th March, 2010, noted that the state of Maharashtra had written to the Director of the Computer Emergency Response Team (CERT), Ministry of Electronics and Information Technology, seeking blocking of Betfair.com and asked the CERT to take action in accordance with law within three months.

As per a response given by the IT Ministry to a Right to Information (RTI) query filed by activist Pranesh Prakash, the CERT-IN did meet on 24th August, 2010 to discuss blocking of the website Betfair on grounds of public order, but noted that no details suggesting the impact of the website on public order has been given by the state of Maharashtra.

The CERT-IN consequently rejected the demand to direct blocking of Betfair. (Interestingly though Betfair ceased accepting customers from India earlier this year and the website is no longer accessible from Indian IP addresses).

It remains to be seen whether the Information Technology Ministry and CERT-IN will also state in the Delhi High Court like it did in its 2010 meeting that online betting websites cannot be blocked under the grounds of ‘public order’.

The CERT and IT ministry could however react differently in 2019 due to the provision in the Information Technology (Intermediaries Guidelines) Rules, 2011 (these rules had not come into force when the CERT decided the Betfair issue in 2010), which require intermediaries like ISPs, search engines and hosting providers to not transmit any content, inter alia, ‘relating to or encouraging gambling’ and disable such content within 36 hours of it being brought to their notice.

Read more about gambling laws in India.

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Gaming

Man vs. technology – Which way will the cards fall for the Indian online gambling market?

A blast from the past to understand the value of casino & sports betting regulation

LeoVegas Casino & Sports is a Swedish online gambling operator founded in 2012. Now, seven years later they have finally opened the doors for Swedish players. Since the start LeoVegas main market have always been Sweden and in 2017 they spent $35 million in advertisement to attract Swedish customers.

So how does it come the doors have finally been opened for Swedish players?

LeoVegas has been operating in a legal grey zone up until the regulation of the Swedish gambling market the 1st of January 2019. They, together with 100 other Swedish casino operators, have made use of a legal glitch which allows casinos based outside of Sweden to target players inside the borders.

Prior to the regulation, all operators hosted their real money games from the gambling friendly island Malta. A tiny, progressive island which also is a member of The Commonwealth but have decided to take an open approach to online gambling, cryptocurrency, cannabis and Artificial Intelligence – compared to some other of its’ members.

Malta’s goal is to stand in the forefront for digital and technological debated topics. The island, which is a part of the European Union since 2003, quickly realized the value of attracting foreign investment. The benefits of taxing companies inside the country on gambling activities performed abroad became a gold mine. Taxation from online casinos and sportsbooks accounted for 12% of the GDP in 2018.

Now, when Sweden has regulated its own market, Malta can wave goodbye to their tax income on Swedish players.

How deceptive marketing methods are used for short wins

There is much India can learn from this. India is standing in front of either battling 1000’s years of betting culture, or follow a recipe which has successfully been working in many other countries.

We can already see clear traces of how modern technology is running in circles around the outdated betting laws. 

Indian Facebook users have over the past few months seen a sponsored Facebook article flooding the newsfeed. The article says the CEO of LeoVegas, Peter Newsted, was fired due to a loophole in a promotions terms & conditions.

This was something many Indian betting- and gambling-guide portals picked up. They debunked the fake news article and managed to prove there’s nobody at LeoVegas named Peter Newsted.

The sole reason behind the fake news article was to attract Indian casino players with a deceptive promotion by lying about the mistake.

LeoVegas accept Indian players at their website, but they are not actively doing any type of promotions towards India. If a player comes to their website, they are welcome, but there’s no pursuing of the customers as of today.

Since the Indian online gambling market is a “wild wild west” LeoVegas cannot take any legal rights towards the fake news articles.

If the market was regulated, the situation would have ended very differently.

It’s not only about the money

When you are regulating a market, it is not all about the tax money or controlling your partners marketing initiatives. No, the foremost purpose is supervising the health of the players. A regulated market is a safe and sustainable market for the online punters.

Sweden, who are known for their bullet-proof welfare system, did not go easy on responsible gambling and self-exclusion once the regulation went into force. All casino operators must obey by some of the strictest guidelines for responsible gambling. During the first week of regulation 10 000 players self-excluded themselves from a central system, so they will never be able to place bets again. Not on any form of online gambling site in Sweden. None. Never.

The other day the Swedish online casino Ninja lost its license to operate in Sweden, since they had not fulfilled the criteria for responsible gambling. A tough blow for a company which relies 95% of its revenue on the given market.

What can Indian online casinos & sports books learn from this?

Unfortunately, not too much, since the local operators are not invited to the party.

As of today there’s a long list of websites hosted abroad which accepts bets in INR, LeoVegas being one of them. The economical mathematics are easy to calculate, and it does not benefit the Indian tax system nor employment opportunities. All the bets are wagered and taxed outside of the borders.

Malta stands as a happy chap though.

However, this also means all valuable player data on behavior is stored abroad. Data which can be used to enhance the experience for the users. Lacking this valuable data means the Indian casino’s and sportsbooks will fall short on product knowledge, which will further push the market advantage for the international gambling operators.

What will happened within the legal field in India is still unclear. What is not unclear is the fact that international casinos will continue to pursue their economic dreams within our borders. What we will do about it is entirely up to us.

Disclaimer: This article is a sponsored post and does not necessarily reflect the views or opinions of the authors of this website. Readers may treat this as an advertorial. 

Read more about online gambling in India.

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Legal & Regulatory

Delhi HC declines interim blocking of poker & betting websites, next hearing on 31st July

A division bench of the Delhi High Court comprising of Chief Justice Rajendra Menon and Justice Brijesh Sethi declined to issue an order directing interim blocking of online gambling, betting and poker websites in the PIL filed by social activist Avinash Mehrotra.

“No interim relief. Let it go on,” the bench stated when advocates Prashant Kumar, Siddhartha Iyer, Saurabh Suman Sinha, Awantika Manohar and M/s AP&J Chambers, appearing on behalf of Mehrotra, pressed for blocking of online gambling, betting and poker websites due to possibility of heavy betting on the portals on account of the upcoming cricket world cup.

The court however issued notice to the centre and the Reserve Bank of India (RBI) and sought their response on Mehrotra’s petition which has alleged that illegal and illicit gambling, betting and poker portals are soliciting bets from India in violation of foreign exchange laws, tax laws and existing gambling legislation.

Meanwhile, senior counsel Sandeep Sethi along with law firm Nishith Desai Associates and Gaggar & Partners’ managing partner Vaibhav Gaggar, acting on behalf of the All India Gaming Federation (AIGF) sought to bring to the attention of the court that some online India-based poker portals including Adda52 and PokerStars.in are wrongly included in the petition.

Sethi argued that online poker portals operating in the country are ‘games of skill’ and poker has been wrongly classified as a ‘game of chance’ in the petition.

AIGF has sought to formally intervene as a party in the matter before the matter is heard again on 31st July, 2019.

Read more about gambling laws in India.