The Indian gaming industry is one of the thriving and ever-evolving industries. Counted as one of the top gaming markets, the sector is growing rapidly due to various factors. As per Mordor Intelligence, the market is projected to touch the $4.88 billion mark by 2026 and will grow at a CAGR of 20.83% from 2021 to 2026. Affordable data and the rise in the GEN-Z population that is heavily influenced by technology, along with the pandemic, have together contributed to driving the growth of the segment. It is now undergoing a paradigm shift as it is no longer considered a leisure activity, but rather a seriously lucrative business opportunity. Players now have avenues to indulge in gaming as a viable profession.
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The industry comprises various segments including PC, mobile, console, fantasy sports, Esports, etc. And out of these, fantasy sports receive a special mention because this market is surging significantly. According to a joint report by the Federation of Indian Fantasy Sports (FIFS) and Deloitte, India currently is one of the largest fantasy sports markets at the global level, with a user base of over 13 crores.
Fantasy sports allow players to assemble teams from a roster of athletes to compete in real-time matches on a specific day based on predetermined criteria. The conversion of real-world stats to fantasy points implies that the user’s fantasy points increase directly to how well the chosen player performs in the actual world. Until now, cricket was ruling the segment. However, other sports such as kabaddi, hockey, football, and volleyball will also gain prominence in the fantasy sports market.
Laws pertaining to the gaming industry
While the Indian gaming industry, on the whole, is growing, it is also receiving the required support from the government. Various policies are being implemented in favor of the gaming industry, boosting its growth as well as ensuring gamers’ protection.
The primary law governing gaming in India is the Public Gambling Act of 1867 (often known as the “Gambling Act”). To create state-specific gambling regulations, state legislatures have been given a large amount of regulatory leeway under the Indian Constitution. The Gambling Act is the primary statute that some Indian states have accepted, and other states have passed their laws to control and oversee gaming and gambling within their borders (“Gambling Legislation”). Since most gambling laws were passed before virtual or online gambling became popular, they mainly apply to game and gambling activities on actual premises.
Games of Skill vs Games of Chance
The definition and distinction between games of chance and games of skill have a significant impact on the status of fantasy sports in India. The player’s expertise is necessary for a skill-based game. To put it another way, players must invest time in developing, learning, and perfecting their skills to succeed. The ability to win in such games is based on how well one comprehends the rules and accepted strategies, and how well one plays. Over time, players can excel and guarantee success. On the other hand, a game of chance is one in which luck or chance has a significant impact on the outcome and where chance outweighs skill. It is hard to predict who or what will win in such games because the winning criteria are accidental. While these games are winnable in the short run, they are not sustainable in the long run.
A state issue has been created around online gaming.
In India, online gaming has been declared a “State-Issue,” giving each state the freedom to decide how to manage and control it. While some laws and regulations say all “online games” to be illegal, others have permitted them if they meet standards based on skill rather than chance. All parties involved—investigating authorities, businesses, and customers—are increasingly concerned about India’s underdeveloped state of egame laws and regulations.
One of the major legal challenges is how to best control online games, so they don’t turn into betting platforms. The prevalence of gambling and betting games has become a major issue for most investigative authorities. As new game kinds emerge, it is crucial to develop evolved contracts that anticipate and address potential issues before they arise.
The Esports phenomenon has also made it necessary to comprehend contract law better. Endorsement agreements are one of the most important areas where Esports participants require legal counsel. While organizations need assistance with contract negotiations, it could be argued that individual players are, in some ways, much more exposed when given a contract.
Formal recognition of FSPs on app distribution platforms
A stable legal environment and governmental recognition could have a more significant impact on how operators of fantasy sports use digital platforms. According to Deloitte, the Google Play Store is the go-to app store for many Indian mobile users because it controls the distribution of apps to over 95% of the country’s digital customers. The Play Store functions as a “walled garden,” only listing applications that follow the rules for content and security after conducting a helpful review. However, it restricts fantasy sports as Google does not allow mobile apps that work on a pay-to-participate contest model. In the absence of direct downloading of FSPs from the play store, users are apprehensive about going beyond secured download methods.
In such a scenario, it becomes imperative for the app distribution platforms to draft policies aligned with the Indian laws. An FSP being listed on the app distribution platform will eventually have an opportunity to witness unprecedented growth. This, if implemented, could be a revolutionary move for the FSPs and the Indian gaming industry.
Perception management
The love for the sport and the desire for fans to feel involved and aware that there are consequences or rewards which bring out people’s competitive sides have been the foundations of FS’ growth and popularity in India. While the chance to compete and win prizes is intended to recognize individuals who have honed their abilities and accumulated information over time, it should not be seen as the main incentive for their engagement on such platforms.
As per Deloitte and FIFS’ report, more than 80% of the respondents surveyed shared that their interest in sports increased due to fantasy sports. This is why fantasy sports platforms should focus on enhancing player engagement and instilling healthy competition amongst the gamers. It is imperative for the players to ensure the guidelines are adhered to and regulatory frameworks are all aligned. This will enable FSPs to be in sync as per the legal protocols and cater to the user requirement seamlessly.
Digitization is leading to a surge in digital payments
In addition to the global spread of formal financial institutions, the COVID-19 epidemic has spurred financial inclusion and led to a huge rise in digital payments. This also holds for the various credit and debit transfer methods, including UPI-based mobile payments. Since the trust in online payments is increasing, this is further paving the way for the growth of Fantasy Sports in India. With the variety of payment modes, all transactions on the fantasy sports platforms today happen in a secured manner through payment gateways. The FS gaming platforms ensure seamless payment experiences and lower transaction failures.
The Bottom Line
The Indian gaming industry is evolving. The young population is highly influenced by technology, especially during the pandemic, leading to the growth in the industry. Players no longer consider it a leisure activity. They now indulge in gaming as a profession. Online fantasy sports games already benefit from the legal sanction of numerous High Court judgments. In a manner, this has also significantly helped in its development. The sector has considerable promise regarding growing employment prospects and potential revenue production.
It is time for India to establish precise rules to offer them legitimacy and recognition to overcome the barriers to its efficient operation, even though its fate rests on the next highest court’s attitude and judgment. The internet gambling sector also needs laws to close this gap, including licensing and supervisory agencies with other checks and balances. It is essential that the app distribution platforms devise policies supporting the Indian laws, as this move will boost the FSPs as well as the Indian gaming industry on the whole. Amidst regulations, the future of gaming will be progressive if the policies would be in favor of the segment.
Author: Mr. Rishabh Bhansali (Co-Founder, FanClash)
The author is the Co-Founder of FanClash, a leading sports Platform in Asia. He is an IIM Ahmedabad Graduate, Associate CA from ICAI & a CS. FanClash is an esports startup for gamers to compete, access curated content, and get their daily dose of thrill by playing fantasy leagues on popular esports from across the globe. From fantasy to tournaments to the latest happenings in the gaming world, FanClash is with the gamers on every step of their Esports fandom.
