Conducive Eco System Can Be Game Changer For E-Gaming-remove Pain Points
At least 2.7 billion e-gamers are honing their skills and participating across globe with business to exceed USD 1.5 billion in 2022 and 5 billion by 2025 with CAGR of 38% across globe. The rise in number of companies has also gone up in India from 25 in 2010 to that of 275 and do employ 15,000 of skilled developers. The Center and State Governments have their own interpretation on issue of Gaming on slotting it and then the social impact that it may be having. The parental control is being passed on to that of the tool ie e-Gaming. The addition is also blamed to e-Gaming (like alchohol) but then ‘Ban’ is not solution. There can be two approaches, one technical filters and other social education.
To deliberate on ecosystem of e-Gamic constitution of IMTF (Inter-Ministrial Task Force) for E-Gaming is a welcome step with MeiTY at the driver’s seat getting inputs from all stake holders for e-Games. The issues that IMTF must address at the onset should be the first and foremost to have agreed definition of Electronic Games; and for that Issues that need to be understood and addressed should be as to whether it is
The clarity and removal of vagueness in understanding of above six issues is paramount as that will decide the direction of regulations, direct and indirect taxation and future of e-Gaming spread in India. It can grow to be an opportunity for sustainable high level employment, a tool to educate players on rules of game, bridge digital divide and enable honing of skills.
What is e-Gaming distinguishing from ‘Games’ is ‘players’ is the center theme a stand-alone video game what can be played on desktop computer or the internet between one or more players then it is a e-GAME .
1. Game of chance or that of skill
The first issue that needs clarity is whether it is game of ‘SKILL” or that of ‘CHANCE”(gambling). As per rulings of multiple Courts, e-Gaming has clearly being categoriaed as 'games of skill' and are legitimate business activities protected under Article 19(1)(g) of the Indian Constitution since they do not fall under the purview of 'gambling',. A “game of skill” is based mainly on the mental or physical level of expertise of a player, rather than game of chance. the judgments of high court and Supreme Court have clarified umpteen number of times that it is game of ‘Skill’ and hence that should now be settled argument and provisions of law and regulation should apply and be framed accordingly. (ref: Manoranjithan Manamyil Mandram v. State of Tamil Nadu (2005); the Hon’ble High Court of Karnataka, in the case of Indian Poker Association (IPA) v. State of Karnataka (2013)7, observed that Poker is a game of skill; Hon’ble Punjab and Haryana High Court in Varun Gumber v. Union Territory of Chandigarh (2017)9, has held that games such as horse, boat and foot racing, football, baseball, chess, golf are games of skill and significant judgment and not a game of chance; Bombay High Court in the case of Gurdeep Singh Sachar Vs. Union of India and Ors. (2019)10 wherein the Court observed that it was evident that the success in Dream 11 fantasy sports depends upon the user’s ability to exercise his skill based on superior knowledge, judgment and attention), thus umteem number of cases in court has termed e-Gaming as ‘Game of Skill’ and not that of chance.
Based on court judgements and the acid test is the distinguishing factor is e-Gaming attributes mental and physical knowledge and expertise and thus the skill of the player. Thus, the IMTF to set parameters to classify as ‘Game of Skill’ as from there will flow the other issues of concern. Those e-Games that do not follow the agreed parameters’ among stake holders and defined by IMTF covering paid and unpaid games, based on the participation of ‘player’ comes with knowledge, expertise and capabilities and thus it is skill and not a ’chance’ game. IMTF will have to settle that regulation will thus be under the IT Act and not IPC (Indian Penal Code) provisions for games of chance commonly known as gambling.
The first step is therefore, is the need to define E-Gaming clearly to avoid confusion whether it is gambling (comes under state and IPC-Indian Penal Code) . Those e-Games that do not fulfill the agreed parameters and have ailment of ‘gamble’ will have to adhere to provisions of IPC but clarity of parameters is paramount.
2. Based on (a) What should be direct and indirect tax regime?
Once, it is settled that it is a ‘Game of Skill’ then from this emerge the taxation issue. For the indirect tax, the Group of Ministers on GST perceive it as game of skill then it definitely does not invite the 28% of tax and then for direct tax it should it be on gross gaming revenue (GGR ) or overall gaming proceeds. This defining by IMTF is important to avoid the hit that telecom sector took for non clarity on the issue of AGR (Adjusted Gross overall Revenue) in case of telecom sector. Definitely, taxation in e-Gaming has to move with clarity so that heavy taxation does not kill the growth of innovations in India resulting in migrations of talent. It has positional to grow as a major revenue source if taxed with logic.
3. Broadcast with predesigned Outcome or it is the knowledge and skill of player that determines the outcome.
Another challenge to settle for IMTF is whether e-Gaming is a broadcast like an OTT platform or a game. Here the determinant factor to classify is where lies the control on outcome of Game played as individual or group. In e-Gaming the outcome is not predetermined and neither the information is one source like broadcast, so it does not qualify to be a broadcast or OTT platform. Outcome is dependent on the knowledge and skill of the player and its opponent. The communication between the players is limited as per rules of the game. Thus, e-Gaming qualifies more as that of non broadcasting or OTT category. Thus, e-Gaming probability factor is result of number of players and their skills.
4. Is e-Gaming a entertainment, amusement or recreation to hone up skills and knowledge
Many a times there is confusion or hurry to classify e-Gaming being for entertainment, amusement, recreation or a mechanism providing recreation and adrenalin jump by acquiring knowledge of game, its rules, and honing of skills and thus resultant active participation in the game. Thus, e-Gaming again falls in category of skills that assists to play the game as per rules with no defined outcome and that depends on knowledge, study, observation and skill of the player. It is used to hone up skill by being participative player in the Game.
5. Is it just a platform that enables field games to pay in electronic mode or Product
In e-commerce it is principle as to now a settled what law and rule applies to brick and mortar shops different criteria should not be applied only because of change of platform. Same understanding is needed in case to address issue of e-Gaming to be treated as a platform or a product. Electronic gaming is an interactive game operated by computer circuitry. The machines or platforms on which electronic games are played include general-purpose shared and personal computers, arcade consoles, video consoles connected to home television sets, and hand held game machines. Electronic gaming is conducted in casinos also. Bingo games and other games conducted with help of electronic devices are electronic gaming. For this it is important to understand the revenue stream of gaming and the technology. Maximum revenue comes user paid portals, with 27% paid apps but from RMG (Real Money Gaming) where players play for the money with skill to win by paying a platform fee charged to the user as percentage of amount put by the player) ie 53% by around 20% of players. Percentage of revenue shift is also more on strategy, card, board games, sports where action and adventure ranges from 15-20%. Thus, in players choice shift is also more and more towards non-adventure and knowledge and skill oriented games.
E-Gaming is therefore a platform that enables the ground games to play electronically, and also some exclusive games developed that enables players to hone up their knowledge and skill and outcome is based on the knowledge, ability gained of the player.
6. Is the platform works as intermediary or publishes content and broadcast
The next concern is whether e Gaming is intermediary or a publisher. E-Gaming aggregators are intermediaries or publishers or both. In generic vocabulary using a stand-alone video game, desktop computer or using internet with one or more players is E-Games. There is a contradiction in this generic understanding, it is participative and outcome is based on knowledge of game and skill of the player. Thus, it is a platform to test skill, hone up skills, acquire more knowledge, rules, and interaction and is an option in gaming. It is participative even e-sports is not to just watch but to be a participative player who appreciates rules of games, hones skill, and learn about different leagues and players who play actual game. It is educator and skill. Thus it is an Intermediary With this understanding the existing rules will be sufficient to regulate the e-Gaming industry.
As argued above on the 6 major concerns, e-gaming is a skill not game of chance, thus taxation regime has to be in sync with that of game of ‘skill’, it is not a game option not an entertainment , amusement , broadcasting like OTT. broadcasting but outcome is based on being participative and skill of player, it is an intermediary not a publisher. The regulations should accordingly flow with this clarity in understanding in the inter-Ministerial committee.
Thus, definition of e-Gaming could be -An electronic game is a game of skill that uses electronics to create an interactive system with that a player can play. Video games are the most common form today, and for this reason the terms are used interchangeably. It is just a platform and includes game traditionally played in field or at tables. The hardware is consoles to PC, online streaming services , e-Sports (including fantasy games) . It usage is honing skills, edutainment, e sports (and definitely not just for entertainment or amusement) as intermediary enabler to active participation.
7. Social apprehensions on being addictive, spending in terms of time and money at cost of other options etc.
Besides above technical clarity, IMTF is to also address the social apprehensions. Many times debate falls under children wasting their time and adults indulging in e-games at cost of family time. Is it so or can e-Gaming also be transformed to a different perspective of become a big learning tool. I recollect when my son was young he used to play and e-game that involved spread and migration of population, and game needed to plan their housing, if number is more schooling, job sheds so on and so forth, in a way inculcating the thought of planning in advance and I used to joke that every employee of town and country planning should play this game. E-Gaming can be a good educational tool to imbibe the systematic thought process and training brain for advance and multiple perspective considerations and accordingly player can equip oneself with appropriate. Thus, instead of e-Gaming being exhaustive, depressing it can be transformed to be theureaupatic. That will emerge from more educating the players and also on strict filters on time (hours that player can play in 24 hour cycle, maximum money that one can spend and entry age restrictions. Parental skill lies in picking up right kind of games for their children.
The next important step is the need to encourage peer discipline and design and enforce code of conduct in modern management has to be on encouraging Self regulation(SRO) like EGF (E Gaming Federation), FIFS etc body taking the lead with an appellate independent body created. The SRO body is to have all the developers and operators as members with consent to adopt and abide the code of conduct. Any violation should be peer reviewed and corrected and if not by the appellate board, on failure of both the regulator to take steps to cancel license, block/deregister entities that continue to violate. There will always be a black sheep and regulations to deduct them by enabling Self Regulation and law of land to curb such elements is welcome but it should not suffocate opportunity of potential of India becoming hub for billions of dollar start up industry from Indian developers. SRO be formally recognized (as was done by RBI for micro finance institutions the MFIN) by enabling them to discuss and reach consensus to strictly follow KYC norms and also evolve for grievance redress system and ensure anti money laundering norms are followed. The Inter ministerial committee should look at this more an opportunity for Indian technical youth to make India a base and facilitate and work out regulatory norms. Need of IMTF is to be bring in clarity on above seven issues and be a facilitator than being an impediment. It is brilliant tool for deeper penetration for e-learning, closing digital divide and enabling logical scientific thinking capabilities of brain.
Dr. Aruna Sharma is a Practitioner Development Economist and Policy Advisor. She was Secretary, Ministry of Electronics and IT and also worked as Secretary Steel in Govt. of India. She was instrumental in bringing the Steel Policy 2017 and changes ifn GFR and preference to Make in India to enhance domestic consumption of steel. She was a member of the Reserve Bank of India's High-level Committee on Deepening the digital payments in India. She works in the field of Digital Transformation, e-Governance, FinTech, Digital Assets as well as core sectors like Steel and Mining laws. She has developed and successfully led the panchayat level governance model. Presently, Dr. Sharma is on the Board of Directors for some companies and writes regularly on Economy, Digital and Social Innovation, and Rural Development. As an author, she has 5 bestselling books to her credit. The latest book is Dancing Towards The $5 Trillion Economy on a Holistic Beat (Indra Publishing House).
