Karnataka Outlaws Popular Online Games, Risks Losing Revenues and Jobs
- Nov 09, 2021,
- Updated Nov 09, 2021, 7:36 PM IST
When authorities in Bengaluru pushed through the State Legislative Assembly a blanket ban on online games for money, the move resonated around the nation. With hundreds of tech startups and millions of mobile game users affected, industry experts urge the Karnataka Government to consider other regulatory options.
A Legal Industry Suddenly Made Illegal
The recent news that the State of Karnataka has pushed through a legislation banning all online games for real money came as a surprise for industry outsiders. It was, however, monitored with concern by business groups operating in the sector. The Confederation of All India Traders (CAIT), based in New Delhi and representing more than 40,000 trade associations, stepped in to raise awareness of the difficulties that such laws create for India’s growing digital industry.
The blanket ban on paid online gaming is certain to push players to illegal gambling offshore rather than stop it, CAIT has warned. Many of the games covered have a huge following and have been legal for years. This has created a robust business system around it, especially in tech hubs like Bengaluru, making the move even more surprising to analysts.
Desi favourites like online lottery and powerball India will be among those immediately affected, along with legitimate games like fantasy sports andcasino mobile apps. Any money exchanges over digital devices, including in-app purchases, paid subscriptions and prize withdrawals, could now attract huge fines or even lead to imprisonment.
Playing into the Hands of Black Markets
An expert look into the Indian lotteries state by state reveals that Karnataka does not have its own legal government lottery. The local market is already influenced by the hugely successful legal lotteries of neighbouring states like Kerala and Maharashtra, with tickets smuggled over and players buying bundles for friends and family.
Online lottery platforms and other digital gaming has been a legal option for many, with affordable smartphones and cheap data packages extending coverage outside big cities. And even though the new Karnataka Police (Amendment) Bill does not explicitly ban lottery, horse races or betting within or outside State bounds, it prohibits any digital transactions for such games.
Not being able to distinguish between games of skill and chance makes things worse. CAIT Secretary General wrote to Karnataka CM urging the Government to reconsider the move, as industry experts believe it will only cause Indian gaming companies to exit the market, directing players to offshore and illegal markets instead.
Chinese and other foreign betting and gambling platforms have often been found reaping the benefits of unregulated local markets. Cyber Crime units are now tasked with more responsibilities, going after local tech startups and gaming operators, while players have been left with no legal alternatives.
"The gaming startup sector is the pride of India. Many of these homegrown startups have carried the Indian flag across the world by launching operations in various countries.
Legal Uncertainty Holds India’s Digital Pride in Difficulty
Bengaluru is widely known as one of the drivers of India’s booming digital economy. The gaming startup sector has enjoyed exponential growth over the past few years, reaching over 400 million active players according to 2020 KPMG reports.
Serving both public and private industries, the sector has been the pride of Digital India in recent times, with many desi development studios gaining markets on a global scale. Dream11 has been rated as the first gaming unicorn in Bharat, with companies like Nazara, MPL and Games 24*7 also attracting huge investor interest.
With over 600 innovative companies operating in the online gaming segment, CAIT has called for clear and stable regulation mechanisms that will make the best out of their potential. A more measured approach (than a blanket ban on online games) will ensure that local businesses and consumers do not have to surrender to foreign competition and black market operators.