Why online gaming in India needs regulation

There are three types of online gaming. The first is e-sports. These are video games that, in the 1990s were played privately or on consoles in video game shops but are now played online in an organised way between professional players, individually or as teams. This flourishing industry suffers from a lack of regulatory oversight. Online gaming falls in a regulatory grey area and there is no comprehensive legislation concerning its legality, or its boundaries with gambling and betting even as the applicable tax rate is being debated in relevant circles. A game of chance may be considered as gambling if players wager money or anything of monetary value. Online games based on the traditional ludo, arguably the most popular online game in India, have run into controversy, and allegations of betting and gambling. From this definitional issue flows the legality of online gaming. Games based on skills are allowed in most parts of the country while games of chance are in the ambit of gambling, treated as immoral and prohibited in most parts of the country. As betting and gambling is a state subject, different states have their legislation. Parents across the country are struggling — without much success — to help their children set limits around technology usage and gaming. Psychologists have opined that the opportunity cost of this is immense as the impact on health is growing with each passing day. Online games like PUBG and the Blue Whale Challenge were banned after incidents of violence and suicide. A well-regulated online gaming industry presents compelling advantages in terms of economic benefits too. There is an urgent need to regulate this industry suitably. The government should ensure that KYC norms are strengthened. Each game should follow a well-established age-rating mechanism and minors should be allowed to proceed only with the consent of their parents — OTP verification on Aadhaar could potentially resolve this. A Gaming Authority at the central government should be created while various forms of self-regulation are encouraged for the industry. This authority could be made responsible for the online gaming industry, monitoring its operations, preventing societal issues, suitably classifying games of skill or chance, overseeing consumer protection, and combatting illegality and crime. This industry is expected to generate revenues over Rs 29,000 crore in 2025 with over 65.7 crore users. It is estimated that more than 15,000 direct and indirect jobs will be created. A Group of Ministers (GoM) of the GST council is seized on the matter of fixing the rate for online games. The debate between a GST rate of 18 per cent for games of skill and 28 per cent for games of chance is expected to be settled soon. The GST and Income Tax generated from this industry will add to the economic multiplier. Every state in India, except Goa, Sikkim, and the Union Territory of Daman explicitly prohibits any sort of gambling, betting or wagering on games of chance. Assam, Andhra Pradesh, Nagaland, Odisha, Tamil Nadu and Telangana have placed restrictions on games of skill as well. Online games based on the traditional ludo, arguably the most popular online game in India, have run into controversy, and allegations of betting and gambling.