Is India’s online gambling infrastructure and regulatory framework sufficient?

A comprehensive regulatory framework by a regulatory agency is necessary to oversee online sports games and to deter any illicit activities,” the Madras High Court stated in 2020. Regulation of online sports would stimulate investment in the area, perhaps resulting in technology breakthroughs, income generating, and job creation.

These observations are still incredibly pertinent a year later. According to FICCI and EY, India will have over 350 million gamers by 2020, with a growth rate of 21% in transaction-based online world777 gaming and a YOY growth rate of over 27%. Recent events have undoubtedly spurred significant regulatory effort. However, there is still a long way to go in terms of overcoming the current regulatory framework’s hurdles and realizing the industry’s full potential.

State-by-State Consistency

Because each state has the authority to set its own betting and gaming laws, there is a lack of uniformity in the legal position among states. Real money games have been outlawed in Andhra Pradesh and Telangana, although skill games are permitted in Tamil Nadu. Kerala has outlawed stakes-based online rummy.

The legal framework is uncertain, posing a barrier to investors and placing a large compliance cost on game operators. It’s critical to have a method to the madness, and it shouldn’t be too difficult to achieve. After all, most states’ gaming laws are based on the Public Gambling Act of 1867, a pre-independence federal statute.

Clarity in Terms of the Legal Situation Of These Games

The legality of online games is evaluated by the Supreme Court’s skill vs. chance test. To begin with, the test is subjective, and different courts have applied it in different ways. Poker, for example, is a chance game according to the Gujarat and Bombay High Courts but a skill game according to the Karnataka High Court. With the exception of online fantasy sports (OFS) activities, most other modern games are fraught with uncertainty.

The Supreme Court stated that world777 rummy is a skill game, but that it might be considered a chance game if it is played for money or if the game operators benefit. In a digital era where the country is home to dozens of gaming businesses, at least one gaming unicorn, and where citizens have easy access to stock and even cryptocurrency (another regulatory problem) trading platforms online, such a classification seems unusual.

Experts could evaluate regularly played games and categorize them as skill vs chance games, taking into account real-money variants, as one possible answer. For OFS games, Niti Aayog has proposed that a self-regulatory organization (SRO) conduct the classification.

Authority to Regulate

Then there’s the requirement for a regulatory compliance authority. Niti Aayog has recommended self-regulation by an SRO for OFS games. An SRO, like the OTT framework, might provide an effective redress mechanism for gamers. An SRO, on the other hand, cannot exercise judicial authority or divide games into skill and chance categories.

However, it is unclear whether this process would be effective in India, where game operators could face criminal charges if there are no clear laws (like one has seen for OTT platforms). This is especially true because numerous state laws specifically recognise gambling as a criminal offense. A safe-harbor would not eliminate the need for more precise regulation in line with the current situation.

Safeguards and Protection for Gamers

Other areas of concern include the lack of safety for gamers and precautions against unlawful conduct. However, this isn’t the only option. The Niti Aayog has advocated a minimum gaming age, as well as the fairness of game terms and conditions, disclosures, and responsible advertising. To avoid criminal actions and money dealings, game operators should conduct KYC checks, user authentication, and other procedures.