With state control, India’s $3.8 billion online gaming sector can eliminate unlawful betting and gambling sites and encourage it to flourish naturally. However, the industry faces challenges due to state-level regulations, heavy taxes, and ambiguity.
The Issue: Gaming Vs. Gaming
Calls for tougher regulations have emerged because many Indians still believe that gaming and gambling are the same. For years, the gambling sector has struggled with unclear rules, creating ongoing issues. In April 2023, the Ministry of Electronics and Information Technology (MeitY) sought to provide clarification by implementing fresh policies, but this did not resolve the problems. Later, the government raised the GST (tax) on internet gambling to 28%, hurting gaming businesses. Though there were expectations for relief in the Union Budget for 2025, the government made no reference to online gaming.
Meanwhile, illegal betting sites have proliferated, with transactions totaling ₹8.2 lakh crore. The high taxes in India have caused many customers to migrate to offshore platforms.
Effect on Employment and Development
By 2025, Ernst & Young and USISPF projected that the online gaming sector could generate 250,000 jobs. However, due to the new tax laws, this figure has shrunk to barely 30,000. About 83.3% of gaming companies are struggling to attract extra staff.
Despite these challenges, India is set to become the world’s second-largest mobile gaming market by the end of 2024, with 590 million gamers, up from current levels. Experts predict that the sector will reach $9.2 billion by FY29, exhibiting a 20% annual growth rate.
Real-money gaming (RMG), still the main source of income, brings in $2.4 billion. However, in-app purchases are rising faster, with a 41% increase in FY24. In-app purchases are expected to exceed RMG income by FY29.
Problems at the State Level
Some states, including Odisha, Telangana, and Andhra Pradesh, have banned real-money gaming. Tamil Nadu has instituted strict measures, such as a ban on gaming between midnight and 5 AM. Other regulations include:
- Restrictions on players’ expenditure of money
- A ban on minors participating in gaming
- Pop-up warnings about the addictive nature of gaming
Gaming firms like Games24x7, Junglee Games, and Head Digital Works (A23) have contested these regulations in court, arguing that the regulations are unconstitutional and unfair. Professional players have also joined the fight, asserting that the regulations violate their rights to make a living.
Why Is Central Regulation Needed?
The gaming sector believes that central regulation is the only way to stop unlawful offshore gaming and provide a safe environment for consumers. Roland Landers, CEO of the All India Gaming Federation, claims that state-specific legislation is difficult to follow and often leads to uncertainty.
However, central regulation is not straightforward. One of the main problems is the lack of self-regulating bodies (SRBs). In 2023, MeitY stated that SRBs would determine the permissible games; however, these bodies have yet to receive approval. The lack of clear guidelines has led state governments to create their own laws, further complicating the situation.
Where Is Next?
According to sources, the Ministry of Home Affairs (MHA) is investigating central legislation to control betting, gambling, and internet gaming. However, it remains uncertain whether this legislation will be implemented.
Until central control is in place, the gaming sector will continue to face difficulties. Clear guidelines from a unified framework would help, but they would also come with tougher compliance requirements, including KYC standards and advertising limitations.
For now, the direction of India’s internet gaming sector remains uncertain.
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