A conducive ‘light-touch’ regulatory environment and robust support mechanisms should be put in place in order to allow India to emerge as a ‘global gaming innovation hub’, and allow the industry to contribute significantly to the country’s economic and cultural growth, the All India Gaming Federation (AIGF) proposed.
The AIGF, representing over 150 members in the online gaming sector, recently revealed its proposals to the Telecom Regulatory Authority of India’s (TRAI) consultation paper on the formulation of the National Broadcasting Policy 2024.
In April, the TRAI released a Consultation Paper on ‘Inputs for Formulation of National Broadcasting Policy-2024’ (NBP), with the AIGF releasing its submitted opinions to the body.
In its submission, the AIGF highlighted the exponential growth of India’s online gaming industry, which is currently valued at $2.2 billion and projected to reach $4 billion by 2026, emphasizing the need for a progressive regulatory framework to harness the sector’s potential.
‘There are over 450 million online gamers in India and the pay-to-play gaming
comprised 83 percent of the sector’s revenues with free-to-play games and esports exhibiting robust growth,’ the federation pointed out.
In a statement regarding the consultation, AIGF CEO Roland Landers commented that, given that the industry “is in its infancy”, the federation subscribed to the country’s prime minister’s remarks for the need for top-down regulation for the industry and a light touch regulation bringing the industry under an organized legal structure in order to uplift the reputation of online gaming and “let it grow and boom”.
“We continue to advocate for a progressive regulation focused on consumer safety, competition and ease of innovation and believe that with a progressive regulatory and tax framework, online gaming can become the cornerstone of the $1 trillion digital economy as envisioned by the Hon’ble Prime Minister,” Landers commented.
In its written opinion, the AIGF stressed the importance of regulations focused on consumer safety and innovation facilitation, while asking for regulatory clarity.
The federation lauded the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, for providing a framework to distinguish between games of skill and chance, safeguarding consumer interests, and ensuring responsible gaming practices.
However, the AIGF warned for the need for the implementation of these rules, awaiting the designation of self-regulatory bodies by the Ministry of Electronics and Information Technology (MeitY), which can incorporate lessons learned from the IT Rules into the upcoming Digital India Act, and foster a comprehensive regulatory environment for all online games.
Additionally, the AIGF underscores the challenge of illegal offshore gambling sites and their advertising, emphasizing the necessity of coordinated efforts to combat them, proposing leveraging the IT Rules’ verification marks to identify legitimate games and curb illegal platforms’ reach.
‘At present, the proliferation of online offshore gambling poses a significant threat to
Indian users. Such online platforms are illegal in most states under their public
gambling laws, as these platforms offer games of chance,’ the document shows.
‘As per estimates, illegal betting activities are causing significant tax losses, with an
estimated inflow of $100 billion per year, and a GST loss of 28 percent of that
amount. According to another estimate, certain offshore online gambling operators
are collecting $12 billion per year from Indian users, which is causing a loss of at least $2.5 billion per annum in GST alone to the national exchequer.
In October 2023 a 28 percent tax on online gaming, casinos, and horse racing was implemented and scheduled to be reviewed after six months. The taxes that were levied on the full face value increased the government revenue fourfold from the sector.
The decision evoked a sharp response from the online gaming industry, with operators claiming that they would suffer huge losses due to the additional taxes.
In the document, the AIGF suggested the implementation of verification marks as provided for permitted games under the IT Rules, as a way to enable MIB, ASCI, advertisers, and the public to access a whitelist of legitimate online games, and immediately identify content belonging to unmarked illegal gambling platforms.
Lastly, AIGF advocates for the implementation of Animation, Visual Effects, Gaming & Comics (AVGC) recommendations in mission mode to support Indian game developers and promote cultural gaming content globally.
