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From The Dark Ages To The New Dawn In The Gaming Industry

With various initiatives of the government like Digital India a significant increase can be expected in the availability of high-quality and engaging gaming content.

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Taking a clear stand, the Karnataka High Court by its latest, laudable and landmark judgment gave relief to the online gaming operators and players by declaring certain provisions unconstitutional which earlier banned and criminalized online games.  

‘I don’t need therapy; I just need my online game!’

In the past few years, the online gaming industry in India has been revolutionized completely by witnessing a tremendous growth by being one of the fastest growing-sunrise industries in India, clocking about 40% growth in 2019-20. 

As per various reports, the online gaming industry was valued at Rs. 13,600 crores in Financial Year 2021 and the industry is expected to grow more than double within the next four years to reach a total market size of Rs. 29,000 crores by Financial Year 2025. 

Recent research has also showed that India recorded about 365 million online gamers in 2020. The number of gamers is estimated to reach 510 million in the year 2022. 

From playing ludo with your family in your drawing room to playing Ludo-King virtually now the Gen Z today seems to have experienced it all! The need for virtual entertainment has been on the rise since many years. 

Today, most of the unicorns of the gaming industry have been born again due to the unavoidable and several waves of the pandemic and hence the lack of outdoor activities and meetings resulting into loneliness, depression and more leisure time. Online gaming and fantasy sports during this time thus became the go-to place and a new hobby for many. 

The pandemic accelerated the organic growth of digital games as mobile app downloads grew by 50% and user engagement went up by 20%. Moreover, it saw 50% growth in the gaming industry’s turnover with national average gaming time spent by users reaching 4.1 hours post-covid from the pre-covid average of 2.5 hours. 

Apart from this, a greater clarity has now been witnessed between the ongoing confusion faced in differentiating a game of skill and a game of chance in our country. This is because only a game of skill is considered legal under the Public Gambling Act of 1867. 

Because gaming is a state subject, different Indian states look at it differently. However, the courts of India have time and again passed various judgments on this issue. Games like online rummy, poker, fantasy sports, and e-sports have all been found to be game of skill by various High Courts and Supreme Court in India. 

Since 2017, fantasy sports companies in India and federations have fought quite a few battles in court, and have received a favorable view from various high courts as well as the Supreme Court. 

The Punjab and Haryana Court in the case of Varun Gumber vs. Union Territory of Chandigarh (2017 Cri LJ 3836) held that games such as horse, boat and foot racing, football, chess, golf are games of skill and significant judgment and not a game of chance. However, in a fantasy game, a participant user who builds a virtual team would require considerate skill, knowledge, judgement and discretion, as the participant has to estimate the relative value of each athlete/sportsperson as against all athlete/sportsperson available for selection. He is required to study the strengths and weaknesses of the athlete which would determine the result of the game and his chances of winning a contest. 

A similar finding was reached by the Bombay High Court in Gurdeep Singh Sachar vs. Union of India and Ors. (2019 75 GST 258(Bombay) wherein the court had observed that it was evident that the success in Dream 11 fantasy sports depends upon the user’s ability to exercise his skill based on superior knowledge, judgement and attention. 

The Hon’ble Supreme Court, in Avinash Mehrotra vs. State of Rajasthan (SLP (C) No. 18478/2020) by its order dated 30th July 2021, upheld the online fantasy gaming site Dream 11’s fantasy sports format as a ‘game of skill’ dismissing a special leave petition that alleged the format amounted to gambling, wagering and betting. 

The Hon’ble Madras High Court in Junglee Games India Pvt. Vs. State of Tamil Nadu (2021 SCC Online Mad 2762) held that as games based on ‘preponderance of skill’ are protected under Article 19(1)(g) of the Constitution, the restrictions imposed by the State on conducting or playing such games should satisfy the tests of reasonableness and proportionality. 

Most recently, in All India Gaming Federation vs. State of Karnataka (W.P. No. 18703/2021), the Karnataka High Court on 14th February 2022, held certain provisions of the Karnataka Police (Amendment) Act 2021 unconstitutional and struck them down as being ultra vires to the constitution as they banned and criminalized online games with stakes. 

Needless to say, India now has over 130 million online fantasy sports players across more than 200 platforms. ‘Ab Poora India Khelega’ were the buzzwords of the IPL season that kicked off in April 2021, with various Fantasy Sports platforms like MyTeam11, Dream11, MyCircle11, amongst others gearing up for the influx of users that such “cricketing” period brings to their platforms. 

There has thus been a rise of new age gaming companies in India since then. 

Dream Sports which is the parent firm of fantasy sports platform Dream11, raised an investment of $840 million at a valuation of $8 billion in November and is one of the most-valued gaming start ups in India.

MyTeam 11, a bootstrapped company, on the other hand caters to the sports enthusiasts of a wide variety of sports like cricket, football, kabaddi, baseball, rugby, hockey etc. What sets MyTeam11 apart from the rest of the players in this industrial field is its hunger and strive to keep enriching the user experience and tapping into every growth opportunity. 

With that in mind, it launched Sports Tiger in 2020, which is a platform that offers live updates, fast and interactive live scorecard, expert fantasy tips, in-depth game analysis and much more. Hence, a combination of diverse and multiple revenue streams have ensured that MyTeam11 continues to be a leading name in Indian online gaming industry. 

Furthermore, its plans to milk the rising interest in NFTs among the youth by introducing reward-based and tradeable NFTs for its users which show that they are actively evaluating the dynamic market behaviour and keeping themselves ahead of the curve. 

This nascent industry thus, has seen a new dawn with several gaming unicorns launching new games and sports every month.

However, given the various views and different restrictions by various state governments in the absence of a uniform code for dealing with the rising online gaming industry, the view of the country as a whole still remains contrasting. 

In addition to getting the law right, more awareness is also required on this ongoing issue to really be able to distinguish between a game of chance and a game of skill. The issues around the regulation of online gaming it seems can be resolved with the right precedents. 

With having one of the world’s largest and youngest populations, India is positioned to become a worldwide leader in the gaming industry in the coming years. India is currently among the top five mobile gaming markets in the world. The gaming industry in India is currently valued at $930 million and is estimated to grow at 41% each year. With various initiatives of the government like Digital India a significant increase can be expected in the availability of high-quality and engaging gaming content.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

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Sudhir Mishra

The author is Founder and Managing Partner, Trust Legal.

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Simran Gupta

Associate, Trust Legal

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Raghav Sethi

Associate Advocate, Trust Legal, Advocates & Consultants

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