Lockdown – A potential for the online gaming industry!!

May 7, 2020
online gaming

By Rupin Chopra and Reetika Wadhwa

With the sudden outbreak of the viral infection and the lockdown situation arising therefrom, people have been restricted within the four walls of their homes. The fear of transmission of virus has shut down workplaces, public places, entertainment zones and centres. This whole situation has compelled people to find a source of entertainment in online gaming or e-gaming. Further the advancement of technology coupled with the deep penetration of internet even in the remotest areas of India has led to a surge in online gaming and online gaming industry and startups. Thus, eventhough other sectors have been severely affected by the pandemic outbreak, digital gaming is one sector which is attracting huge traffic of players.

Post the outbreak of pandemic and subsequent lockdown, several reports have surfaced which indicate a boom in the online gaming industry. Gaming portals such as Paytm First Games and Gamerji have reported a 200% and 50% increase in their users of online gaming portals over March 2020.[1] Over half a million daily active gamers spending 30- 45 minutes on gaming platforms.

Owing to the scientific development and technological advancements, games are not only present on the virtual media but attributable to the graphics and designs available they have acquired a life-like feel available at the ease of button over a hand held device thereby gaining rapid popularity. Online platforms cater to the need of various segments of the society not confining itself to the youth only. Online gaming apps offer games of varied nature and numerous forms.

Another significant aspect concerning the operation of online games is the involvement of real money to play them. This adds thrill to the game thereby involving more enthusiastic players on one hand and generates reward in the form of revenue to those engaged in its creation.

Online Gaming: Law in India

By the virtue of the provisions of Public Gambling Act, 1867, gambling activities are prohibited in India. The regulation of gaming/ betting activities in India are monitored by the respective State Governments being a matter subject to State jurisdiction.[2]

However, the games involving exercise of a skill of some sort are permissible to be offered, even for real money except, in a few States such as Assam[3],  Odisha[4] , Telangana[5].

Which games are not permitted or considered as Gambling?

Gambling activities, including the facets such as those listed below are not permissible on the online world:

  • Involving a play for value
  • Where outcomes are based on the occurrence/ non-occurrence of an uncertain event
  • Entirely dependent on chance/ luck
  • Played in the hope of gaining something of value.

Which games of skills are permitted in India?

The games which base success upon the existence of skill are known as games of skill. The law in India holds a game to be a game of skill, even with the element of chance if it depends upon3:

  • Superior knowledge;
  • Training;
  • Attention;
  • Experience;
  • Adroitness of the player;
  • Element of Skill predominates over the element of chance

The Legal framework clearly recognizes that the games with below elements are not “gambling[6]:

  • where success depends on substantial degree of skill; and
  • despite there being an element of chance there is requirement of application of skill.

Permitted gaming

Online skill games are not prohibited in most of the States in India, however the north-eastern Nagaland accords legal validity to the games of skill under the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2016 and the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Rules, 2016 by issuance of license in respect of some skill games such as Chess, Sudoku, Quiz, Rummy, Virtual racing, Virtual sports (Soccer/ Cricket/ Archery/ Snooker/ Bridge/ Pool), Fantasy games, etc.

Gaming industry has acquired recognition as one of the most potential industries which is likely to generate substantial revenue in the years to come. The present bandwagon of online gaming has also given a big boost to online gaming industry and startups in India and around the world.

License for online gaming portals in India

Obscurity and ambiguity persists with respect to a robust regularization of online gaming in India as the gaming laws were formulated before the advent of the cyber age in India and they do not specifically address the concerns arising out of online gaming activities in India.

Also read: How to Obtain Gaming License in India?

However, the States of Sikkim and Nagaland have introduced laws which provide for procurement of licenses for online gaming activities in India:

Sikkim Online Gaming (Regulation) Act 2008

The Sikkim Online Gaming (Regulation) Act 2008[7] (hereinafter referred to as the “Sikkim Law”). Under the Sikkim Law- “online gaming” refers to all or any games of chance or a combination of skill and chance, including but not limited to poker, roulette, blackjack or any game played with cards, dice or by means of any machine or instrument for money or money’s worth.

Procedure to obtain license under Sikkim Law:

Under the Sikkim Law, any person desirous of obtaining license for online gaming shall:

  1. Make an application in writing to the State Government in the prescribed form and manner
  2. On receiving the application and after considering its particulars, the State Government may either grant license or refuse. Please note that the law provides that the license can be refused by the State Government without assigning any reason.
  3. The proviso states that when the State Government refuses grant of license then it shall record its reasons for such refusal.

Duration of license- A license issued for online gaming under the Sikkim Law shall remain in force for a period not exceeding five years.

The Nagaland Gaming Law

The regime of online gaming in Nagaland is governed by the legislations- Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2016 and the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Rules, 2016.

The Act exclusively prohibits gambling which include games involving wagering or betting based on chance and not skill[8].

Also read: Nagaland Online Games of Skills Act, 2016

Licensing Requirements under Nagaland Gaming Law:

  1. Applicant of license shall have no criminal history
  2. Controlling stake of the applicant shall be in India
  3. Operations of the applicant including technology support platforms, software servers should remain within the territorial limits of India
  4. Applicant should submit application in the prescribed form alongwith the prescribed fee of Rs. 50,000/-

The COVID-19 disruptions have been far and wide across industries. Economies around the world have been impaired as they were not ready for this shock absorption. However, amid this crisis situation, the online gaming industry is one of the few sectors which offers a  ray of hope for economic sustenance and revenue generation by entertaining and engaging those who are locked into their homes due to the viral outbreak.

Related Posts

India: Raising the Stakes for Online Gaming

India: It’s not an easy game to play under the Gaming laws

Copyright in the Gaming Industry

[1] https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/egaming-companies-have-a-field-day-as-virus-keeps-millions-home/articleshow/75001617.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

[2] Constitution of India, Seventh Schedule, List II, Entry No. 34

[3] Assam Game and Betting Act, 1970

[4] Orissa Prevention of Gambling Act, 1955

[5] Telangana Gaming Act 1974

[6] State of Bombay v. RMD Chamarbaugwala[ A.I.R., 1957 S.C. 699] – held by the Apex Court of India

[7] https://indiacode.nic.in/bitstream/123456789/11161/1/the_sikkim_online_gaming-edited.pdf

[8] https://ssrana.in/articles/nagaland-online-games-of-skill-act-2016/

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