In the beginning, God’s dice spun and rolled across the void…. And Creation came to be, in a wanton game of chance. How’s that for an account of the universe? Maybe sport—our playful tango with unpredictability—is not just an indulgence of leisure, but the very soul of our existence. The ‘ludic’ ethos, as they call it—from the Latin ludere, to play, the very word which also gives us Ludo. Now, a virus may defeat the best traps laid by humankind, but does it stand a chance against something ordained by the Creator? The roll of God’s dice—and man’s dice—saw dynasties vanquished, epochal battles fought and kingdoms lost. The pastoral world of the Rig Veda was no stranger to it. And the centrepiece of the Mahabharata—as rich a lighthouse view as you want of social realities in the centuries before—was the virtuous Yudhishthira’s fatal attraction for chausar, an ancient board game. Our human-like gods themselves loved it: witness Ellora’s eighth century painting depicting Shiva playing a game of dice with his consort, Parvati. Cut to the 21st century….
Things have changed a bit; humans can now recreate themselves in a test tube. But the thrill of dice rolling in the air has grabbed us all over again. The players could now sit continents apart, but the humble charms of a board or card game bind them irresistibly. Old games refitted onto mobile screens—rummy, poker…and Ludo. The last is the runaway winner in the bustling world of online gaming: millions have downloaded apps for a game that goes all the way back to the one on which epics turned. Now, Hastinapur is in lockdown…so is Houston, and everything in between. But the pulse quickens in countless homes as that cube spins hypnotically.
Online gaming was already burgeoning in India before COVID-19. It had grown 40 per cent in 2019 to reach Rs 6,500 crore in revenues, with casual and core gamers numbering a grand 360 million—exceeding the population of the US! And now, when world economies have come to grief due to the pandemic, the online gaming sector has shown a contrary graph—the months of lockdown have seen massive growth. This is the second year in a row that online gaming has been the fastest growing segment of the Indian media and entertainment industry. It is now the seventh largest segment of the industry and is expected to be the fifth largest by 2022, according to Ernst & Young. Mukesh Ambani, never a laggard at trendspotting, offered: “Gaming will be bigger than music, movies and television shows put together.”
Yudhisthira at the game of dice
The beating heart of this explosion is the nerdy, hard-core gamer—a special sub-species of humankind around whom this ecosystem evolved—but the flesh and blood is now made up of ordinary gamers. Ludo, for instance, is simple, comes wrapped in nostalgia, and the multi-player format has created an enjoyable space for family time. The warmth of time spent together in play—with parents and children logging in from across the world—is the best antidote to an atomised existence, made gloomier by the lockdown. Ludo King, an app developed by a Mumbai-based company, became the world’s sixth most downloaded game this May, crossing 100 million downloads. The lockdown saw Ludo King’s popularity soar 142 per cent, with 51 million playing the game every day, worldwide! Mummy plays rummy in the afternoon with friends, but gets together with daddy and kiddo for a bout of ludo by nightfall, the soft glow of mobile screens lighting up smiling faces.
But the enormous potential of gaming resides in the young ones, who have grown up as digital natives. Ankit, a class 12 student and a Chelsea fan, is addicted to the FIFA Mobile game, often to the frustration of his parents. But he has his self-analysis down pat. “Online games provide a platform for people, generally teenagers like me, to escape into a fantasy world…lured by a sense of false achievement and the ability to become someone whom we idolise. It gives us a feeling of control and how it feels like to be at the top. Games like FIFA Mobile give people the opportunity to play with their favourite soccer stars and compete with other players to make the best dream teams,” he tells Outlook.
The world of online gaming is complex. The digital age gives us high-speed internet and affordable smartphones, just the catalyst it needs. But the biggest challenge the industry faces is credibility. As operators compete fiercely to grab a share of the ever-expanding user base with innovative products, questions on regulations and transparency abound. In recent weeks, even the innocuous Ludo has come under the scanner: the concept of virtual money has not escaped the attention of industry watchdogs. If virtuous Yudhishthira could wager wife and kingdom—back when wives were chattel—the fallibility of the common Indian is easy to imagine. Especially when offline betting can easily escape detection. So far, games like Ludo have been controversy-free, with companies making money through Google ads. But it could be a matter of time before some enterprising operator, exploiting a sketchy law, introduces betting to add to the excitement.
Online gaming has three broad segments. There are transaction games like poker, rummy, fantasy sport et al where people pay to play a game; hyper-casual games like Ludo, Scrabble, quizzes which are played individually or in teams; and e-sports games like PUBG Mobile, Counter Strike, DOTA, FIFA, which are skill-based, competitive, involve multiple players and, at the higher end of the scale, attract live viewership. Enough variety to make definitions difficult, and to raise regulatory eyebrows. Indian laws are rather ambiguous—except that they differentiate between “games of skill” and “games of chance”, which is not easy to adjudicate. Anything that has mass following and involves a monetary transaction attracts attention and, as industry experts admit, there are always bad apples that spoil an otherwise fair business. The moment money comes into play, the game has to justify how a winning outcome was reached.
There’s a strict prohibition on participation in games of chance that offer money, like sports betting, roulette and lotteries. However, games of skill—where outcomes are not entirely controlled by chance—are treated differently; they are deemed comparable to any other entertainment activity. This differential treatment has been a historic feature of Indian law.
“Ludo is unlikely to be classified as a game of skill under Indian law, and therefore placing money on the game could amount to an offence of gambling. Nothing can be done if people are placing bets separately, outside of the app, while playing Ludo. Gambling privately amongst friends is not illegal if the organiser makes no profit or commission out of the activity. However, if betting activity on Ludo is organised for profit, law enforcement authorities can take action,” says Jay Sayta, a legal expert on regulatory and online gaming policy issues.
Another differential is an accidental byproduct of federalism. In the Seventh Schedule to the Constitution (Entries 34 and 62 of List II), state governments have been authorised to make laws on betting and gambling. Therefore, where a state legislation on gambling exists, it prevails over the Public Gambling Act of 1867, the long-standing central legislation. A number of states have enacted legislation to govern gambling and gaming. Many operators, especially those operating fantasy leagues, resort to these state laws to run their businesses.
On July 24, the Madurai bench of the Madras High Court passed a detailed order on a petition, urging the Tamil Nadu government to bring in a law to regulate online and virtual games. The court noted, in an inquisitive tone, how websites like Ace2Three, My11Circle, RummyPassion, LeoVegas, PokerDangal, Spartan Poker et al are mushrooming and advertising. Elaborating on games of skill and chance, as well as the pitfalls of gaming addiction among unemployed youth, the court said it’s not against virtual games per se but expressed the need for a regulatory body to monitor and regulate the domain. Not a bad thought, given wide concerns over the social impact of games like Blue Whale or Pokemon, which have been banned by many countries.
The internet revolution—counting telecommunication technology and global bank transfers—has created a global market for activities on which people can legally place a wager. Today, with easy access to internet gaming sites, people can place wagers over phone, personal computer, what have you. The regulatory mind, thus, needs to negotiate a tricky, dynamic field. But India is still trapped in the old duality of ‘skill’ or ‘chance’, observed a Deloitte report. Roland Landers, CEO of the All India Gaming Federation, an industry body like FICCI, adds more facets: “Digital transactions have increased, and it’s difficult for states to police online gaming flowing from elsewhere. I am in Mumbai today, tomorrow I am in Delhi. And the game that was legal in Mumbai may not be legal in Delhi. We are working to resolve this anomaly.” Landers is happy about the recognition the industry has got, especially in the last two years.
What gives legal protection to fantasy league operators and firms running online games like Rummy and e-sports is Section 12 of the Public Gaming Act that exempts games of skill from penal provisions against gambling—“Nothing in the foregoing provisions of this Act contained shall be held to apply to any game of mere skill wherever played”. Even the Supreme Court has interpreted the words “mere skill” to include games that are preponderantly of skill and have laid down that (i) competitions where success depends on a substantial degree of skill will not fall into the category of ‘gambling’; and (ii) despite there being an element of chance, if a game is preponderantly a game of skill, it would nevertheless be a game of “mere skill”. Hence, no trouble over gambling.
While these definitions may merit a serious relook, card games like Rummy, among the most thriving of all online gaming businesses, seemingly look more securely regimented. Online rummy is about 12 years old and has about seven million registered players in India. Sameer Barde, CEO, The Online Rummy Federation, wagers that unlike fantasy sports, Rummy is “purely skill-based” but says what gives it credibility is that top operators ensure stringent adherence to rules to guarantee a safe, fair and transparent environment.
Parvati beats Shiva in a game of chausar
“We have a system of certification. The four top operators—Rummy Circle, Ace2three, Junglee and Rummy Passion—have acquired the TORF seal, a sign of credibility and integrity. TORF guards the player from getting cheated. The system prevents underage participation, money-laundering and people playing beyond their means,” says Barde. TORF also guards against irresponsible advertising that puts young people at risk of being exploited. Barde says Rummy anticipates a turnover of around Rs 3,000 crore this year, with the business growing at the rate of 25-27 per cent each year. “We should be worth half a billion two-and-half years down the line and that’s largely due to the credibility we are building,” Barde says, adding that Rummy is far ahead of fantasy leagues in terms of business. “Fantasy leagues associated with cricket are burning a lot of money to grab visibility but they have some way to go before they can actually start making money,” he says.
Questions on transparency and security have grown stronger in recent weeks. In the wake of the India-China standoff in Ladakh, online gaming has come under the scanner also because Chinese firms have either invested big time in Indian partners or their apps like PUBG Mobile have swept the millennials off their feet. Thus, it was not surprising that Paytm First Games, which have major investments from Chinese e-commerce giant Alibaba, refused to talk on their nature of business and style of operation.
Paytm is also a major partner of the BCCI. Reportedly, Paytm First Games had recently partnered with Daraz, a Pakistan-based e-commerce company. Both Daraz and Paytm First Games are backed by Alibaba. While Paytm First Games/Daraz have stated they would be expanding to Bangladesh, Sri Lanka and Myanmar (Pakistan as a market has not been mentioned publicly), this collaboration deal might raise concerns from Indian authorities, say industry insiders.
To be secretive is intrinsic to an industry that’s still only in the process of being formalised. The touchiness is getting more and more pronounced in the wake of the Union government’s decision to review all kinds of alliances with China. Gaming and entertainment apps, thus, are grabbing attention for the wrong reasons now. While Mumbai-based Nazara Technologies Limited, which claims to operate in 60 countries, did not show any interest in talking about their business, Mobile Premier League, a mobile gaming platform, offered these guarded words: “The space is still nascent and all stakeholders must work on such aspects (like regulations on transparency) together.” However, MPL, unlike Paytm, was not entirely opaque with information. The company, which recently tied up as sponsors of Cricket Ireland, said its investors include Sequoia, Go Ventures, Times Internet, among others.
Sayta explains the competing goods at play here: “Funds inflow (into gaming) from venture capitalists et al certainly boosts overall FDI inflows into India; the industry’s growth also means revenues for the government. With respect to Chinese investment, our new FDI policy allows Chinese investment in any Indian company only with prior government approval. Investments by Chinese firms in Indian gaming apps are a matter of concern from the data security/ privacy standpoints.”
Interestingly, some of India’s celebrity cricketers have lent their names to fantasy leagues. Former captains M.S. Dhoni and Sourav Ganguly endorse separate brands. Among all the fantasy leagues, which are dependent on live sporting action, Dream11 has become a household name because it is associated with the world’s richest cricket property, the IPL. Dream11, also linked with the BCCI and ICC, has so far been riding orders from the Punjab & Haryana, Bombay and (more recently) Rajasthan High Courts to operate in a space where fantasy can still get classified as a “game of skill”. But there are serious doubts about the integrity and style of their operation—especially after Fancode, a sister company of Dream11, came under investigation for live-streaming a fake T20 league!
Dream11, which receives funding from Chinese behemoth Tencent, is also under the Supreme Court scanner for charges of evading GST. While no valuation is readily available of the industry as a whole, Dream11, the largest fantasy sports operator in India, was reportedly estimated to be valued at approximately $1-1.5 billion in April 2019—that’s nearly Rs 10,000 crore. The Department of Revenue had challenged a Bombay High Court order, claiming that Dream11 had evaded GST to the tune of Rs 2,173 crores. It further alleged that the company was liable to pay 28 per cent GST on the face value of bets; it currently pays 18 per cent.
On an appeal from the state of Maharashtra, the Supreme Court on March 6 stayed the orders of the Bombay High Court and issued notices to all parties for hearing their contentions afresh. “Even though the views of the Punjab & Haryana and Rajasthan high courts continue to be in operation, the SC’s order to put a stay on the operation of one of the seminal judgments regarding online fantasy sports in India has for the time been thrown into doubt the existing judicial endorsements in favour of online fantasy sports in India,” observes Khaitan & Co, a legal firm.
Dream11 didn’t respond to Outlook’s query on its present status. But the Federation of Indian Fantasy Sports, a body founded by Dream11, said: “Recently, IIM Bangalore published India’s first academic study which mathematically proves a predominance of skill in Dream11’s specific format of fantasy sports. This case study has been published in the Harvard Business Review and is now used in statistics classes. This is why FIFS is absolutely certain that Dream11’s format of fantasy sports is a ‘game of skill’ not amounting to betting/gambling. In the GST matter referred to above, the Supreme Court has issued notices to respondents to hear the case again. It would be premature for us to comment as the matter is subjudice.”
EY is the one who calculated India’s country-sized number of 360 million-plus consumers; now, the coronavirus has seen both gamers and the time they spent spiking. At the same time, StayAtHome has accelerated digital adoption…so there could be 440 million online gamers by 2022 in India. But numbers may not be proportional to business growth.
Most people have gone to online gaming purely from an entertainment perspective. Social gaming has gone through the roof and the Ludo story is an example. Engagement doesn’t necessarily increase revenue because people are playing for free. When it comes to real money gaming, consumers are more prudent in these times than they would normally be; people are circumspect. Still, online gaming has carved out its own piece of the earth; the rush of consumers is akin to what OTT platforms like Netflix and Amazon Prime have seen. Either God or the virus has ordained thus, but humans may want to show some prudence.
By Soumitra Bose with inputs from Jyotika Sood)