Of the numerous things that the pandemic has changed in our lives, an obvious one is the way we entertain ourselves. Amid the proliferation of OTT channels and the rise in viewing hours what has gone unnoticed is the burgeoning use of online gaming. The average time spent on online gaming has gone up almost 65 per cent from pre-Covid levels. More than 43 crore people have spent time on virtual gaming.
There are three types of online gaming. The first is e-sports. These are video games which, in the 1990s, were played privately or on consoles in video game shops but are now played online in an organised way between professional players, individually or as teams. The second is fantasy sports. These are games in which you choose a team of real sports players from different teams and win points according to how well the players perform in real life. Finally, there are online casual games which could be skill-based — where the outcome is predominantly influenced by mental or physical skill — or based on chance, where the result is strongly determined by some randomised activity, such as rolling a dice. A game of chance may be considered as gambling if players wager money or anything of monetary value.
This flourishing industry suffers from lack of regulatory oversight. Online gaming falls in a regulatory grey area and there is no comprehensive legislation with respect to its legality, or its boundaries with gambling and betting even as the applicable tax rate is being debated in relevant circles.
From this definitional issue flows the legality of online gaming. Games based on skills are allowed in most parts of the country while games of chance are in the ambit of gambling, treated as immoral and prohibited in most parts of the country. As betting and gambling is a state subject, different states have their own legislation. Every state in India, except Goa, Sikkim, and the Union Territory of Daman explicitly prohibits any sort of gambling, betting or wagering on games of chance. Assam, Andhra Pradesh, Nagaland, Odisha, Tamil Nadu and Telangana have placed restrictions on games of skill as well. Online games based on the traditional ludo, arguably the most popular online game in India, have run into controversy, and allegations of betting and gambling.
Notwithstanding the legal position, a large number of people are developing a strong dependence on online gaming. This addiction is destroying lives and devastating families. Compulsive usage of technology was heading towards becoming an issue and the pandemic managed to catalyse the steady journey. It has caused a dramatic increase in our screen time.
Parents across the country are struggling — without much success — to help their children set limits around technology usage and gaming. Young boys and girls are trapped in compulsive gaming, many spending as much as six to eight hours per day playing online games. This is affecting their performance in school and straining their social lives and relationships with family members.
Psychologists have opined that the opportunity cost of this is immense as the impact on health is growing with each passing day. Online games like PUBG and the Blue Whale Challenge were banned after incidents of violence and suicide. This addiction is also said to be causing near-sightedness in our youth. Further, inadvertent sharing of personal information can lead to cases of cheating, privacy violations, abuse, and bullying.
There is a need to build checks and balances to prevent the youth from becoming pathological gamers. Various high courts have nudged state governments to regulate the virtual gaming landscape. The Centre, in a recent advisory to states, has laid out useful dos and don’ts to educate parents and teachers. Even casinos do not allow underage participants hence there is no reason why online gaming companies should be lax about it. Incidentally, the Chinese, as is their wont, have announced rules to limit online video games for those under 18 to three hours a week. The Chinese state media has called online gaming the “opium of the mind.”
A well-regulated online gaming industry presents compelling advantages in terms of economic benefits too. This industry is expected to generate revenues in excess of Rs 29,000 crore in 2025 with over 65.7 crore users. It is estimated that more than 15,000 direct and indirect jobs will be created. A Group of Ministers (GoM) of the GST council is seized of the matter of fixing the rate for online games. The debate between a GST rate of 18 per cent for games of skill and 28 per cent for games of chance is expected to be settled soon. The GST and Income Tax generated from this industry will add to the economic multiplier. This sector has the potential to attract significant global investments — current investments in gaming companies like Dream11 are good indicators.
There is an urgent need to regulate this industry suitably. The government should ensure that KYC norms are strengthened. Each game should follow a well-established age-rating mechanism and minors should be allowed to proceed only with the consent of their parents — OTP verification on Aadhaar could potentially resolve this. No in-game purchases should be allowed without adult consent and wherever possible, the in-game chat option should be disabled. Gaming companies should proactively educate users about potential risks and how to identify likely situations of cheating and abuse. They should remove the anonymity of participants and build a robust grievance handling mechanism.
A Gaming Authority at the central government should be created while various forms of self-regulation are encouraged for the industry. This authority could be made responsible for the online gaming industry, monitoring its operations, preventing societal issues, suitably classifying games of skill or chance, overseeing consumer protection, and combatting illegality and crime.
