The growth of online gaming in India shows the need for regulation

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Consumers across the subcontinent have flocked to online and mobile gaming, with real money and casual games topping the charts. The Centre’s hesitant stance on regulation has left most states without direction on a sensitive topic like online gambling.

Online gambling further boosted by pandemic

India has surpassed 750 million active internet users in the past year, almost all via mobile. About half of them are also said to be regular players, with real money games among the big winners. Casual gaming apps also enjoyed significant market share, although more difficult monetization kept business interest at somewhat lower levels.

Real money games range from sports and other seemingly unrelated genres (with in-app purchases) to classic casino games. But these have received more attention recently, sparking discussions suggesting measures ranging from a blanket ban to a framework regulation.

Many regular users join companies in their concern about excessive regulation. While the media cites iconic cases of suicide and bankruptcy, most states still turn a blind eye to offshore gaming platforms and other gaming apps that go under the radar.

In reality, for most regular desi consumers, playing on the internet simply means choosing an online India lottery instead of a traditional paper ticket or playing 10Cric online casino with co-workers after work. The pandemic has accelerated the digital transition and physical distancing has triggered an even higher demand for online media and entertainment, just as e-commerce has grown in previous years.

Despite some objective concerns, these changes in consumption are a reality for most of us. The digital transition makes gambling – and gambling in particular – one of the most accessible sectors but also easier to regulate. Successful examples from Europe and America are not hard to find.

Online entertainment markets attract large crowds and big investors

One of the reasons for considering targeted regulation is the economic importance of the segment. Domestic and foreign investors continue to fund game studios and related online services. The new reality of online entertainment and multimedia content has shown its true potential, with more Indian companies producing original local content rather than providing services to foreign operators.

The country’s Tier 1 cities and their large online communities have certainly influenced these trends, supporting the digital transition and shaping the demand for games and entertainment. Industry analysts often point to lower penetration levels among Tier 2 cities and rural areas as the next big factor to further drive market growth.

Currently, gambling is only officially permitted in four states, but online betting is only explicitly prohibited in Andhra Pradesh and Tamil Nadu (and only since last year). But with an estimated 433 million gamers – expected to grow to 657 million by 2025 – the world’s second-largest online gaming market requires more clarity and at least some framework rules.

With an annual growth of around 40%, online gaming in India is supported by more than 400 tech startups across the country. Most are capitalizing on the boom in gaming, projecting new growth and attracting large investors.

Gaming apps and platforms have been heavily funded by venture capitalists, showing their confidence in the industry. Nazara is one of the biggest Desi tech companies and has pulled over an 80% premium on its IPO listed price. Dream11 secured nearly a quarter of a billion dollars in institutional funding several months ago, bringing the company’s total valuation to $ 2.5 billion. Similar investor interest is evident in payment provider Paytm or the Mobile Premier League, one of the more popular gaming apps.

The social and economic importance of the sector is sufficiently important to justify a careful regulatory effort. Over-regulation or complete bans will stifle the market and cause states to lose the benefits of a thriving economic segment.




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