Why is it hard to govern e-gaming?

The e-gaming sector in India is in its infancy and has run into some teething trouble. Industry insiders say there is a problem of perception around e-gaming and playing for real money, especially by the regulatory authorities.

“Gaming is considered a frivolous waste of time and secondly it is unclear if playing with money is gambling or gaming,” says Sameer Barde, CEO e-Gaming Federation, an industry body: “The perception that it is gambling.” And EGF is trying to change this perception.

In India gambling is illegal, but there is some confusion about what gambling is. The popular card game rummy is considered a game of skill by the Indian law and not gambling. Offline, one might think betting on horses was gambling, but it is not because the law believes it takes skill. No one can roll a dice better than anyone else (unless the die is rigged), so that is classically a game of chance. Any game involving money and chance is gambling. Yet, Indian gamers may play gambling games such as blackjack online but not for real money.

“The way the Supreme Court (SC) has looked at it is, ‘is this a game of skill or is this a game of chance?’ A game of chance is essentially gambling; so what is a game of chance? It is anywhere that your personal capability has little or no impact or very minimal impact on the final outcome of the game that you're playing. So how the SC decides is, ‘what is the preponderance on: skill or chance?’”

This is when we reach the heart of the problem. There are multiple states that have gone and banned real money gaming calling it gambling. And this has led to endless litigation.

Besides, anyone can use a VPN to bypass the system altogether. “This way the fly by night guys can make merry as the state police has little or no ability to find out if something is happening,” warns Barde.

It is early days for e-gaming and the per capita spend on gambling is minimal because most gamers are playing free games such as Candy Crush and chess. But it is seeing investor interest and some M&A activity. For instance, Nazara became India's largest mobile entertainment platform and then the first gaming company to list.