Majority of the industries across the world have been negatively impacted by the COVID-19 pandemic. In spite of the never-before-seen disruptions, there is one industry which has seen an increase in business during this time of the pandemic – online skill gaming. Sure to say, this industry has been doing exceptionally well in part to the Work-from-Home culture which has flourished during the pandemic period, directly providing a big boost to the gaming sector.

Since mid-March, reports state that online gaming, as a business segment, has witnessed a growth rate of more than 21%. According to the Gaming India report, India has 300 mn online gamers. By the year 2022, the numbers are forecasted to record a massive growth of 47%.

Accelerating growth

Certainly, even prior to the lockdown, online skill gaming & eSports was already among the rapidly growing sectors in India. Between the year 2014 & 2020, the industry attracted investments worth $350-plus million from venture capitalists. Big Corporations such as Airtel have shown a rising interest in collaborating with domestic eSports start-ups. As a consequence, there is growing creation & consumption of local eSports content.

Taking these figures into account, one would assume such a sector to receive substantial incentives. But that’s far from it. In contrast, transactional online skill gaming is banned in some Indian states. This is courtesy of the perceptions or rather, misperceptions, regarding the sector. Majority of the problems arise from provisions in the Public Gambling Act, 1867, which prohibit gambling activities in India.

The matter is compounded by diverse interpretations & application of the Act by different State Governments with regards to online gaming. This occurs because betting & skill-based online gaming are under the jurisdiction of individual states. Accordingly, state governments regulate them as per their own vision & some even have separate laws in place for eSports activities.

The main point that is totally forgotten is that the 1867 Act was devised before the birth of online & digital applications. Applying ancient laws to online games makes no sense as the yardsticks are different. The matter of legality depends on a simple premise. Are such games based on ‘chance’ or ‘skill’? If it is chance (or randomness), it’s deemed illegal. If it is a skill, it’s legal.

This definition is an inherently flawed one. For instance, how does one decide whether a particular game entails skill or chance considering that even completely skill-based games such as tennis or soccer will also have some element of chance at critical junctures like a net touch or external factors like an unexpected gust of wind, etc. As a result of laws based on open-ended definitions, states like Telangana, Assam & Odisha bar all games– even those requiring some element of skill. In other states, such games, including the transactional ones are allowed.

The conflicting situation of some states enacting laws as per their own vision debarring what is legally sustainable across the country is apparent. But definitions open to various interpretations could culminate in being a losing premise for all stakeholders, especially in the post-pandemic era where revenues for the state & earning possibilities for individuals to assume elevated significance.

Importantly, even the Supreme Court has acknowledged that games like football, chess, rummy, golf, baseball & horse racing are skill-based. To explain, in horse racing, one has to assess not only the form of the jockey & the horse but other variables as well.

Employment & entrepreneurial potential

Furthermore, the lockdown has created unparalleled economic conditions wherein crores of people across the world have become unemployed. Consequently, thousands are prone to stress, depression & other mental health problems since they are jobless. Taking into account these unprecedented conditions, activities like online gaming & eSports should be embraced. In the case of skilled or professional gamers & those employed in the industry, it keeps them productively working as well. Industry statistics speak their own success story.

According to a 2020 report on India’s Media & Entertainment Sector which was published by FICCI & consulting firm Ernst & Young, India’s online gaming grew swiftly, registering 40% growth in 2019-20 while revenues generated in 2019 were an estimated Rs 65 billion. As per the report, the total number of gamers in India was determined to be around 365 million.

Among different types of transactional gaming, as per EY estimates, fantasy sports rose in excess of 100% in 2019 while online skill-based card games surged around 30%. According to the forecast, online gaming will keep on registering robust CAGR of around 43% over the next 3 years – becoming a $2.5 billion industry (around Rs 187 billion) & accounting for 40,000-plus direct jobs in India. Moreover, online gaming’s total indirect tax contribution in 2019 was estimated to be about Rs 98 billion, with 2022 estimates being around Rs 286 billion.

Typically, investors have been encouraged by these growth figures. But to make profitable investments safely, they expect a predictive policy & enabling regulatory environment. While online gaming including eSports possesses huge potential in generating significant revenues for the Exchequer, its entrepreneurial & employment potential are also there to be seen for perceptive stakeholders.

Currently, leading online gaming & eSports companies are backing the #PlayApartTogether initiative, which attempts to promote physical distancing. The WHO also backs this initiative. The COVID-19 threat won’t go away any soon. With normal economic activities expected to be seriously restricted for the upcoming year or thereafter, old-world laws should not hinder the promotion of gaming for generating revenues & offering employment & entrepreneurial opportunities to millions of people.

It’s high time we have clarity & consistency in the regulatory laws for online gaming & eSports. Eventually, practicality, not impractical morality, should be the determining factor in these regulations.