Ban on money-based online games will sound death knell for us, says industry
NEW DELHI: The Indian gaming industry, which till just a few years back was seen as a sunrise sector, was shell-shocked by govt's proposed move to ban "online money game", claiming it would sound the death knell for firms.
Industry experts pointed out that the measure would put 4 lakh companies, 2 lakh jobs, investments of Rs 25,000 crore and annual GST of Rs 20,000 crore at risk. As draft copies of the Bill started circulating online, gaming executives said they would "need to wind down operations with no plausible source of revenue in sight" in case the law is enacted. "We will fold up if this becomes a reality," a top official said.
Gaming In Numbers
'We will fold up if this becomes a reality,' a top official at one of the biggest gaming companies in India said.
'What is surprising is that, while govt regularly consulted us on most of the issues, there was virtually no discussion this time around on a proposal that has the capacity to decimate us,' the official — whose company is big in fantasy gaming, where again real-money transactions are popular — told TOI.
There will be a downstream impact to domestic sports as fantasy sponsorship keeps most non-top T20 leagues afloat, with state and city leagues likely to be hit, weakening the talent pipeline, industry players said.
Most companies insisted that large Indian gaming players, with regulatory structures and strong funding, including FDI, were 'not engaging in any illegal activities' such as betting, money laundering, terror financing or gambling.
Dream11
, Games 24x7, MPL, Gameskraft, Nazara Technologies, Zupee and WinZO are among the big players in this space.
'Our operations were broadly focused on skill-based real-money games.
These have been the source of most of our revenues, which has seen us build valuations, provide jobs to engineers and graphic designers, gain global recognition and FDI funding and provide GST and tax to govt,' another founder of a top company said.
Industry sources said there is also a risk of some the platforms moving offshore or other apps taking advantage of the gap, with weak KYC and anti-money laundering provisions and in turn, impacting tax collections.
Countries such as the UK, the US and Australia regulate and licence the business with strict KYC, and advertising rules and enforcement, instead of a ban, and industry players suggested that even in India this should be the preferred model to regulate and monetise the industry. The 2023 framework, which is sought to be junked, had created rules and a self-regulatory organisation path for 'permissible' real-money games, which should be strengthened, they suggested.
Besides, the bill leaves several gaps as there is no transition plan. If a law is legislated, there is a need for wind-down, ensuring user balance refunds and employee protections to avoid a cliff-edge shock, said experts.
A balanced outcome can be achieved by licensing onshore operators, setting deposit and loss limits, along with affordability checks, localising data, and blocking illegal offshore sites aggressively, they added.
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