Factsheet

Online Gaming in India

Date: 31 August 2021

1. Online Gaming in India

Online gaming industry has emerged to be a crucial sunrise sector with the potential to
drive investments, jobs and innovation in India. The industry has seen revenues double over
a span of 4 years - from Rs. 20.3 billion in FY2013-14 to Rs. 43.8 billion in FY2017-18.1 It is
projected that the industry will reach 155 billion by FY2022-23 as it is growing at a CAGR of
27%.2

2. Reasons for Rising Popularity of Online Gaming

Some of the factors attributed to exponential growth of the industry are as follows:
• Catalytic push by Digital India Mission
• Increasing internet penetration
• Availability of affordable smartphone devices
• Ease of digital payments
• Rise in sports leagues
• Increased interest in sports facilitated by a feedback loop between real and online
games

3. Categorisation of Games
Online games can be categorised in many ways. There are casual games and E-sports which
are games consumed purely for entertainment purpose for instance Subway Surfer and
Temple Run or WWF and FIFA, amongst others.
These games need to be distinguished from games of chance or games of skill. In games of
chance, a player plays the game and wins/loses on the basis of luck. In other words, chance
dominates over skill. On the other hand, in games of skill, a player’s prior knowledge and
understanding of the game plays a key role in deciding his win/loss. Here, skill dominates
over chance.
Today, games with preponderance of skill over chance are significant contributors towards
driving revenue for the online gaming industry. For instance, number of fantasy sports
platforms increased from 10 to over 140 during 2016-2019 while their user base rose from 2
million to 90 million at a CAGR of 212%.
Games of skills can be further categorised as below:

1
KPMG, The Evolving Landscape of Sports Gaming in India, March 2019.
2
EY, Playing by New Rules – India’s Media & Entertainment Sector Reboots in 2020, March 2021.
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 S.No. Game Category Description Example

1. Fantasy Sports Virtual emulation of real sports Dream11, FanDuel,

and real team/player in which etc
the outcome is based on
actual statistical performance
of the team/player and
knowledge/skills of gamer

2. Real Money Games Games in which the outcome Poker, Rummy, etc
of the game is dominated by
skill and where monetary
stakes are involved

4. Governance of online games

Online games are currently being governed through self-regulation and various state
regulations. The following seven elements have a bearing on existing and evolving
governance architecture of online games:
• Constitutional competency
• Jurisprudence on skill based games
• Existing regulation
• NITI Aayog discussion paper
• ASCI standards
• Sectoral Advertising Standards
• Position of states
4.1 Constitutional Competency:
Games involving an element of skill and chance in the online world are not currently dealt
by any specific law. In such a vacuum, they fall within the purview of Public Gambling Act of
1867. Otherwise ‘betting and gambling’ come under the purview of State List in Entry 34,
List II, Schedule VII of the Constitution of India.
In other words, State Governments are empowered to enact their own set of rules on
betting and gambling. Thus, either States have adopted the central legislation (eg. Uttar
Pradesh) or enacted new laws [eg. Sikkim Casinos (Control and Tax) Act, 2002]. However, it
may be noted that ‘games of mere skill’ are not prohibited even under the Public Gambling
Act, 1867.
4.2 Evolving Jurisprudence
Substantive jurisprudence on this subject has evolved since 2017. The following table shows
what courts have said in this regard.

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 Year Court Judgement
2017 Punjab and Haryana Competitions involving preponderance of skill are
High Court not gambling

2017 Supreme Court of India Dismissed the SLP challenging the above order

2019 Bombay High Court Fantasy sports do not constitute gambling

2019 Rajasthan High Court Fantasy sports format constitutes a game of skill.
The matter is a settled law now and that fantasy
sports are not functioning in total regulatory
vaccum

2020 Gujarat High Court Need to regulate online gaming industry to curb
illegal activities and encourage investment in the
sector

4.3 Existing Regulation

The online gaming industry has made an attempt to self-regulate itself. Therefore, Rajasthan
High Court has also held that the online gaming industry is not functioning in ‘total
regulatory vacuum’.3 The following self-regulatory bodies exist to regulate the domain:

Game About the Self-Regulating Body

Federation of Indian Fantasy Sports (FIFS) is a body which
looks after the self-regulation of Fantasy Sports industry in
India, among other things. It was established in 2017 and
was formerly known as Indian Federation of Sports
Gaming (IFSG).
Fantasy Sports
FIFS has designed a Charter for the Fantasy Sports industry
as well as established Ombudsman, a post presently held
by former Supreme Court Judge – Justice A.K. Sikri. Also,
the body has adopted Self-Regulation Guidelines on
Advertising.
The Online Rummy Federation (TORF) was established in
2017 with a view to self-regulate the rummy industry by
adopting suitable best practices of regulations from across
the world (particularly regions where rummy industry is
Rummy
regulated).

TORF certifies the online rummy platforms on the basis of

TORF standards, a set of guidelines/best practices for the

3
Rajasthan High Court, Ravindra Singh Chaudhary v. Union on India, 2019.
3
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Online Skill Gaming
industry.
All India Gaming Federation (AIGF) was established in 2016
as the apex body for online skill gaming industry. The body
strives to self-regulate the industry to ensure responsible
gaming and protection of users.

It has devised a charter for self-regulation for the industry

which is based on 3 principles – Integrity, Transparency
and Responsible Gaming.

4.4 NITI Aayog’s Discussion Paper on Online Fantasy Sports

In December 2020, NITI Aayog had released a discussion paper4 suggesting 8 guiding
principles that could regulate online fantasy sports platforms in India:
• Self-regulation must be the preferred mode of governance to ensure transparency,
consumer protection and accountability
• A self-regulatory organisation for fantasy sports should be recognised by the
Government
• All formats of fantasy sports should have preponderance of skill
• Prevent minors (below the age of 18) from using online fantasy sports platforms
• A fantasy sports contest should relate to and emulate an entire real world officially
sanctioned sports contest as closely as possible and not infuse elements of chance
that are not present in the real-world contest. However, this requirement may be
waived by the independent evaluation committee in cases it deems fit.
• All users should be subject to same set of uniform and transparent rules and
regulations. Users of the platform should also have access to a grievance redressal
mechanism.
• The platforms should be protected from criminal liability as long as they are in
compliance with these guiding principles.
• Advertisements of games should comply with advertising standards set by ASCI

4.5 Advertisement Guidelines for Online Gaming by ASCI

The Advertising Standards Council of India (ASCI) on 24th November 2020 released
guidelines for Online Gaming for Real Money Winnings. The guidelines were issued with a
view to raise awareness about the financial risks as well as other risks associated with such
games. The key points enumerated in the guidelines are:
• Prohibit showing minors as playing real money games or online games with real
money winnings
• Advertisements cannot depict online real money games as an opportunity to earn
income

4
NITI Aayog, Guiding Principles for the Uniform National-Level Regulation on Online Fantasy Sports Platforms
in India, December 2020.
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• Advertisements must be accompanied with a mandatory disclaimer reading “This
game involves an element of financial risk and may be addictive. Please play
responsibly and at your own risk”

4.6 FIFS Self-Regulation Guidelines on Advertising of Online Gaming

Online gaming operators/companies have to adopt the following principles of self-
regulation to ensure that their advertisements are socially responsible and protect users
from being exploited. A more detailed guideline framework may evolve later. A closer look
at these guidelines indicates the intent of self-regulation.

• The advertisements should never target minors or induce them to indulge in gaming
in any manner whatsoever directly or indirectly
• There should not be publishing/distributing/aiding news or information that would
aid or facilitate betting and gambling in any way
• Gaming companies should not use any phrase that misrepresent the likelihood of
winning in any manner whatsoever
• The advertisements should not present gaming as an income opportunity or an
alternative employment option
• Advertisements of gaming products or services, including games of chance or any
games that do not qualify as Games of Skill are prohibited except as may be legally
permitted or which may have approval from a reputable law firm that qualifies and
authorize a game as a Game of Skill
• There should be no mention of cash/gross winnings/gross prize money/etc (including
referral bonus, cash bonus, etc) in any mass media advertising
• No competition or ads hijacking on placement like any other brand's own keywords
on Google results or direct / in-direct attempts to show any other brand in a
negative light in any kind of promotions. Avoiding the usage of blackhat techniques
that undermine Google's algorithm and/or be disruptive to another brand
• When messaging includes winning/mention of money (on BTL like digital platforms),
it is important to avoid misleading claims.
• No ads to include words like betting, gambling, chance, luck, wager, etc. and also not
use phrases similar to "try your luck", "get lucky", "Chance to Win", "Anyone can
win", “You can win big”, which compromise skill element. There should be no linkage
with gambling, betting, wagering, lottery, etc. Ads should always promote words like
skill, intelligence, IQ, research, etc
• Violation may be reported to the gaming council and the council may consider taking
appropriate action based on the magnitude of the offense
• Direct or indirect linkage or mention of tapping frustration, depression, or boredom
of the public in lockdown to play online games/gaming should be avoided.

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4.7 Position of States
The legal framework governing online gaming platforms differ from state-to-state. Provided
below is a snapshot of the state regulations which govern online gaming:

S. State Regulation Takeaways

No.
1. Sikkim Sikkim Online Gaming (Regulation) • Online Games of chance
Act of 2008 puts into place a licensed allowed
regime to offer specific casino games • Online Games of Skill
online. The act also legalises online allowed (eg. Poker, Fantasy
sports betting. Sports)

In case of offline games, Sikkim

regulates lotteries and casino games.
2. Nagaland Nagaland Prohibition of Gambling • Online Games of Skill
and Promotion and Regulation of allowed (eg. Poker, Fantasy
Online Games of Skill Act of 2016 Sports)
permits betting and wagering on
games of skill. It recognises online
fantasy sports and poker as games of
skill, thereby, legalising them.

A game operator needs to acquire

license to offer Poker and fantasy
sports in the state.5
3. Meghalaya Meghalaya Regulation of Gaming • Online Games of chance
Ordinance of 2021 regulates games allowed
of skill and chance under a licensed • Online Games of Skill
regime. The games covered under allowed
the ambit of this law involves
wagering or betting. The licensed-
regime is introduced for both
physical as well as online gaming.6
4. Kerala Under the Kerala Gaming Act of • Online rummy played for
1960, all games involving wagering or monetary stakes is not
betting, except lotteries, are banned. allowed
‘Game of mere skill’ are exempted
from such ban.

5
Nishith Desai Associates, Gaming Law, 2019.
https://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research_Papers/Chamber_Global_Practice_Guid
e_Gaming_Laws.pdf
6
S. S. Rana & Co., Third from the Seven Sisters Adopts License-Regime for Gaming, June 2021.
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 In February 2021, the state amended
its act to impose a ban on Online
Rummy involving monetary stakes.7
However, offline rummy played for
monetary stakes is allowed in the
state.
5. Tamil Nadu The recently amended Tamil Nadu • Online Games of Skill
Gaming and Police Laws Acts prohibit allowed
all offline and online games involving
wagering or betting on games of
chance. However, games of skill are
exempted from prohibition.

In an ordinance in 2020, online

gaming which involved wagering was
banned by the state government.
However, this was struck down by
the Madras High Court in 2021.
6. Andhra AP Gaming Act (1974), AP Gaming • Online games of skill played
Pradesh (AP) Rules (1976) and AP Gaming for monetary stakes are not
(Amendment) Ordinance (2020) allowed
regulate gaming in the state.

Under the new ordinance

promulgated by the AP Government,
all games of skill played for monetary
stakes are banned in the state.
Earlier, only games of chance played
for monetary stakes were banned. 8
7. Telangana Under the Telangana Gaming • Online games of skill played
(Amendment) Act of 2017, games of for monetary stakes are not
skill are not permitted as an allowed
exception. Thus, no game of skill can
be offered in Telangana.

Telangana government adopted

regulations similar to the AP Gaming
(Amendment) Ordinance (2020)
which prohibit all games of skill
played for monetary stakes.

7
MediaNama, Kerala Band Online Rummy for Stakes, amends state Gaming Act, March 2021.
8
Khaitan & Co, End of Play – Andhra Pradesh outlaws real money gaming, October 2020.
7
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5. Potential Benefits of Uniform Regulations
It is clear from the above that different states have different approaches towards regulating
similar aspects of online gaming despite an unequivocal jurisprudence emerging from the
legal system and evolving self-regulatory mechanism. NITI Aayog discussion paper also
indicates a need for uniform regulatory structure for online gaming.
Some of the potential benefits of such a regulatory framework may be as follows:
• An industry led uniform Grievance Redressal Mechanism
• Increased revenue for multiple states
• Uniformity in rules could avoid risk of forum shopping i.e. preferring jurisdiction
where laws are more favourable
• Reduce burden on state capacity and judiciary
• Increased knowledge of sports
• Promotion of investments into real sports by online gaming companies. For instance
in December 2018, Federation of Indian Fantasy Sports (FIFS) started a program
called Stars of Tomorrow (SOT). The program was started in association with
Dream11 Foundation, Fantain and GoSports Foundation. SOT is a 3-year program to
support (financial and other assistance) young athletes aged 14 to 21 years in non-
mainstream games (eg. golf, sailing, tennis, etc). Within the first year of the program,
13 athletes from the program secured 32 Gold, 20 Silver and 6 Bronze medals in
various games9. Further, Dream Sports Foundation (the CSR arm of Dream11) under
its 'Back on Track' program provided support to athletes during COVID. This program
was launched in August 2020. It also provided support to organisations working in
the Indian sports ecosystem such as Nagaland Football Foundation, Nav Sahyog
Foundation, etc10.

6. What Do Consumers Say?

Four different surveys conducted by different agencies in the recent past have brought out a
consumer perspective on this subject11. A gist of the four surveys is captured below:
• Majority of the users stated that ‘fun and excitement’ and ‘stress relief/social
interaction’ is their key motivation to play fantasy sports
• Majority of the users consider expenditure on gaming as ‘entertainment spends’

9
https://www.outlookindia.com/newsscroll/ifsg-s-stars-of-tomorrow-athletes-win-58-medals-in-12-
months/1689583
10
https://economictimes.indiatimes.com/news/sports/dream-sports-foundation-supports-3500-needy-sport-
professionals-during-pandemic/articleshow/83598898.cms?from=mdr
11
https://assets.kpmg/content/dam/kpmg/in/pdf/2019/03/online-gaming-india-fantasy-sports.pdf,
https://assets.kpmg/content/dam/kpmg/in/pdf/2017/05/online-gaming.pdf,
https://www.koanadvisory.com/wp-content/uploads/2021/01/Building-a-sporting-culture-in-India.pdf,
https://www.business-standard.com/article/current-affairs/68-people-want-govt-code-to-regulate-online-
fantasy-sports-survey-121032201057_1.html
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• Substantive number of users has played paid contests on Fantasy Sports Platforms in
last 12 months. However, less than one-third users stated that they played fantasy
sports to win money. Overall it indicates that for majority of the people earning
money is not the prime motivation to play fantasy sports
• Fantasy sports help in gaining knowledge about real sports through research
• Increased knowledge about sports helps in playing such sports
• Increased knowledge also increases interest in viewing sports broadcast
• Helps develop interest in new sports
• Majority of the users want guidelines and regulations for online gaming

7. Conclusion
The factsheet can be distilled into a brief conclusion as follows:
• There is clear jurisprudence in favour of games with preponderance of skill
• There is existence of self-regulation mechanism
• There is rapid evolution of self-regulation mechanism including Grievance Redressal
Mechanism
• Government of India apex think tank NITI Aayog discussion paper has also suggested
self-regulation of the sector while highlighting the need for uniformity of rules
• There are clear benefits for uniformity in rules and regulations as discussed above
• Online games can be catalyst for promotion of real sports
• Consumer sentiment is favourable towards online games
• Consumer interest in new sports has expanded
Given the above, high variance in regulation of online games by different states is an
anomaly that needs to be addressed. However, that seems to be changing. For instance and
as discussed above, through an ordinance in 2020, online gaming which involved wagering
was banned by Tamil Nadu state government but this has been struck down by the Madras
High Court in August 2021. Further, the Supreme Court also upheld the Rajasthan High
Court Judgement which categorises Fantasy Sports as a game of skill in August 2021.

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