Need for Designating Regulatory Parameters for Skill-Based Gaming in India

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The rebranded SPice India & Sri Lanka Merger event, held in Colombo in February 2024, brought together industry experts to address a pressing concern faced by India's online gaming industry: the regulatory challenges surrounding skill-based gaming (SBG) in both India and Sri Lanka.

One of the crucial highlights of the Colombo "SPice" Merger Conference was the panel discussions revolving around the themes of regulation, innovation, and responsible play, echoing the sentiments shared by the wider gaming community.

Moderated by Vidushpat Singhania, Managing Partner at Krida Legal, the panel comprised iGaming experts such as Abhinav Shrivastava, Partner at LawNK, Gourav Pilania, iGaming Consultant - Content, and Manmohan Kohli, Manager - BD & Govt. Relations at GLI India.

Together, they emphasized the necessity of a balanced policy and regulatory framework to foster responsive gaming and industry growth in South Asia and beyond.

The panel shed light on India's intricate legal landscape concerning skill-based gaming, marked by varying legislation across states, leading to ambiguity for companies.

Despite the availability of scientific tests to classify games, most operators overlook these evaluations. They emphasized the importance of legislative clarity due to potential penalties for noncompliance, particularly regarding games involving predictions or resembling betting activities.

The panel also underscored the need for industry-wide cooperation. Similar to Sri Lanka, India currently does not have a uniform or central legislation for online gambling, which may affect some forms of server-based gaming (SBG) offered in casinos.

In this volatile regulatory environment, international iGaming companies are avoiding India, sending an unwanted signal to many other potential foreign investors. Additionally, the iGaming industry has been notified by tax and regulatory authorities of delays in the publication of recognized parameters as well as in the establishment of an independent regulatory body.

Emerging Technologies Pioneering Innovation in iGaming

Despite the regulatory hurdles, India's skill-based gaming industry is witnessing remarkable innovations as it harnesses emerging technologies like 5G, AI, ML, and VR to deliver responsive, unique, and immersive gaming experiences. Various factors are contributing to this evolution:

Fantasy Sports Platforms: AI algorithms can act as virtual game masters, dynamically adjusting game difficulty, pacing, and storytelling based on player actions and feedback. This adaptive approach ensures that players are constantly challenged and engaged, leading to a more immersive and rewarding gaming experience. The proliferation and penetration of mobile gaming present new avenues for innovation in SBG experiences, underpinned by responsible play principles.

Responsible Play: ML algorithms can analyze player behavior patterns to detect signs of potential harm or distress, such as excessive gaming, cyberbullying, or online grooming. Additionally, AI-driven identity verification systems can help ensure that players are who they claim to be, reducing the risk of impersonation, fraud, or unauthorized access to accounts.

Thus, key focus areas include robust age verification measures, self-exclusion programs, and collaborative efforts among stakeholders to establish responsible play standards. During the panel discussion, Mr. Manmohan Kohli of GLI India highlighted whether it would be possible to have an objective test to determine addiction and harm according to responsible gaming standards.

While the central government has introduced Online Gaming Rules (2023) to provide a regulatory framework, challenges persist due to the absence of an integrated self-regulatory body and uniform legislation across India, mirroring the situation in Sri Lanka. The lack of clarity has discouraged international iGaming companies from investing in the region, highlighting the urgent need for a stable regulatory environment.

Conclusion and Way Forward

"By the end of the session, we concluded that much more regulatory clarity was needed from the government to support this industry. We also discussed that the industry now needs to be viewed as a mode of entertainment rather than a sin and we concluded that considering the current landscape, there is no clear operational distinction between a game of skill and a game of chance," said Vidushpat Singhania, Partner at Krida Legal.

The discussion concluded with a call for clarity and collaboration to address key challenges facing SBG in India and Sri Lanka. This includes establishing clear definitions of SBG, revisiting prohibitive wagering clauses, and shifting the narrative surrounding iGaming from taboo to legitimate entertainment. Learning from global success stories and adopting best practices tailored to India's unique contexts could foster responsible industry growth.

Additionally, the panel unanimously vouched for the need to legislate with a long-term vision for a stable and predictable regulatory framework. This will help strike a balance between promoting innovation and safeguarding players through responsible gaming practices, which is key to building a sustainable industry.

The panel also urged Indian legislation to adopt global standards on gambling, permitted games, responsibility for operations, and taxation. The government should consider regulating the entire industry with reasonable tax rates so that the AVGC (Animation, Visual Effects, Gaming, and Comics) policy of the government realizes its potential.

"It was good to have a technologist, someone from content and a lawyer speaking together and so it was incredible to gather insights from across sectors. Stakeholders in the industry are also clamouring for a national regulatory framework," remarked Abhinav Shrivastava, Partner, LawNK.