AIGF presents "Game On: India", a monthly round-up of the latest policy and other developments in the online gaming space Subscribe Now!

Welcome to the first edition of ‘Game On: India’, a newsletter on all things online gaming from the All India Gaming Federation (AIGF).

We are the oldest, largest, and most diverse industry association for the online gaming sector in India. While AIGF started as a body of Pay to Play (P2P) platforms, today we represent the largest number of game developers and some of the biggest Web 3.0 gaming companies in the space.

Our monthly newsletter will bring to you the latest developments in the online gaming sector, including regulatory movements, industry news covering new launches, emerging revenue models, mergers and acquisitions, tournaments and more.

Keeping up with the ethos of informed and knowledge-based engagement, we want this newsletter to be useful to all stakeholders across the gaming fraternity, be it gamers, esports athletes, regulators, investors, or a casual reader looking to understand the growth and potential of online gaming in India better.

We would love to hear your thoughts, suggestions, and feedback. If you liked these updates, or want to see something specific covered here, do reach out to us at [email protected] .

Here we go with round 1!

Best,

Roland Landers????????????

Right now, is the online gaming industry's moment in the Indian sun. The total number of online gamers grew from 390 million in 2021 to 420 million in 2022, with the number of paying gamers seeing an increase from 80 million in 2020 to 95 million in 2021 to 120 million in 2022. The number of professional esports players are set to rise to 1.5 million by 2025.????????????

?All this play is also serious work. According to a recent report by Lumikai, Indian online gaming is a 2.6 billion USD sunrise sector with 38% CAGR and set to reach 8.6 billion USD by 2027. Currently, Pay to Play (P2P) constitutes between 60 – 70% of the revenue of the industry. The gaming sector is expected to add 100,000 jobs to the Indian economy this year. For investors and brands, opportunities are ripe.

The total venture capital funding to Indian pay to play gaming startups was over 500 million USD between 2014-2020. However, the pay to play gaming industry attracted over 1.8 billion USD between 2021 – April 2022. Web3 gaming firms raised USD 620.5 million across 32 deals in India in 2022.

Today, there are over 1,100 gaming startups and over 15,000 game developers in India. India got its first gaming unicorn in 2019, and since then has seen 2 more unicorns and 1 successful IPO . It isn’t just about arcade-style mobile phone games or esports. Score-keeping and competing permeates many other digital experiences now, like marketing , education and fitness . These gamification elements have shown increased consumer engagement.????????????

• There is a visible effort by the government towards creating an environment of support, predictability, and stability for the industry and those looking to invest in it.
• Encouragement for the Indian online gaming comes from the highest level of government, with the Hon’ble Prime Minister, Mr. Narendra Modi speaking about the industry’s potential from time to time. The Hon’ble PM noted the scale of gaming market internationally and called for India to increase its footprint in it.
• Earlier this year, the federal Ministry of Electronics and Information Technology (MeitY) was appointed as the nodal ministry for online gaming. Meanwhile, the federal Ministry of Youth Affairs and Sports (MYAS) is now officially in charge of esports which are part of multi sports events.
• In January this year, MeitY released the draft amendments to the IT (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, proposing regulations for the online gaming industry. Industry players have welcomed the government’s move.
• While releasing the draft bill, the federal IT Minister of State, Mr. Rajeev Chandrasekhar that the federal government would like the online gaming ecosystem to grow and be an important catalyst to India’s one trillion dollar digital economy goal by 2025-26. He also said that government envisions a bigger role for startups in the online gaming industry. As for gambling, while it is a state subject in India, federal IT Minister Mr. Ashwini Vaishnaw has recently spoken in favour of a uniform central legislation.
• Moreover, the Finance Bill 2023 has simplified taxation on winnings from online games, moving towards taxing cumulative annual net winnings. The government has also promised clarity on GST on online gaming in the coming months.
• The federal Ministry of Information and Broadcasting (MIB) has made a concerted push for the development of the Animation, Visual Effects, Gaming and Comic (AVGC) industry. The AVGC Taskforce announced in the 2022 Budget, recently proposed a National AVGC-XR Mission for the growth of the sector.
• The federal government has also been cracking down on illegal offshore and onshore gambling apps and sites.
• MIB has issued two advisories last year asking private television channels, digital news publishers and OTT platforms to refrain showing advertisements of online gambling sites and their surrogate advertisements.
• The federal Ministry of Consumer Affairs has also strongly taken up the issue of these surrogate advertisements.
• Recently, MeitY 138 banned gambling apps and websites too.
• The proposed Digital India Act is likely to have measures to safeguard children including mandating anti-addiction measures and preventing children below the age of 18 from making in-game purchases.

Now, we get down to the game. Since this is our first newsletter, we will cover some important developments from a little before February as well.????????????

Federal-Level Policy Developments???????????

• MeitY in January 2023 released draft amendments to the IT Rules 2021, proposing regulations for the Pay to Play gaming industry. The rules are the first piece of regulation that provide specific legal recognition to online gaming under a federal statute. The draft amendments do not make any distinction between games of skill and reiterate that all games of skill are equally regulated under law.
• The draft amendments offer a definition of online games and identify entities offering them as online gaming intermediaries. The rules provide for a light-touch regulation, where most of the day-to-day compliances will be undertaken by a self-regulatory organization.
• The draft amendments require that online gaming intermediaries register games with the self-regulatory bodies, which in turn, must register with MeitY. Under the draft provisions, online gaming intermediaries also have due diligence requirements such as with KYC compliance and grievance redressal. Importantly, AIGF P2P members already undertake most of these diligence measures as part of the AIGF Charter, implemented by the All India Skill Gaming Council (AISGC).
• Consultations with stakeholders from the gaming industry on the proposed amendments have concluded. The final rules are expected to be out by end of February or in March 2023.
• We believe that these rules will have a positive impact on multiple levels including:
• While many states are looking into regulating online gaming, the hope is that they will follow the approach laid out by the federal level law - promoting online gaming while also curbing gambling. This can be seen from the recent example of Chhattisgarh Assembly passing a new law to ban online gambling and exempting games of skills.
• Light touch regulation will allow for continuous innovation of games, while curbing games of chance.
• The rules will also pave the way for all skill-based games being available on mobile app platforms.???????????????

Tax Developments???????????????

• The Union Budget 2023 provided clarity on direct tax for online gaming. It made a critical distinction between games of skill and games of chance, classifying them into separate sections and introducing a section 194BA for online gaming. Under the new section, tax will be applicable only on net winnings of users and will be deducted at the time of withdrawal of winnings or at the end of a financial year.
• Updates are expected on the GST regime for online post the next meeting of GST Council. Online gaming currently attracts a GST of 18% on gross gaming revenue (GGR) for games of skill. Last year, the federal Ministry of Finance had constituted a Group of Ministers to look into online gaming, casinos and race courses. This group was to deliberate if GST should be uniformly 28% across all categories, charged on the entire fee paid by a player or on the GGR. It has submitted a report with divergent views on the matter, with a majority of members recommending 28% but on GGR for skill gaming. The decision is now pending with the GST Council. (Read more )
• Recently the Rajasthan High Court in an interim order passed in a case against a pay to play company held that show-causing skill gaming companies for not paying GST on the total entry amount is an abuse of the process of law. This is similar to the stance taken by the Bombay High Court in 2019 in another case where it held that GST should be paid on GGR.
• The AVGC Promotion task force under the Ministry of Information and Broadcasting issued recommendations for boosting the sector. A ‘Game Development Fund’ to educate players on responsible gaming and encouraging startups to file for patents and increasing their access to technology were a few of them. (Read more )

State Level Policy Developments

• States are trying to regulate online gaming in parallel to the central government’s deliberations on a country-wide law to regulate the sector. Examples of legislative and judicial movement at the state level over the last few months include:
• Chhattisgarh recently passed a law banning both online and offline gambling. This is the first time that a state has brought an amendment to its Public Gambling Act since 2017, and provided specific exemption to games of skill.
• Meanwhile, the Andhra Pradesh High Court has directed the state government to establish an independent committee to decide if online rummy is a game of chance or skill. Importantly, the Kerala and Karnataka High Courts have previously already held that online rummy is a game of skill.????????????

Our goal as the largest online gaming industry body is to bring together diverse stakeholders in policy conversations. To that end, we supported several consultations around the draft amendments regulating online gaming, including The Quantum Hub , The Dialogue , CCAOI and Medianama . We also conducted several closed-door discussions with multiple investors and other online gaming enabling companies.

• We participated in multiple government consultations and shared inputs on the draft law. Key issues of self-regulation, responsible gameplay, KYC authentication and assessing games of skill were raised in our submissions.
• We have appealed to the Tamil Nadu government to reconsider its law banning online games in the state, and avoid pushing people towards offshore betting sites. The Governor of Tamil Nadu, who is yet to assent to the bill, has sought clarity on issues such as previous judgments from the Madras High Court., which AIGF has also raised. We also approached the Madras High Court on this issue in November 2022.
• We also participated and submitted detailed comments in the recent closed-door consultation organised by the Government of Madhya Pradesh, regarding prohibition of online gambling and regulation of online gaming.????????????

• India will send an esports contingent to the 2023 Asian Games in Hangzhou, where esports will be a medal sports for the first time and there will be 24 medals up for grabs.
• The 14th India Online Poker Championship concludes , with a record-breaking prize pool of INR 48 crore (USD 5.79 million), and 5,600 participants competing for it.
• Studio Sirah raised $2.6 Mn in its pre-series A funding round led by Kalaari Capital and Lumikai.
• NewGen Gaming raised 1 million USD from nCore Games.
• Jio signs a ten-year strategic partnership deal with French cloud gaming service Gamestream, for its cloud gaming platform JioGamesCloud.
• February was a busy month for marketing teams of Pay to Play companies. Zupee , MyTeam11 and Junglee Games launched campaigns with their new brand ambassadors.
• A series based on the life of India’s first woman poker player, Muskan Sethi was announced .????????????

The All India Gaming Federation (AIGF) is the apex industry body for online gaming in India. Being the oldest, largest and the most diverse industry association for online gaming, AIGF’s overarching vision is the growth of the Indian online gaming ecosystem in an open, safe, and accountable manner, and making online gaming a cornerstone of Digital India. At AIGF we want to support and push the vision of Create in India and have the Indian gaming industry compete globally. Find out more about us here .?????