E-Sports and Online Gaming - Ecosystem and Challenges in India | Parth Verma

Introduction

In recent times, the E-Sports market in India has witnessed tremendous growth. The number of E-Sport players along with the resultant revenue generated over the last two years has almost grown by 30% annually. This is expected to rise even higher in the next few years because of increased interest and incoming investments in this sector besides opening up considerable new career opportunities for gamers. As a result, this sector has opened up a plethora of opportunities in different fields be it directly such as in the Online Gaming profession as well as in the legal and administrative fields for companies in this sector. This article aims to delve deeper into the course of the development of E-Sports and Online Gaming Ecosystem in India and the effect of recent amendments and decisions by the Courts.

What is E-Sports?

E-Sports, a short form of Electronic Sports, essentially refers to all the sports played through digital platforms or in the form of video games. Digital simulation of real-life situations would also fall within the purview of E-Sports. It is quite different from all conventional sports because these games are played virtually between the players who might be in different parts of the world. These games do not require physical meeting of the players nor much of a physical effort; the players’ effort is more on the mental side.

?In India, this has helped in providing more employment opportunities to people and has also helped India sustain itself during the tough times of Covid-19. It has turned out to be quite a lucrative sector over the past 5 years with increased investments and E-Sport competitions taking place throughout the world. Even the Indian contingent of gamers has had huge success with several Indians winning medals in E-Sports gaming events.

However, the only concern till now was the long-standing debate with respect to whether E-Sports and Online Gaming are legal or not. However, this also has come to an end with the amendment leading to the Government of India (Allocation of Business) (Three Hundred and Seventieth Amendment) Rules, 2022 which clearly stated that the Ministry of Electronics and Information Technology will oversee the functioning of the online gaming industry.

Further, the Ministry of Youth Affairs and Sports has been appointed as the nodal ministry for E-Sports as a part of Multi-Sports events. It essentially means that E-Sports has now been formally recognized by the Government – this amounts to a huge reform in the sporting sector.?

However, it has brought with it a certain set of challenges as well. In order to analyze the present challenges that are being posed, there is a need to look into the background of E-Sports in India and to trace the major developments that took place which resulted in this particular amendment.?

Background

The E-Sports Industry is not very new to this world. It started off with the introduction of video games around the 1980s which evolved over the years with 3D games being introduced in the 1990s. In India, however, E-Sports attained prominence among the people only in last few years in a big way. Online games had been introduced after liberalization of the Indian Economy in 1991 with the introduction of Gaming Cartridges. Later several games came up at the beginning of the 21st Century.

However, a major development came up in 2006 with the introduction of the XBOX 360 gaming console which was considered to be one of the best consoles during that time. However, till then people only used to play these games independently and it was only restricted to leisure gaming without it being thought of as a profession.?It was not a glamorous profession as it has become now.

This sector was later institutionalized for the first time with the establishment of Entity Gaming which became the first funded E-Sports organization in India. Indian gamers started participating in various global E-Sporting events. As per the Forbes list, India is at 16th Position in terms of E-Sports market size at the global level for 2022.

Yet, during all this time there was no official recognition on part of the Government for these events or even to the Online gaming platforms. Persons involved in online gaming till the amendment have not been supported by the Government and had to participate either through private sponsorships or through their own expenses. Before this amendment, there were no laws directly regulating E-Sports. Certain laws such as the Public Gambling Act, 1867 and Information Technology Act, 2000 had provisions only relating to the prevention of cyber offenses and barely mentioned any provisions for regulating gambling or online gaming in general.

Finally, the Supreme Court in 2021 recognized E-Sports as legal and running gaming platform as a Fundamental Right under Article 19(1)(g) of the Constitution. It was held in this judgement that Dream11, an E-Sports platform, involves skills and knowledge and hence doesn’t amount to gambling. This was followed by the 2022 Amendment in the Allocation of Business Rules, 2022 which officially recognized E-Sports and online gaming in India.

As a result, this amendment is a welcome move to strengthen the Online Gaming ecosystem in India which would further contribute to the GDP of the Country.?

Arguments against E-Sports

This sector has had quite a tainted image since its introduction among the general members of the community which continues to remain so even after the amendment. The reasons behind the same are as follows:

• Most E-Sports are still believed to be merely games of chance that involve huge financial risk as well. Much news regarding people losing their income after investing in E-Sports or Fantasy games further strengthened this belief. As a result, E-Sports is still compared with gambling or betting, both of which are unlawful.?
• For many years, it was the opinion that Online Gaming would essentially amount to a wagering agreement according to Section 30 of the Indian Contracts Act, 1872. This is so because these were assumed to be purely based on luck and neither of the parties had control over the outcomes. Since wagering agreements as per the Indian Contracts Act, 1872 are void, hence any agreement between the gaming platform and the user should also be void.?
• Various online gaming platforms such as Dream11 or FantasyLeague, etc to this date are subjected to certain degree of financial risk being involved and they disclose the same in their advertisements, stating that people should play at their own risk. They have constantly marketed their platforms under the notion that these are games of skill and knowledge. In other words, the analogy has been drawn with Stock Market trading which is also based on the same skills. However, they have no argument against the risk factor that is still present.
• With respect to Online Gaming, the concern has been much more about the lack of regulations or institutions to look into their overall functioning. However, the introduction of the amendment bringing E-Sports under the supervision of the Ministry of Electronics and Information Technology has curbed this issue to a large extent.?
• Another major concern would remain to constantly monitor whether the game is based on knowledge or purely on luck. This amendment will surely lead to an increase in E-Sports platforms some of which might try to take advantage and exploit the users by stating that these games are based on knowledge which might not always be the case. Hence, there would be a greater need to filter out the genuine platforms from the others which could certainly prove to be difficult at times.
• While encouraging the youth to take up the new opportunities that have come up in this field, there is also a need to ensure that they don’t compromise on their education. E-Sports can have an adverse impact on education and could also be highly addictive. These have tendency to deviate from the Government’s main motive of promoting education and good health by taking up this profession which could also have a detrimental impact on the population.
• Courts have ruled that E-Sports involve skills and knowledge but haven’t provided any directives or criteria to determine whether the game is knowledge based or chance based. It can be difficult to determine since most of these games have an element of risk whether it be based on knowledge or luck.

As a result, there are certain challenges that are still required to be thoroughly investigated and resolved for ensuring that the platforms and safe for the users/gamers and are well regulated for protecting the interests of both the customers and the gaming platforms and organizations.?

Arguments for E-Sports

Recognition of E-Sports is a welcome move introduced by the Government which would essentially create more employment opportunities in India. Its benefits are going to be numerous which are as follows:

• This amendment is going to play a vital role in integrating E-Sports eventually with the Olympic movement and would lead to a rise in competitive gamers.
• New employment opportunities are going to be created for gamers along with several other fields. Examples of the same can include data scientists for the purposes of analysing the pattern of Online Gaming and accordingly measuring the performance.?
• This will increase the participation of Indian Contingent in global E-Sporting events. It is also going to strengthen the case of E-Sports being introduced in the next Asian Games which has been in discussion for quite a long time.?
• The presence of a Government ministry (Ministry of Electronics and Information Technology) to oversee the functioning of the gaming platforms will secure the rights of the users and would also protect them from facing any kind of exploitation.
• The control will also keep the platforms accountable and would ensure transparency in the entire process. This would ensure that in case of any malpractice, strict action could be taken against them which would not have been possible previously because of lack of supervision.
• This would also provide an opportunity to the gamers for availing support or aid from the Government in necessary times. The Government, at the same time, to ensure greater participation and better performance in E-Sports tournaments would provide all facilities and support to the gamers. In other words, E-Sports would now be regarded at the same level as all other field sports such as cricket, football, or badminton.
• It would encourage greater investment by several stakeholders in this ever-booming industry. Additionally, it will also help in improving the infrastructural facilities for the training and coaching of E-Sports athletes.
• India could possibly become a great global leader in E-Sports Sector and could earn a greater amount of foreign exchange by inviting investments for different events and for gaming platforms. The reason behind it is the unprecedented increase in E-Sport platforms and increased fan power and craze for it.

Due to all these reasons, the Supreme Court’s decision, coupled with the amendment rules, is going to bring about large-scale reforms in the Sports Industry of India and would ensure more participation of gamers in global events which they were previously deprived of due to certain economic and political factors.

Way Forward

The E-Sport and Digital Gaming market is gaining more prominence and popularity among the general population and this graph is only projected to rise in the next five years. As a result, more E-Commerce platforms are willing to invest because of its highly lucrative nature.?

However, it has also posed certain risks which are required to be addressed and the Government institutions have a vital role in effectively dealing with them. For now, the main focus should be on achieving a balance between the interests of gamers and the gaming platforms so that neither the platforms feel that their Right to Profess their trade freely is being restricted nor the gamers or users feel cheated or exploited by these platforms. E-Sports are said to be a game of skills and knowledge by the Courts. As a result, it's the responsibility of the Ministry to filter out all those platforms which are purely based on chance from all others.?

This market is continuously developing and is posing newer set of challenges which should be effectively met. Hence, active institutional support coupled with stringent regulations will shape the path of this industry in years to come. This ecosystem can survive only if there is complete support from the institutions and encouragement for investors and the gamers.?

At present, it still remains to be seen how this amendment is going to affect the E-Sports industry in India and even at a global level.

References

• https://thebridge.in/gp-article/esports-india-growing-industry-21733?infinitescroll=1?
• https://sportstar.thehindu.com/other-sports/indian-government-gives-official-recognition-to-e-sports-olympics/article66311172.ece?
• https://www.scconline.com/blog/post/2022/08/17/regulation-of-esports-in-india/?
• https://economictimes.indiatimes.com/news/india/government-gives-official-recognition-to-esports/articleshow/96550077.cms?
• https://blog.turnip.gg/esports-in-india/?
• https://timesofindia.indiatimes.com/blogs/voices/the-rise-and-rise-of-esports-in-india/?

?Parth Verma is a second year BBA LLB student at Christ, Bengaluru