This article is written by Vaishali who is pursuing a Diploma in Cyber Law, FinTech Regulations and Technology Contracts from LawSikho.
Table of Contents
Introduction
Entertainment Sector has widened its horizon in the virtual space and has given Gaming Industry a shelter to bloom and flourish. People of different age groups have accepted and adopted the games because of the involved excitement, enthusiasm, unexpected tricks, attractive components and accessibility.
If we look at the business other than the gaming business, they have witnessed a detrimental impact on its revenue generation and even functioning in the ongoing COVID-19 pandemic. It is the Gaming Business which is gaining rapid and constant popularity in these times.
For the past few years, gaming business in India has enjoyed tremendous growth with many new entrants in this market. Achievable target market, more players and potential customers have attracted companies to enter into the Gaming business and this means a cut-throat competition amongst the competitors to stay ahead of the competition and capture the vast client base and monetizing the opportunity.
Steps to start an online gaming business in India
To start an online gaming business, you need the following:
-a professional deveoper, to analyse the games in demand and develop a structure on the same line
-Gaming software, to set up the whole structure and add lucrative content and offer so that the gamer spends more time and plays more to collect the points or offer related belongings.
-a merchant account, for smooth monetary transactions. It needs to be taken care that it accepts all the bank cards and the gamer has a best experience in transacting for any game irrespective of the game module selected by him/her.
-a dedicated server, it’s a must as a dedicated server offers more memory, storage capabilities in comparison to any other hosting solution and also enables fast connection to the client’s favorite game and ensures stability and reliability.
Factors to be considered before starting a gaming business
Essential factors to be taken care of are:
- Handpicked Gaming Software Provider- This is the most crucial decisions to be made since you will be entering a partnership relation with your Gaming software provider. The quality of services, fee, term of contract needs to be valued minutely.
It is important that the Software provider commands the knowledge and experience in the same field. Moreover, his understanding of the online gaming business and experience in launching successful online casinos will be a win-win.
- Attractive content on the gaming website to attract more customers.
Once you decided to enter the online gaming market along an established name in the Gaming industry, there are a few questions you need to answer before you proceed:
What software platform will you use on your online gambling site?
What about a live casino module? These days, professional dealers, live video streams and user-friendly interfaces bring the casino feel into players’ homes.
- Taking prior permissions and required license for the decided and targeted jurisdictions and location of operation. For valid operation of online gaming business throughout India, the license issued as per the Nagaland Act and Rules which ensures that the game obtaining license is a game of skill and does not fall under the category of gambling, is enough except for the states like Assam, Odisha, Bihar, Telangana and Gujrat where it expressly prohibits betting and wagering of any sort.
Further, it lists certain obligations to eb met by the applicant willing to obtain the license as per the said Act and Rule:
- Applicant must not have any criminal history.
- India should the epicenter of the stakes controlled by the Applicant.
- Applicant needs to deposit to the Director of the State Lotteries, Nagaland the application along with the fee of Rs. 50,000/-.
- Applicant needs to ensure that the technological operation, dedicated server, support platforms remain within the territorial limits of India.
- Choose a payment system provider
When you start an online gaming business, it is crucial that you enter into an agreement with the payment system provider, on the agreed terms and conditions so that the business runs smoothly without any technical hassle.
How can you select the Gamily Software Provider? Below listed are the services which are mandatory in terms of delivery in order to have an online gaming business. Therefore, your Software provider must be capable to deliver:
-complete services
-payment processing
-integration with all major e-merchants
-multi-currency support
-advanced risk management
-fraud detection
- Work on your website’s design
The way your website looks is very important.
- Implement a sound marketing strategy including loyalty and retention program.
Your main goal should be to position your online casino as a quality, trustworthy business.
Let us look at the games expressly permitted in India:
- Casino (permitted in Goa and Sikkim);
- Lottery (permitted in 13 states PAN India);
- Crossword and Prize related games;
- Betting on Horse Race (permitted in cities such as Pune, Mumbai, Kolkata, Bengaluru, Delhi and so on in certain racecourses);
- Online gambling (permitted in few states).
States offering online games in India
Gaming and gambling falls under the State List as per Indian Constitution. Indian State do not prohibit games in exchange of real money. States such as Assam, Odisha, Telangana, prohibits games based on exercise of skill of the gamer or the players.
In the state of Nagaland, as per Nagaland Prohibition of Gambling and Promotion and regulation of Online Games of Skill Act, 2016 and Nagaland Prohibition of Gambling and Promotion and regulation of Online Games of Skill Rules, 2016, based on the license issued by the state Online Skill games can be offered.
In the State of West Bengal, the Act mentions the procedures and requirements. According to the Act, an application seeking permission to organize games of skill needs to be mandatorily made to the Police Commissioner (for the public places) or to the District Magistrate or Sub-Divisional Magistrate (places other than the public places).
In Goa, the Public Gaming Act, permits the hotels and offshore containers to establish common gaming houses. The Act specifically provides provisions related to the functioning of licensed games of electronic amusements. License can be applied for 20 electronic amusement machines and the License holder is bound to pay the license fee subject to yearly increase.
Applicability, fee and validity of license
Under the Online game of Skills, license holders will have a free hand to offer the gaming services to all the states where games of skills have been allowed.
The Licensee is bound to pay royalty of 0.5% on the gross revenue generated, excluding the tax, payment gateway charges, cashbacks and so on.
License stands valid for a term of five years from the date of issuance.
Case laws
- In Satyanarayan Case, Hon’ble Supreme Court held that Rummy was a game of skills and on basis of this gambling law should not apply to it. This is how various courts and states came to a dramatic conclusion that games of skill is outside the purview of gambling laws of the relevant states.
- In M.J.Sivani & Ors v State of Karnataka, it was held by the Hon’ble Supreme Court that Poker was a game of chance. It was further stated by Hon’ble Supreme Court that presence of prize is an essential element of gaming and gaming mandatorily involves playing of any game be it of skill or chance for exchange of money or consideration which is money’s worth.
Conclusion
In September 2019, KPMG in its report stated that by 2024 Indian Online Gaming Business will be worth INR 250.3 billion.
Under the Modi Government, the Digital India drive has been working on infrastructure improvement and with better internet connection, the Online Gaming business has made its mark even in the remote areas of the nation. This factor has added a huge customer base for this business to flourish.
Keeping in view the need of a uniform law, A report by the Law Commission of India was released in July 2018 titled ‘Legal framework: Gambling and Sports Betting’. After this report, a press release was done emphasizing ban on betting and gambling in India. However, it was later decided to rethink and regulate the betting and gambling laws The Report is with the Government to reconsider.
In the year December, 2018, Sports Bill was introduced in Lok Sabha with Law Commission’s report as its backbone. The Bill stated the following aims:
- Preservation of integrity of sports in India;
- Introduction of regulatory regime for online sports betting.
However, the Sports Bill lapsed with the dissolution of the Parliament and till now it has not been reintroduced.
In order to maintain the uniformity of Gaming and Gambling law in India, it is important that Central Government take measures and formulate laws that protects not only the players but also the company i.e. the online gaming businesses in India. A clear legal framework is need of the hour to cater the modern day’s demand in the emerging and flourishing Gaming business.
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