How secure is the online gaming industry?

Much like the banking, insurance and retail industries in India, which migrated from the brick-and-mortar model to the online model in the past few years, the gaming industry in the country too has moved online.

The nearly-₹1,200-crore industry is charting up an impressive annual growth rate of around 70 per cent. Yet, it is facing certain peculiar issues — the widespread perception that all card games involve gambling. This leads to questions — what are the rules of the game, and is the industry playing by the rules?

The online gaming industry honchos swear by the rules that govern their world. “Online games are conducted through certified and tested software, and all transactions take place through banking channels. Also, the history of the games played in the past is easily available in online games,” says Trivikraman Thampy, co-founder and Co-CEO of Play Games24x7, one of the largest players in the industry.

Since this is online, there is no scope for cash transactions, says Deepak Gullapalli, CEO, Head Infotech, another large player. “All transactions are conducted through verified and regulated banking channels. Also, the quantum of stakes are capped on our platforms, unlike offline games (played at clubs) where there can be very high stakes or no-limit tables.”

Moreover, companies here pay GST on every game played and Income Tax on the overall income. “The industry pays about ₹Rs 150 crore a year as taxes to the government,” says points out Guallapalli.

In India’s online world of games, both games of skill and chance are played. However, the Supreme Court has laid down that games of skill, such as rummy, are allowed to be played for stakes (money), while games of chance — such as teen patti and flush-and-dice games, are not allowed to be played for stakes.

Though the apex court has not mentioned anything about poker and fantasy games, the Karnataka High Court and the Punjab High Court have declared poker and fantasy games of skill.

So, what about games of chance played online? According to Thampy, games of chance such as teen patti are offered in a ‘freemium’ (pun on free but premium) format on app stores. In this category, which fall under social games, players are allowed to buy additional chips to play for entertainment, but there is no way of winning prizes or money. Since there is no cashing out, these games cannot be treated as gambling games under Indian laws, but are merely games for entertainment.

While complaints of games of chance being played in the guise of games of skill are commonplace at brick-and-mortar avenues, online players make it evident that it is not possible in their industry. This is achieved in various ways. For starters, these companies have put in place strong anti-collusion and anti-fraud detection mechanisms to ensure integrity and fairness in game-play, says Gullapalli.

Before playing for money, all players are required to get their phone numbers, ID and address proof verified so that the companies can carry out appropriate KYC checks, “much like those mandated by the RBI for mobile wallets,” says Thampy.

Also, not everyone can play these games. According to Thampy, the game-playing audience, both in skill and social games, is predominantly males of all age groups over 18.

Gullapalli had an interesting point to make. He said that while the player base comprises largely working professionals and businessmen, “a fair share of housewives and retired senior citizens too” play on their platform, adding to the respectability of the industry.

As part of its expansion plans, the online gaming industry is striving to popularise social gaming — a segment growing at over 100 per per year, thanks to the proliferation of smartphones and, now, extremely cheap data. Social games are not played for money. However, players can make in-app purchases to access certain levels and extend it for longer durations. The three biggest Indian companies in this space are Octro, Moonfrog Labs and Play Games24x7.

“Recently, we launched our social games vertical, Witty Games India. We are developing games inspired by the local community games prevalent in India. Our new game ‘In-between’ is an example. It is a three-card game inspired by the card players on the street corners of India,” said Gallapalli.

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