Professional Documents
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Online gaming also can refer to the idea of gambling over the Internet, which
doubles up as an online casino or poker room. In terms of video games, online
gaming is growing in popularity for a variety of reasons. Gamers can easily find
opponents of an equal skill level when playing a head-to-head game over the
Internet. Some online games charge a monthly fee for access to the video game
software.
In fact, we have no laws that can effectively deal with legal issues of online gaming,
online gambling, online fantasy sports, e-sports, etc in India. As a result we have
prohibitions and restrictions that have been imposed by central laws and laws of
different states making the entire gaming and gambling activities murky.
Even, the Supreme court has refused to decide about legality of online poker, online
rummy and online card games As gambling is a state subject, different states have
reacted differently in this regard. While some states have adopted a very liberal
approach others have taken a conservative approach. While some have banned
them some have allowed them.
Legal experts say India lacks techno-legal framework that can manage online
gaming and online gambling related issues. But so far there are no laws that could
effectively enforce in India so far.
They say for instance, although online game “Pokemon Go” has not been launched
officially in India yet users and gamers are taking advantage of virtual private
networks (VPNs) to change their locations and catch Pokemons in New York and
London while sitting in their homes.
Similarly, geo-location restrictions can be bypassed in India using proxies and VPNs
thereby violating the sovereignty and legislative powers of various states.
This is just a single example of how techno-legal requirements are ignored in India.
There are many more issues that are simply ignored by online gaming and online
gaming industry and stakeholders.
As the Indian government itself is not aware of these issues, these websites and
businesses thrive as they remain away from one’s legal reach. In the backdrop of
this situation, it remains to be seen how effective the ban on online gaming can
prove to be in Telangana State.
Game of skill and Game of Chance
The Supreme Court of India has termed skill of superior knowledge, training, attention, experience
although the element of chance cannot be entirely eliminated. Whether the dominant element, is skill
or chance is what determines the character of the game. As per the court, a game of chance is one in
which the element of chance predominates over the element of skill and a game of skill is one in which
the element of skill predominates over the element of chance, a game of skill might involve an iota of
chance is considered as legal in India.
No games of chance are offered for stakes in India. However, games of chance like ‘Teen Patti’ are
offered in a ‘freemium’ format (social games) on the Google Play Store on Android phones and the
App Store on iPhones. In these games, people can 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.
Games in India that are considered as skilled games
Traditional card games such as poker and rummy have taken the mobile gaming industry by storm
as card games on social networks find wider acceptance in India, being the second largest
smartphone market in the world. According to a report, 8% of games being developed in India are
casino-based card games, explaining the popularity of a hassle-free gaming experience, ease to log
in from any location at any time, and there is no need to hunt for a gaming partner.
India’s online poker industry is estimated at $110 million which is slowly becoming a profit-making
model, growing at a pace of 60% - 70% a year. Best known online poker sites like Play Game24x7,
Head infotech, Adda52, Dream11, Junglee, Octro Inc, Spartan Poker, Poker-Baazi and Moonfrog Labs
generate profits on annual revenues of at least Rs. 5 crores. The audience both in skill games and in
social games, is predominately male, India has about 1000 professional poker players of which 95%
of them are males. While males of all age groups over 18 years play, over 90% of revenues are
generated from people over 25 years of age, that is those with disposable income to spend on
entertainment.
With regards to betting on online casino-based card games, it has been observed that Indian gamers
ageing above 25 years with disposable income, find it practical to bet on these games which shows there
is a market and acceptability for spending money for entertainment and leisure purposes either to earn
more or during commuting hours or as a relaxation purpose.
Despite demonetisation and the rise of digital payments oiling the wheels and mobile network
coverage also improving, the vast majority in India remain unwilling to spend money on mobile
games.
The central issue is a cultural one, it seems, and something that will take a considerable amount
of time to overturn.
However, the sheer size of India's mobile games market means that there is still money to be
made in the margins. Most local developers who are driven by monetisation targets have chosen
to go after ads, and hence focused on high downloads as a means to achieve it.
As far as monetising games in India is concerned, it’s clear that that the per user spend is much
less than it is in other countries and therefore the advertising rates are also lower per click.
For example, cricket games on Android which have hit the Top 100 Games list, (i.e. overall DAUs
of about 10,000) have managed to make at least $100 to $300 per day on advertising only. This
number can also increase depending on how well the advertising has been integrated into the
game and the quality of ads that the ad networks are providing the game.
The latter usually requires a lot of consistent relationship management with the ad networks
directly. When a game hits the top 10 games list, along with a good number of returning players,
games can make $1,500 to $2,000 per day in advertising alone. The games on Android in the
50th to 75th positions of the top grossing games charts make $200 to $300 a day.
If a developer has a game with solid distribution and good enough monetisation design built into
the game to manage to hit the top 75 grossing charts in both Android and iOS, they could easily
make $400 to $600 a day on IAP alone.
On Android alone, a game in the 10th position could make as much as $1,500 a day and the
number one game on the chart could possibly make close to $7,000 a day.
for developers to actually make substantial revenues using IAP monetisation in India, the design
of the monetisation in their games needs to be as aggressive as Clash of Clans or Teen Patti.
Other include avenues like: sponsorship integration, one-off deals, embed deals, try and buy on
specific devices, direct deals with premium distributors, third-party distribution stores, etc. this is
pure business development work, requiring a constant focus and a solid sales initiative to make it
successful.
There are very few who've generated significant revenue from in-app purchases within mobile
games in India, and these are predominantly social casino titles.
Special offers at a good discount from what's available in their in-app shops.
Different formats within the game, so players have more fun. This usually results in
spending more time, and therefore a greater likelihood of situations that influence
purchase.
Almost all the top-grossing local titles have a way of users purchasing for high amounts
and sharing the same with friends.
This is a good way to overcome the barriers to online payment in India.
A friend of yours may really want to make in-app purchases, and is willing to give you
hard currency in exchange for you making the online purchase on their behalf.
is among more than 50,000 people who play on homegrown online poker startups such as Adda52, Poker-
Baazi and Spartan Poker every month.
Online poker is a profit-making model,” said Rajat Agarwal, cofounder of Spartan Poker. Though it is difficult
to estimate the size of India’s online poker industry, according to Agarwal, reports last year pegged it at
about $110-120 million. That may seem a small size for a largely profit-making industry but the potential isn’t
lost to outsiders.
According to Delta Corp Chief Financial Officer Hardik Dhebar, Adda52 was a debt-free and cashgenerating
online poker startup that clocked revenues of Rs 47 crore in calendar year 2015 with core operational
(EBITDA) margin of 30-35%.
Besides focussing spends on a strong software, we had to focus on Google adverts maximisation and using
the right (search engine optimisation) techniques… Also, not hiring excessively and being one of the first to
enter the market in India helped.”
nd this industry is growing big-time – by 60-70 per cent a year. But it faces certain challenges, such
as those related to perception (gaming being equated with gambling and its vices), and varied rules
by some States in India, despite Supreme Court judgments setting the parameters.
The game-playing audience, both in skill games and in social games, is predominantly male. While
males of all age groups over 18 play, over 90 per cent of revenues are generated from people over
25 years of age, that is, those with disposable income to spend on entertainment.
This is an entertainment-only business and our customers are predominantly males aged between
25-40 years of age. The user base largely comprises working professionals and businessmen, but we
also have a fair number of housewives and retired senior citizens playing.
We also have strong anti-collusion and anti-fraud detection mechanisms in place that ensure
integrity and fairness in gameplay. Our platforms are used only for rummy, which is a game of skill
as settled by the Supreme Court. At offline clubs, there are complaints of games of chance being
played in the guise of rummy.
We collect identification documents to verify the user, and set dynamic purchase limits based on
the user’s gameplay as a part of our ‘responsible gaming’ measures. These limits are set based on
the player’s activity which is closely monitored – our objective is to avoid users spending
irresponsibly on our platforms. We pay GST on every game played and Income Tax overall. GST and
Income Tax account for at least Rs 150 crore for the industry.
A future growth driver will be availability of mobile wallets as payment instruments on the Google
Play Store, which is currently not available.
Games like tic-tac-toe, connect the four, box it are available online but not as wagering based
games.
Games like bejeweled, mahjong, chess and backgammon can be found online as wagering games.
4. Indian Gamers
Behavioural pattern of Indian gamers is set with mostly played on free-based games on Web or App,
which has seen to be changing in last couple of years. More than 940,000 apps are installed on over
2.1 billion devices. At the same time, the average time spent in gaming apps has shot by 44 secs and
revenue has seen a 53% year on year growth. Games in board and strategy, racing, sports have seen
an upwards rise of 29%, 26% and 9% year on year.
According to MARC research we suggest the following strategies which we found most suitable for
revenue generation:
As per MARC findings, it would be fitting to launch 4 games in the start, as these games are
highly played for entertainment but unexplored in wagering area:
Tic-tac-toe
Connect Four
Box It
Carrom
A focus group of 50 individuals was conducted, revealing 18.8% were interested in skill and
puzzle games.
The online skilled gaming industry in India has still yet to be developed, with 14% played by
casual gamers. Thereby, showing a promising growth at the initial stages to capture a more large
and targeted audience of professional skilled gamers.
With skilled games and social games been predominated by male, with all age groups over 18
plays, 90% of revenue is generated from people over 25 years those with disposable income to
spend on entertainment. In addition, there is also a fair number of housewives and retired
senior citizens who spend time in playing.
With regards to the perception and mentality of Indian gamers with respect to wagering and
betting is still backwards, not completely open to the engagement for entertainment purpose
which would be a steady growth
For the purpose of generating revenue initially a mixed model or a combination of 3 monetizing
strategy could be used in the first 3 months post launch
In-game Advertising – In this method, a player/user is given an option to pay for another
round/retry or to watch an ad to earn a free round. The player then has the option to
select either option to proceed with the game. If he/she selects the in-game ad, then
they are presented with an ad, which the player has to watch in order to earn the extra
chance for free.
Subscription Model – The subscription model basically does away with the transaction
fee. For example, if a person subscribes for a monthly pack of INR 200, the transaction
fee on his/her wagers will be waived off for the specified period of time which he/she
has subscribed for.
Rake/Transaction Fee model – In this model, a percentage on the total amount wagered
is charged. For example, if 2 people have put in INR 10 each, they will be charged INR 1
each as rake. So, the winner gets the total amount wagered (INR 20) minus the total
transaction fee (INR 2) which turns out to be INR 18.
For the purpose of rewards or winnings, with cash rewards being one of the vital means another
approach to reward winners can also include vouchers from online shopping sites such as
Amazon, Flipkart, Myntra to induce players into playing more with the excitement of rewards.
TDS on games of skill – Games of skill will be taxable under the head Income from Other
Sources. The income will be taxable at the flat rate of 30% which after adding cess will amount
to 30.9%. If the prize money exceeds INR 10,000, then the winner will receive the prize money
after the deduction of TDS @30.9% u/s 194B.It does not matter whether the income of the
winner is taxable or not. The prize distributor is liable to deduct tax at the time of payment.
As per MARC survey majority users prefer E-wallets such as Paytm, Mobikwik, Freecharge, etc,
while some prefer paying through debit cards/credit cards.