India's decision to ban online gambling poses a significant risk to the sustainability of the fantasy gaming industry.
The Indian parliament has approved a law banning online games involving real money bets, a move that has sparked outrage among industry representatives and investors. The new law, aimed at protecting societies, particularly youth, from the harmful effects of uncontrolled online gambling growth, according to India's Minister of Information Technology, Ashwini Vaishnaw, could have significant implications for the $8 billion fantasy sports industry in the country.
The law prohibits online games with real money transactions, including popular platforms like Dream11, valued at $8 billion, and Mobile Premier League (MPL), valued at $2.3 billion. Games24x7, another company that creates platforms for fantasy sports and has invested millions of dollars, is also affected by the ban.
Under the new law, games lacking mandatory certification from the new regulatory body are prohibited. However, lawyers have pointed out the lack of clear criteria defining "harmful" games, which could create risks for selective law enforcement. The law does not differentiate between gambling and skill-based games like poker or fantasy sports, causing further confusion.
The new law also forbids active game advertising as a means of earning income, and games cannot be promoted in mass media, social networks, or mobile applications. Violation of the law results in a severe penalty of up to three years imprisonment or a fine of up to 1 crore rupees (around $120,000).
Major players in the sector have announced the likelihood of mass layoffs, closure of certain services, and a review of business strategies. Analysts had predicted that the market size for these online games would reach $3.6 billion by 2029, but these projections are now uncertain.
Legal experts and advocates representing gaming companies and industry associations have filed appeals to the Supreme Court, highlighting negative aspects of the new law, including lack of industry consultation, distinction between gambling and skill-based games, and violations of constitutional rights to entrepreneurship and freedom of speech.
The law is alleged to violate constitutional rights to entrepreneurial activity and freedom of expression. Some argue that it lacks necessary consultations with the industry, which could lead to unintended consequences for legitimate businesses. The uncertainty surrounding the law's interpretation of "harmful" games also raises concerns about selective enforcement.
As the industry grapples with the implications of the new law, companies are preparing for potential appeals to the Supreme Court. The future of India's online gaming industry hangs in the balance, with many hoping for a more nuanced approach that protects society without stifling legitimate businesses.
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