Interview with AIGF Roland Landers:Opportunities and Concerns about Real Money Games Industry in India

Interview with AIGF Roland Landers:Opportunities and Concerns about Real Money Games Industry in Indiaia
Interview with AIGF Roland Landers:Opportunities and Concerns about Real Money Games Industry in India

After published “【Exclusive: The Next 100Bn Market】| Real Money Game, the Most Popular Game in India—Local Players’ Thoughts on the Storm Eye Effect”

“What exactly is Real Money Games?”, “How to distinguish between game of chance and game of mere skill?”, “Does operators need license to publish real money games?”, “How many real money gaming operators are there indeed?” and so on.

Therefore, We invited Roland landers, CEO of All India Gaming Federation (shortened as AIGF), to have an exclusive interview with Volanews.

Volanews (Shortened as V):We all know that since 2018, Real money games has grown rapidly and also changes the entire gaming industry in India. About the reasons, which do you think is the main key reason for this booming?

Roland Landers (Shortened as R): the main reasons are because of clarity on legality from various High Courts of the Country. Clarity around legality, surge in uptick of smart phones and availability of affordable data from services like Reliance Jio etc.

V: Compared to over 250 gaming operators in total India Gaming Industry, how many RMG operators are there in India?

R: The number of operators in the online RMG for skill are around 100, and likely to increase for the above mentioned reasons

V: What are the main challenges for those RMG operators and game developers?

R: The main challenges are State-wise regulations and interpretations for online RMG. Taxation on GGR needs to be formalized.

V: So it means there will be certain regulation changes for RMG in the future?

R: Online RMG for skill is in the process of being recognized as an Industry. Future regulation changes is a possibility.

V: Many foreign game developers and operators cannot distinguish game of mere skill from game of chance and gambling. Can you give me a clue on that? What are the differences among those three?

R: Games of skill are those where the preponderance of skill is more than that of chance and don’t need a license. Some games that have some form of legal approvals or based on offline sports formats on skill are certain casual games like chess, carrom etc, DFS, card games like Rummy and Poker, Horse Racing at the race courses etc.

In India there is a Nagaland license for skill games and a Sikkim license for gambling(intranet based) both can be procured by an Indian operator by paying a license fee. The State of Goa and Sikkim issue licenses for casinos in their respective States.

V: Most Chinese game developers and operators thought India Gaming market is not profitable, are there any changes in these 1-2 years except RMG?

R: Valuations in the sector have been high and has attracted a lot of attention from PE firms.

V: Besides RMG, How would you evaluate the development of mobile centric / casual gaming and e-Sports gaming?

R: Mobile centric casual gaming has grown exponentially in the last 2 years and digital sports gaming or competitive e-sports in also a part of this segment

V: How big do you expect the India gaming market size in the next 3-5 years?

R: 1 Billion USD size

V: Can you give us a short introduction about AIGF?

R: AIGF is a registered not for profit society and the apex body for online RMG for skill, focused on bringing recognition to the Industry. Its members are governed by self regulation charters that are focused on integrity, player protection and responsible gaming. The members are operators(both Indian and International) affiliates and any Company that has/will have business interests in the Indian online RMG space. There are some members who are expecting a regulated online gaming marketplace in the near future and hence have become our members.

In order to understand the regulations about RMGs in India more thoroughly, we gather all the classic cases happened in the history and also other regulations that related.

·  The differential treatment accorded to games of skill and games of chance, with the former permitted
and the latter prohibited, has been a historic feature of Indian law. Section 12 of the Public Gambling Act exempts games of skill from the penal provisions against gambling – ‘Nothing in the foregoing provisions of this Act contained shall be held to apply to any game of mere skill wherever played’.

·  In the case of Dr. K.R. Lakshmanan v. State of Tamil Nadu and Anr., (1996) 2 SCC 226, the Supreme Court (“SC”) of India has interpreted the words “mere skill” to include games which are preponderantly of skill and have laid down that (i) the competitions where success depends on substantial degree of skill will not fall into category of ‘gambling’; and (ii) despite there being an element of chance, if a game is preponderantly a game of skill, it would nevertheless be a game of “mere skill”. Hence, games which satisfy test of skill are not regulated under gambling legislations.

·  In the case of State of Andhra Pradesh v. K Satyanarayana, the Supreme Court held that the thirteen card game of rummy was not a game entirely based on chance. The division bench, while allowing the game of rummy to be played in clubs, observed “The game of Rummy is not a game entirely of chance like the ‘three-card’ game mentioned in the Madras case to which we were referred. The ‘three card’ game which goes under different names such as ‘flush’, ‘brag’ etc. is a game of pure chance. Rummy, on the other hand, requires a certain amount of skill because the fall of the cards has to be memorized and the building up of Rummy requires considerable skill in holding and discarding cards. We cannot, therefore, say that the game of Rummy is a game of entire chance. It is mainly and preponderantly a game of skill.”

·  In the case of Dr. K.R. Lakshmanan v. State of Tamil Nadu the Supreme Court held Horse-racing is a sport which primarily depends on the special ability acquired by training. It is the speed and stamina of the horse, acquired by training, which matters. Jockeys are experts in the art of riding. Between two equally fast horses, a better trained jockey can touch the winning-post. ‘Gaming’ in the two Acts would, therefore, mean wagering or betting on games of chance. It would not include games of skill like horse-racing. We, therefore, hold that wagering or betting on horse- racing – a game of skill does not come within the definition of ‘Gaming’ under the two Acts.

·  In the case of Shri Varun Gumber v. Union Territory of Chandigarh and Ors., the Punjab and Harayana High Court held that:

    –  The competitions where success depends upon the substantial degree of skill are not gambling; and

    –  Despite there being an element of chance, if a game is preponderantly a game of skill it would nevertheless be a game of “mere skill”.

Based on the submissions and contentions of respondent-company and factual position admitted in writ petition, Judge was of the view that playing of fantasy game by any participant user involves virtual team by him which would certainly requires a considerable skill, judgment 
and discretion. The participant has to assess the relative worth of each athlete/ sportsperson as against all athlete/
sportspersons available for selection.
He is required to study the rules and regulations of strength of athlete or player and weakness also. The several factors
as indicated above submitted by the respondent – company would definitely affect the result of the game.

The Judge further, expressed that gambling is not a trade and thus, is not protected by Article 19(1)(g) of Constitution of India and thus, the fantasy games of the respondent -company cannot said to be falling within the gambling activities as the same involves the substantial skills which is nothing but is a business activity with due registration and paying the service tax and income tax, thus, they have protection granted by Article 19(1)(g) of Constitution of India. Accordingly, the writ petition stands dismissed.

·  In the case of Auth Rep, Head Infotech (India) Pvt. Ltd., Hyderabad & Anr vs. Chief Secy, State of Telangana, Hyderabad & 3 Ors (“the Writ”). The Telangana State Gaming (Amendment) Ordinance, 2017 (“Ordinance I”) was promulgated by the Governor of the state of Telangana (“State”) on June 17, 2017 to amend the Telangana State Gaming Act, 1974 (“the Act”).

On 20 June, 2017, Ordinance I was challenged before the High Court of Hyderabad (“Court”) by several rummy operators. Pending final outcome of the proceedings before the Court, on July 8, 2017, the State passed another Ordinance, the Telangana Gaming (Second Amendment) Ordinance, 2017 (“Ordinance II”) to amend the Act further.

The Challenge to Ordinance I: The Act, like most State gaming enactments excludes games of skill from its purview. Therefore, prohibitions under the Act do not apply
to games of skill. Ordinance I added an explanation stating that games of skill which have part elements of chance cannot be termed ‘skill games’. Ordinance I furthermore specifically stated that Rummy was not a skill game as it involved part chance.

The challenge to Ordinance II: Ordinance I only made gaming within common gaming houses an offence and removed Rummy specifically from the ambit of games of skill. Ordinance II further amended the law to specifically make online games of skill an offence in the state by entirely removed the exemption to all types of games of skill.

The challenges to the Ordinances I & II
and the subsequent Telangana Gaming (Amendment) Act 2017 passed pursuant to the said Ordinances are based on several grounds, most importantly, that this amendment has upset the law laid down by the Supreme Court upholding the exclusion of games of skill from the ambit of gambling laws and that this Act violates the fundamental right to do business and profession under Article 19(1)(g) of the Constitution of India.

·  Tertiary Laws

·  1994 The Cable Television Network Rules

The Cable Television Network Rules, 1994101 prohibit the advertisement of gambling activities. However, as set out in rule 7 the advertisement of games of skills, such as horse racing, rummy and bridge, is not prohibited.

·  1999 Foreign Exchange Management Act

Remittances of Income from lottery winnings, racing/riding, sweepstakes etc. are prohibited under the Act, 1999 read with Rule 3 and Schedule 1 of the Foreign Exchange Management (Current Account Transaction) Rules, 2000. The Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 201794 and the Consolidated Foreign Direct Investment (FDI) Policy, 201795 issued by the Government of India, vide clause 5.1(a) prohibit both, “Foreign Direct Investment” and “investment by a person resident outside India” in entities conducting “lottery Business including Government/private lottery, online lotteries etc.” and “Gambling and Betting including casinos etc.” by clause 5.1(b). The Consolidated FDI Policy and the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017 are reflective of the National Policy of India in matters pertaining to foreign direct investment and investment by a person resident outside India. Similarly, collaborations in foreign technology in any form whatsoever, for the purposes of gambling and betting activities is also prohibited under clause.

·  2010 Telecom Commercial Communications Customer Preference Regulations

The Telecom Commercial Communications Customer Preference Regulations, 2010 have been issued by The Telecom Regulatory Authority of India, with the objective of prohibiting “Unsolicited Commercial Communications”. These regulations have been framed in response to various complaints made against spam calls and SMSs. Therefore, any sort of unsolicited commercial communication pertaining to gambling or betting will attract the prohibition contained in these Regulations.

·  2011 Information Technology (Intermediaries Guidelines) Rules

The Intermediaries Rules, which have been framed under Section 87(2)(zg) read with Section 79(2) the Information Technology Act, 2000. Rule 3(2)(b) thereof requires ‘intermediaries’ like internet service providers, network service providers, search engines, telecom operators etc. not to host or transmit any content which inter alia relates to or encourages gambling. Further, Rule 3(4) requires intermediaries to remove content relating to or encouraging gambling within thirty-six hours, either “upon receiving actual knowledge or on being notified to do so by the appropriate government or its agency that any information, data or communication link residing in or connected to a computer resource controlled by the intermediary is being used to commit the unlawful act…”

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