Game of Skill to regulate & no gameplan for the game of chance

The Indian online gaming industry has faced much scrutiny over the past year. The recent announcement by the Government to regulate online gaming will apply to all real-money games after the prime minister's office overruled a proposal to only regulate games of skill and leave out games of chance, according to a government document and sources.

According to sources, the government is working on online gaming regulations that will apply to all real-money games, both skill and chance. Simultaneously, the Income Tax Department has started scrutinizing closely the IT returns filed by professional poker players, with several of the country’s top poker pros receiving notices under Section 142 of the Income Tax Act of 1961.

A panel tasked with drafting the regulations for the online gaming industry in August proposed a new body to decide whether a game involves skill or chance and then let skill games be governed by planned federal rules that call for registration requirements, know-your-customer norms, and a grievance redress mechanism. The panel also proposed that games of chance could stay under the purview of individual state governments, which would be free to regulate them.

Experts say the rules would give the central administration broader oversight on all types of games. In contrast, state governments will remain empowered to impose outright bans on gambling or games of chance. The drafting of the new regulations comes amid growing concerns that the proliferation of such games, particularly among young people, had led to addiction and financial losses, with reported cases of suicide.

The much-awaited regulations are seen shaping the future of India's gaming sector that research firm Redseer estimates will be worth $7 billion by 2026, dominated by real-money games. Defining games has been contentious in India. India's Supreme Court says the card game rummy and certain fantasy games are skill-based and legal, for example, while different state courts have held different views about games such as poker.

The Directorate General of GST Intelligence (DGGI) has also begun issuing notices to online gaming operators as the tax authorities believe that online gaming companies have allegedly conducted massive tax evasion in the past few years.

The IT Department has started sending notices to professional gamers in its most recent crackdowns. Many of the country’s top poker pros (at least 50, though the number could be higher) have received notices under sub-section (1) of Section 142 of the Income Tax Act of 1961. This move has been made to squeeze out the tax evaders.

The much-awaited regulations are shaping the future of India’s gaming sector, which estimates will be worth $7 Billion by 2026, dominated by real-money games.

Dr. Deepak Kumar Sahu, President & CEO, VARINDIA