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Sunday, February 05 2023
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What Should the Centre Do to Protect Indians from the Dangers of Gambling?

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Digital India “Steams Ahead” Still Trapped in the Industrial Age When It Comes to Gaming Legislation

In a time when the Digital India programme and the trillion-dollar digital economy agenda are rapidly transforming society, business and governance, most of India’s legislation concerning gaming seems powered by steam engines and still trapped in the Industrial Age.

Laws designed to deal with physical public gaming houses and cash operations, and a constitutional arrangement delegating legislative power over chance gaming to states, have not endured the test of time and proven adequate in the digital world where national and state borders are not what they used to be.

Legal methods and practices that smell of coal burning cannot work well in the age of the internet and this has led to the rise of various problems related to online gaming. These issues were addressed in the Rajya Sabha by senior BJP leader and MP Sushil Kumar Modi at the end of 2021.

“Crores and crores of youngsters have become addictive to online gaming. As it is online, it is very difficult to prevent kids from getting addicted. And now this online gaming has been converted into gambling or betting. And now there is a controversy whether it is a game of skill or it is a game of chance,” Mr Modi said.

“Online gaming is becoming a big addiction. I would like to highlight that this sector, like the crypto industry, certainly has a regulatory lacunae. So, I would urge the government to bring a uniform tax on online gaming. I urge the government to make a comprehensive framework of regulation for online gaming,” he insisted.

Sushil Modi also brought to the attention of the House the failure of several states, including Tamil Nadu, Telangana and Karnataka, to bring the negative effects of online gaming under control by banning it. Numerous such blanket bans were rejected by High Courts as contradictory to the Constitution.

The Centre Initiates Regulation, Includes Casino and Chance Games

A year after the discussions at the Rajya Sabha, the Central Government has already taken the first steps towards regulating the sector by appointing the Ministry of Electronics and IT (MEITY) the nodal ministry for online gaming and the Ministry of Youth Affairs and Sports as the nodal ministry for “”e-Sports as part of multi-sport events”.

Reportedly, following an intervention of PM Modi’s Office, India’s upcoming regulations will cover not only games of skill, but will also include casino and chance-based games, bringing uniform rules across the country.

The new approach is expected to provide the needed flexibility for the country to solve the puzzle on how to have uniform rules on online gaming preserving the autonomy of states over gambling.

States will still be able to choose whether to ban or allow platforms offering games of chance similar to Casino Days. Wherever allowed, however, such games will have to observe the central regulations.

Gaming Regulation is a Challenging Task for India

“Ultimately, the biggest challenge to regulation is that online gaming knows no physical boundaries, while gambling and betting are “state subjects” in India,”comments Svilen Madjov, industry researcher at Indian casino comparison platform SevenJackpots.

In his recent study titled “The Benefits and Prospects of Regulated Online Gambling in India”, Svilen Madjov examines the current situation with gaming and related legislation in India, the developments in the field made in several mature markets around the world, and provides insights into what the Centre should do to protect Indians from the dangers of gambling.

Reports quoted by Mr Madjov reveal that the size of the Indian betting and gambling market was $88 billion in 2012 and reached $130 billion in 2018, growing at a compound annual growth rate (CAGR) of 7 percent. The online section of the country’s gaming market was estimated at just $2.8 billion in 2021, but expanding at the much faster rate of 40 percent per year.

This means that massive gambling and betting turnovers in India are flowing through illegal and black market cash channels, despite legal prohibitions and bans, or more realistically – precisely because of the existence of such prohibitions and the lack of regulation.

“Unregulated gambling comes with a number of risks to consumers and the public interest. Exposure to negligence, fraud, and other criminal activity is only one side of the coin,” Svilen Madjov writes. Players are also subjected to odds tampering, unfair losses, payment frauds, and match-fixing.

Moreover, there are no safety checks and protection provided for problem and addicted gamblers, going into financial trouble is easy in such an environment, and black market debt collection methods can quickly worsen the desperate situation a person has fallen into.

The Balance between Licensing, Regulation and Self-Regulation

“European states also used to have the monopoly on gambling – akin to India’s legal government lotteries – but have gradually shifted from direct operation to licensing and regulation. Crucially, while opening the sector to competition, authorities have allowed certain independence to industry associations that provide varying degrees of self-regulation,” Svilen Madjov points out.

“This approach has proven to avoid conflicts of interest and government corruption. Even more importantly, the best gambling platforms have always taken these kinds of opportunities to stand out and demonstrate their integrity to the public eye,” he explains.

Besides this general outline of a regulatory approach, India’s Central Government can make use of a number of detailed practices in gaming legislation from countries like the UK, Sweden, Denmark, Germany and others, and combine them with the unique Aadhaar ID system to streamline age verification, problem gambler identification and prevention of online abuse.

Responsible gaming policies, including national-wide self-exclusion systems, operator obligations to protect problem gamblers, player and operator blacklists, as well as safety nets with limits on play speeds, gaming on credit, false wins, reverse withdrawals, etc. should be incorporated in India’s gaming regulations.

“In the end, regulation is intended to simplify and streamline complex market conditions. While public interest is the driving force behind such decisions, the result should be clear legal definitions, standards, and “red lines.” Authorities also need monitoring and control mechanisms,” Svilen Madjov points out.

Sunil S Patil

 

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