Exclusive- Niti Aayog’s Regulatory Principles Fantasy Sports, Brings Stability To Indian Real Money Games Industry

Prime Minister Modi in his Mann Ki Baat which is a monthly radio program hosted by the PM himself while talking about the massive toys market both in India and globally touched upon the potential of the Indian Gaming Industry on 30th Aug 2020. He talked about the need to focus on creating game apps for India and also Indian games based apps for the world.

 

Market Status and Potential

 

Online Fantasy Sports Platforms (OFSP) CAGR of 212% from 2 million in June 2016 to 90 million in Dec 2019.

 Niti Aayog has asked for comments on this guiding principles draft.

 Atma Nirbhar App challenge has recognised gaming as a category for where indigenous apps can be encouraged and celebrated.

 But the most important reason why regulating Fantasy Sports has gained ground is because of tax revenue forecasts. GST revenue to the tune of Rs.3000 – 5000 Crore ($400-650 million) is expected and up to Rs. 10,000 Crore ($1.3 billion) in total tax revenue in the next 5 years. As per KPMG India report, the industry has already generated $22 million in GST and as per PWC India Report has received Rs. 1000 Crore or $130 million in Foreign Direct Investments expected to increase 10 times in the next few years.

 

Challenges Faced

 

Niti Aayog mentions that the lack of clarity on regulation as well as state specific laws has had a negative effect on product innovation and development. This also reduces ease of doing business, individual states introducing blanket bans which reduces the potential scale as well as makes the sector unattractive to foreign and domestic investors. The biggest obstacles which these guidelines help overcome are

 

  • Formal recognition of Fantasy Sports
  • National Grievance Redressal mechanism

 

For this reason a consultation was held in Sept 2020 and the following principles and recommendations were agreed upon.

 

  • Government recognition and identity distinct from betting/gambling
  • Uniform national level regulation
  • Single National level policy implementation
  • Light touch regulatory framework
  • Self-regulation
  • Democratically run self-regulatory body through an independent oversight board
  • Implementation of Regulation through this independent oversight board
  • Benefits of self-regulatory organisation for all members
  • Independent grievance Redressal system
  • Implementation of a uniform framework

 

Based on these recommendations, Niti Aayog has come up with following draft of guidelines or guiding principles

 

  • Complete compliance of existing laws, regulations and laws in India
  • Game formats should remain skill predominant.
  •  – New game formats require approval from an independent evaluation committee.
  •  – Independent evaluation committee will be constituted by a self-regulatory body.
  •  – Followed by Statistical and Legal evaluation of the new game format confirming preponderance of skill
  •  – New binding rules can be created and changes can be recommended to the game format
  •  – Preponderance of skill needs to be supported by user data submitted to the self-regulatory organisation
  •  – All users need to be 18 years or above with safeguards to protect minors
  • Emulate the real world official sanctioned sports contest
  • Fair and transparent terms and conditions with no favouritism and a grievance Redressal system for user issues
  • Gambling services or games of chance should not be advertised with frameworks prohibiting illegal activities
  • Advertising and promotion guidelines to be follows
  •  – Truthful and fair
  •  – Compliance with advertising standards by Advertising Standards Council of India
  •  – Should neither represent or imply that winnings in a contest are ‘assured’ or ‘guaranteed’ nor project fantasy sports as anything other than an amusement and fan engagement activity
  •  – Should not represent that the participation in fantasy sports is a source of sustenance, a means of earning a livelihood, a lottery, a jackpot or an investment opportunity
  •  – The same rules applies to third parties associated with the OFSP
  • – The same guidelines need to be communicated to all states by the self-regulatory body thus granting immunity from criminal prosecution.

 

 One of the most important roles of these guidelines and they being used to draft future laws is differentiating Fantasy Sports Games from online gaming. Online gaming already encompasses a lot of game formats with many who are considered part of the industry, trying to disassociate themselves. eSports is another category trying to get legal recognition and thus relevant regulation but also maintaining legal distance between Fantasy Sports and other Real Money Games.

 It’s not only Niti Aayog which has taken a keen interest in Fantasy Sports. With the massive amount of advertising money being thrown about, and especially Mobile Premier League replacing OPPO as IPL2020’s official sponsor, the Advertising Council of India (ASCI) has stepped in with their advertising guidelines. These guidelines were released a few days after an industry meeting held with Real Money Game operators and the Ministry of Information and Broadcasting. As per ASCI’s announcement these guidelines are applicable to Fantasy Sports Operators and other Real Money Games too. It’s not as elaborate a document as Niti Aayog’s take on regulating Fantasy Sports but includes few key points such as

  • Ads cannot depict children or anyone who is or looks younger than 18 years of age
  • Disclaimer on financial risk, addictive nature of the game, responsible gaming and the risk for players involved.
  • Product cannot be sold as a source of regular income
  • Product cannot be sold as an alternative employment opportunity
  • These guidelines by Niti Aayog as well as ASCI will be used to create the laws and legislation for regulation of Online Fantasy Sports Operators in India. However with advantages mentioned above, it brings a sense of stability to the whole industry who no longer have to tip toe so as to not attract Government  and regulator attention to themselves.

 

 With the growing size of the market, once these new regulations are introduced, it reduces risk considerably for investors, venture capital firms turning the industry into a possible gold rush. And with the country reeling from record unemployment rates, an economy technically in recession and a Chinese app ban which has left gaping holes in a nascent market. This Foreign and Domestic Investments and the employment opportunities and tax revenue that comes with it would help in reversing the damage the pandemic has caused to the Indian economy.

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