India’s gaming industry was found to be worth Rs 13,600 crore in FY 2020-21, and is expected to reach a total value of Rs 29,000 crore by 2025. Real-money games such as Dream11, Mobile Premier League and Rummy Villa, account for 51 per cent of the revenues for India’s online gaming sector, which attracted 39 crore users as of 2021.
This is why Google’s one-year pilot that offers real-money games, including fantasy sports on its app marketplace Play Store in India, is significant. Rummy apps and DFS games incorporated in India will be distributed only within the country for the pilot’s limited period, but won’t be using in-app billing or be available as paid apps. This comes after Google launched another pilot, allowing some apps to use alternative billing systems, after criticism over the requirement to integrate the Play billing system in platforms.
Google has been known for its strict policy against promotion of online gambling, as part of which it had removed Indian platform Paytm in 2020, after the launch of fantasy sports app Paytm Cricket League. To participate in its latest pilot, real-money game developers will have to comply with local laws and submit required licenses and permits along with an application form. They’ll have to verify the credentials of users to ensure that they are aged above 18, as well as their PAN card and bank account details for taxation purposes.
Laws about gambling vary across India based on regulations in each state, as Nagaland, Goa, Sikkim and Meghalaya have licensed it, while Odisha, Andhra Pradesh, Telangana and Assam have banned it. But India’s Supreme Court has ruled rummy and fantasy sports as games of skill instead of games of chance, maintaining that players need skills and intellect to beat opponents. This means that such real-money games don’t constitute gambling or betting, and are hence considered legal across the country, enabling Google to implement this pilot.
As games of skill, fantasy sports and rummy also get constitutional protection as trade and commerce through Article 19(1)(g). The GST on games of skill at 18% is also lower than that on games of chance at 28%, but this might change as India’s finance ministry proposed a 28% tax on online games of both categories. The Income Tax department is also urging online gamers to voluntarily pay direct taxes on their winnings, after coming across Rs 58,000 crore that people won through an online gaming app in the past three years.
Applications by developers will be reviewed and applicants will be notified by Google within seven days, and they’ll also have to provide redressal mechanisms to protect gamers.
