Indian video game makers request GoI to not club them with real money, fantasy games

In India, a coalition of over 70 video game companies is urging the government to distinguish their industry from real money and fantasy games.

For over a decade, real-money gaming companies and fantasy sports startups have marketed themselves as video game companies. However, as regulatory scrutiny increases, these video game firms are seeking clearer definitions to avoid being grouped with gambling-related entities.

In a letter to Prime Minister Narendra Modi and the Ministry of Information and Broadcasting, the coalition requested distinct categories: “video games” and “real money games.” They argue that this differentiation is crucial following recent tax amendments that placed real money games in a higher tax bracket (28 per cent) compared to video games (18 per cent).

This lack of distinction has led to negative consequences for video game companies, including tax raids, banking issues, and confusion among international investors.

The coalition, which includes companies like Gmonks, Newgen, Lila Games, Dot9 Games, and the Esports Federation of India, highlights incidents where local police have mistakenly raided video game parlours, thinking they were gambling establishments.

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This confusion has complicated investment deals as companies continually need to clarify that new regulations target real money games, not video games.

The coalition also points out that fantasy sports startups are overshadowing traditional video gaming, causing lawmakers to overlook legitimate video game companies’ concerns and policy proposals.

To address this, they propose clear definitions in Indian policy frameworks, distinguishing video games as digital entertainment products played for leisure or learning, without monetary staking, from real money games that involve monetary stakes.

They also request that media outlets avoid using images of video games when reporting on real money games or gambling, to prevent public misconceptions.

The group suggests that the Ministry of Information and Broadcasting should serve as the nodal agency for the video game industry, aligning it with other entertainment and media sectors, unlike the real money gaming sector, which falls under different regulatory oversight.

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Despite India’s position as a leading startup ecosystem and emerging tech manufacturing hub, its video game industry remains underdeveloped. To support the sector, the coalition proposes several key initiatives:
- Establishing a Catalyst Fund for financial backing of startups and small businesses.
- Encouraging banks to recognize digital intellectual property (IP) as collateral for loans.
- Improving higher education in game development.
- Reducing the Goods and Services Tax (GST) on video games from 18 per cent to 12 per cent.
- Advocating for corporate tax holidays to attract investment and ensure industry sustainability.

These measures aim to foster growth and development in India’s video game industry, ensuring it receives the recognition and support needed to thrive independently of the real money gaming sector.