Could 26 percent FDI and the legalisation of gambling be good news for India?

In an attempt to champion the cause of gaming, the AIGF (All India Gaming Federation) is working with state governments and authorities to introduce 26 percent FDI in the segment and legalise gaming related activities. Just to be clear, whenever we refer to ‘gaming’ in this article, we are referring to gambling, betting and lottery. This includes betting on games such as rummy, fantasy sports, horse-racing, cricket and more. The Indian government differentiates between ‘games of chance’ and ‘games of skill’ and only allows betting on the latter. Games of chance refer to games where the outcome is entirely arbitrary such as dice games or roulette wheels. A game of skill can have an element of chance, but players’ skill must “play a greater role in influencing the output." We spoke to Roland Landers, CEO of AIGF, on the organisation’s view on gaming and the need for FDI in this area. Landers cited a 2009 report that estimated the Indian gaming industry to be worth well over $60 billion, and more than half of it illegal. “There is no reliable estimate on the figures but it is estimated to be in thousands of crores,” he adds, referring to the amount of money spent by Indians gaming online. A more recent report by the International Centre for Sports Security (ICSS) estimates the betting market to be worth $130 billion in India. Landers believes that bringing in FDI in gaming will bring in a large amount of money, in the order of Rs 10,000 crores, as well as open up an entirely new market job market for thousands of people. He also pointed out that it would help cut down on the amount of black money being circulated via illegal gaming in the country. “It is in everyone’s interest to remove gambling, betting and lottery sector from the prohibited list in the FDI policy. Since India is moving towards welcoming foreign investment in all sectors, the gaming industry should not be an exception. The Victorian attitude of prohibition of gambling is no longer in sync with the modern day thinking,” said Landers. Currently, only a handful of states have actually legalised betting in the country. These include Sikkim, Nagaland and Goa. Landers said that AIGF has been working with various state governments, including Telangana, Kerala and Maharashtra, to find ways to legalise gambling and help regulate it. The constitution gives state governments the power to deal with gambling/betting as they see fit. They have the power to allow or deny any and all gambling related activities as they see fit. For example, horse-racing is legal in Maharashtra, as are lotteries. Landers adds, “Various State Governments are actively at exploring all avenues to update archaic laws pertaining to gambling and gaming.” The argument in favour of FDI in gaming the legalisation of the same is as follows:

• Indians are already ‘gaming’ and they’re spending “thousands of crores” doing this.
• ‘Gaming’ is a huge market in India
• Much of this ‘gaming’ is illegal and is facilitating illegal activities
• The state governments stand to earn a huge amount of money in taxes. Money that can be spent as the state sees fit.

The argument against FDI and legalisation, I think, comes down to a moral one. Gambling is traditionally seen as something that’s a bad influence because of its addictive nature and the damage it can do to society when not in check. The same can, however, be said of drinking and smoking as well. This mentality is even seen in the legal terminology as well. Doesn’t ‘gaming’ sound more palatable than ‘gambling’? In this regard, Landers says, “Responsible gaming is a globally accepted practice that is adopted by virtually all countries that regulate gaming. AIGF will also prepare guidelines for responsible gaming to be followed by its members and document reports based on International best practices which will be submitted to the Govt periodically.” Facebook faced a similar dilemma in 2012, when it started allowing real money gambling on its site. These games were restricted to countries that allowed gambling and involved the UK in particular. Facebook’s guidelines with regard to gambling are very clear. It restricts the targeting of related ads based on age and jurisdiction and says that such games must not indicate in any way that gambling is a source of income, among other guidelines. Facebook did face a lot of flak for allowing gambling, but over time, stricter guidelines and tighter regulation has managed to keep most of the moral and legal issues in check. Companies like India’s Mauj Mobile have taken a completely different approach, where no real money is betted in their games. Their games strictly adhere to Google Play policies as well as Indian Law and income is via in-app purchases and advertising. Badri Sanjeevi, CEO of Mauj Mobile told us that FDI in gaming will have no impact on services such as those offered by Mauj since those services do not involve gambling or betting in any form. He also noted that while FDI might seem like a good idea, the legal issues involved in legalising gambling are huge and will have to be worked out state by state. AIGF is already making headway in convincing state governments of the benefits of ‘gaming’ and given their argument, one can see why. What do you feel, however? Should gambling be legal in our country? Let us know @tech2eets , Facebook and Google+