The Swadeshi Jagran Manch, an influential group in the country, will push for limits on entry fees for players of paid online games, potentially putting the heat on a multibillion-dollar industry that is preparing to lobby against tougher rules.
The growing popularity of real-money games, fueled by backing from top figures in cricket, a subcontinental craze, has prompted regulatory efforts to combat the risk of addiction, as well as reports of financial losses and suicides among young people.
According to research firm Redseer, such games could account for up to 53% of a gaming market that is expected to reach $7 billion (roughly Rs. 55,800 crore) by 2026, or three times its current size.
Swadeshi Jagran Manch
“Ticket size should be regulated. It should not be more than 50 rupees. This is an addiction,” said Ashwani Mahajan, an official of the Swadeshi Jagran Manch, which is seen as having significant influence on policy making in the country. “We will talk to all concerned ministries about this,” he told Reuters.
Although only $0.62 (roughly Rs. 50), the proposed cap represents a significant portion of the Rs. 25, or 31 cents, that 97 percent of users typically spend on an app such as Mobile Premier League.
According to one industry source, the remaining 3% of users contribute 30% of the platform’s revenue by playing larger ticket-sized games.
The comments by the group, the economic wing of the ruling Bharatiya Janata Party (BJP), come after a government panel recommended a new regulatory body and deposit and withdrawal limits.
The measures, in a confidential draft reported last week by Reuters, have alarmed an industry in which Tiger Global and Sequoia Capital have invested in providers of fantasy sport games such as Dream11, MPL and Games24X7 that offer cricket and other paid contests.
Dream11 commands a valuation of $8 billion (roughly Rs. 63,800 crore), while MPL and Games24X7 are valued at about $2.5 billion (roughly Rs. 19,940 crore) each, PitchBook data shows.
Although the panel report did not fix any fee ceiling, four senior gaming industry sources who spoke on condition of anonymity have said such a move would affect revenues and the growth potential of platforms. They promised to express their concerns to the government.
The ministry of information technology, which established the government panel, and some top officials from ministries such as revenue and sports who serve on it did not immediately respond to a request for comment.
MPL refused to comment. The other two companies did not respond immediately to requests for comment.
Sameer Barde, chief executive of the E-Gaming Federation, a grouping that represents MPL and Games 24X7, said companies “can’t really function” with a uniform
restriction on deposits and called such limits “unfair” to players.
New federal rules
According to the panel’s draught, the new federal rules aim to address industry complaints about “inconsistent” state regulations, differing court rulings on whether games are governed by skill or chance, and addiction concerns.
Another source of concern for the industry is a government plan to appoint a regulator to determine whether a game is based on skill or chance.
According to two sources, such federal scrutiny will have a greater impact on the Sequoia Capital-backed MPL because it offers approximately 70 real-money games, whereas Dream11 has only seven fantasy sport games, including cricket and soccer.
“Most of the matured industry is quite clear that regulation will only help,” said Barde.
“But the concern is that if it takes an inordinately long time for approvals to come through, you might become irrelevant in the market by then.”
