Licensed casinos in India Who will feel the consequences first?

Roland Landers, the CEO of the All India Gaming Federation, calls the decision of the local government a setback for the online gaming industry. Andhra Pradesh, a major state in the country, has been a major hub for the industry. This decision will be particularly significant for rummy operators, as the rummy game is most popular in the southern states.

Bhavin Pandya, the CEO of Games24x7 and the manager of India's largest rummy website Rummy Dragon vs Tiger, says that Andhra Pradesh has been the most traffic-generating state for his company. Most people consider the amendments to be a political decision linked to the 2019 local elections. The incumbent president did not win, and the newly elected J. S. Jagan Mohan Reddy initially supported a total ban on gambling in the state, following the example of Telangana, where such a ban was implemented in 2017.

Most importantly, representatives from the gambling industry were outraged by the lack of communication with business representatives during the process. At the end of 2017, the Rummy Federation was established as a non-profit organization to develop a system of standards for the industry.

Dragon Tiger game

Rummy Dragon vs Tiger, itself, created Game Prudence, a consulting service to help prevent gambling addiction. Throughout the development and approval process, all relevant organizations were kept in the dark.

The law was adopted as part of a fight against illegal operators.
One part of the problem is that concerns about the negative impact of gambling have been growing recently, and there have been several high-profile reports of companies defrauding customers. However, operators specializing in online games say that lawmakers did not draw a line between legitimate and illegal games before passing the ban package.

"Offshore betting and gambling sites are a concern for all stakeholders in India. These sites are exploiting loopholes in the market and causing problems. The AIGF views this as a priority issue that needs to be addressed, as it represents a significant threat to the Indian online gaming industry," said Roland Landers.

Ranjana Adhikari, co-head of the media, entertainment, and gaming practice at the Nishith Desai Associates law firm, reported that anti-gambling sentiment has been fueled by the increased activity on online gaming platforms during the COVID-19 pandemic.

In the last six to eight months, investors' confidence in gambling companies has increased as the consumer base has grown and profits have risen. However, this has also provoked the anger of some politicians who have previously questioned the legitimacy of the online gaming industry.

The bans may well extend to other states, according to Ranjana Adhikari. India has a multi-party system, and politicians in one state can be influenced by the views of political parties in other regions, especially if they are from the same party or part of political coalitions. This expert suggests that decisions made in one state could have a cascading effect on other state governments' political will. For example, in mid-September, Karnataka MP K.K. Ramamoorthy called on India's upper house of parliament to adopt a nationwide ban on rummy.

Gambling in India

However, contrary to Adhikari's claim, Landers argues that many states recognize the benefits of skill-based games. Digital India, the largest online gaming company in India, creates jobs and generates revenue for the government through direct and indirect taxes. In the past three years, states have clearly recognized the importance of gaming operators for their economies, especially those operating on online platforms.

Will the ban be lifted? In the case of Telangana State, the amendments were challenged in court and overturned, and this is also what awaits Andhra Pradesh's ban. Bhavin Pandya, CEO of Games24x7, believes that the regulations violate the fundamental rights of residents and non-residents to conduct business related to gaming with skills, as guaranteed by the Constitution.

This is the main reason for the abolition of these norms.
Lawyer Ranjana Adhikari agrees with this opinion. She believes that in the case of gambling restrictions, bans violate what the Constitution seeks to protect. However, there is another side to the story: India's judicial system is flawed, and cases can take years to be resolved, so it is not possible to count on a quick resolution to the issue for gambling providers.

Meanwhile, the number of Indian states that are loyal to gambling is decreasing dramatically. Rummy operators are facing another challenge - losses and lost revenue. At first glance, Andhra Pradesh and Telangana seem like just two of the 29 states, and changes here should not have significantly affected the companies' revenue. However, these are two of the most important states for the Rummy market, precisely in terms of consumer preferences and activity on game platforms.

Dream Sports has announced that, in light of recent restrictions, it has begun to focus more on fantasy sports through its website. Management believes that this vertical has the potential to generate significant profits, and is therefore investing more resources in it.

Another area that Dream Sports is exploring is poker. Adhikari has stated that the game has generated significant interest from both foreign and local operators. While poker remains illegal in some countries, including India, there are many operators that offer poker games online.

However, unlike rummy, which has been the subject of Supreme Court rulings, there is no legal clarity regarding the status of poker in India. This has led operators to focus on other types of gambling that have legal guarantees.

According to the data from Statista.com, the market value of the gambling industry in India was approximately 62 billion rupees (approximately $845.5 million USD) in 2019. This amount is expected to grow to $3.4 billion USD by 2024. The online gambling market in India is attractive due to the large number of young people in the country, but there is a lack of a comprehensive regulatory framework that can lead to harsh legislation, government investigations, and legal disputes for providers.

The Supreme Court of India has reiterated that gambling laws in different states do not apply to games where skill outweighs luck. Skill-based games in most states are protected by local regulations. The courts have urged state governments to review their regulatory frameworks.

Due to the lengthy nature of the process, industry representatives believe that attention should be given to raising awareness and establishing a foundation for responsible gaming as entertainment. This can be achieved through discussions with stakeholders, rather than through prohibition. If the US government supports this initiative with restrictions, operators may cease legal operations nationwide.