Highlights
A recent compliance study by SKOCH Group covering 30 gaming apps, 25 astrology apps and 14 OTT platforms reveals significant differences in responsible practices. The evaluation, using both quantitative metrics and qualitative researcher opinions, highlights the need for better regulatory standards across these segments. OTT platforms performed best, with 71% in Technical Compliance and 41% in Quality of Compliance, excelling in content classification, user protection and transparency. They achieved 100% compliance in critical areas like device neutrality and IPR protection.
Digital Astrology fared the worst, scoring only 14% in Technical Compliance and 6% in Quality of Compliance. Key gaps include the absence of age restrictions, credit restrictions, and mental health safeguards, making it the least responsible category.
Online Real Money Gaming (RMG) fell between the two, with 39% in Technical Compliance and 20% in Quality of Compliance. While RMG has strong measures for age restrictions and grievance redressal, it shares similar weaknesses in credit restrictions and mental health policies, indicating a need for stricter standards across the industry.
https://gaming.skoch.in#state-of-compliance-digital-gaming
Highlights
- In 2012, then Finance Minister Pranab Mukherjee introduced retrospective taxation, which harmed business sentiment and deterred global investors, impacting India’s reputation as a stable economic destination.
- The retrospective tax amendment led to prolonged legal battles with Vodafone and Cairn Energy. While verdicts favored these companies, the policy damaged India's economic environment without significant revenue gains for the government.
- In 2023, the GST Council introduced a 28% GST on online gaming, eliminating distinctions between 'games of skill' and 'games of chance.' This move, similar to retrospective taxation, has created substantial tax demands for the industry, raising concerns about its future.
- The gaming industry has been severely affected by retrospective tax demands, leading to reduced investments and a negative impact on business stability. Prominent industry voices like Radha Abrol (Accenture) and Tanmay Bhargav (KPMG) highlighted the adverse signals this sends to investors.
- For the digital economy, which aims to achieve a $1 trillion target, sectors like online gaming and AI are crucial. Stable, predictable taxation policies are necessary to foster growth, investment, and talent development, ensuring India's competitiveness in these sunrise sectors.
https://gaming.skoch.in#havoc-of-retrospective-taxation
State of Voluntary Compliance in Digital Gaming
Mr Sameer Kochhar, Chairman, SKOCH Group presenting at 99th SKOCH Summit in New Delhi
Highlights
- India's first responsible digital gaming index is being created.
- A framework was developed by analyzing seven major economies.
- Mental health and local language support are crucial considerations.
- Multi-stakeholder workshops involved various government and industry representatives.
- Compliance ratings were assessed through mystery shoppers.
- Initial findings show a 39% compliance average among gaming apps.
- Discussions on regulatory frameworks and tax implications are ongoing.
https://gaming.skoch.in#state-of-voluntary-compliance-in-digital-gaming
Digital Assets - New age money and FCC Risks
Mr Tanmay Bhargav, Partner, Risk Advisory, KPMG India at the 99th SKOCH Summit in New Delhi
Highlights
- Digital gaming is crucial for India’s goal of a $30 trillion economy.
- Virtual currencies in gaming include cryptocurrencies and in-game tokens.
- Money laundering risks arise from anonymity and decentralization of digital assets.
- Regulatory frameworks in India are still evolving, impacting taxation and compliance.
- The valuation of virtual assets remains uncertain and challenging.
- Data privacy issues complicate the tracking of digital transactions.
- The gaming industry faces potential retrospective tax implications that could deter investment.
https://gaming.skoch.in#digital-assets-new-age-money-and-fcc-risks-tanmay-bhargav
Regulation in Digital Gaming
Ms Radha Abrol, Managing Director, Accenture at the 99th SKOCH Summit in New Delhi
Highlights
- Highlights the urgent need for regulation in the evolving digital gaming landscape.
- Stresses the importance of safeguarding personal data as the new currency.
- Advocates for regulations that foster innovation without stifling growth.
- Emphasizes parental concern for children’s mental health in the context of gaming.
- Critiques retrospective changes to GST rates impacting the gaming industry.
https://gaming.skoch.in#regulation-in-digital-gaming-radha-abrol
Highlights
- Digital addiction in India is rising, with over 800 million Internet users spending an average of 6.5 hours daily online. This addiction extends beyond screen time, affecting mental health, family relationships, and academic performance.
- Young adults aged 18-24 are particularly susceptible to online gaming addiction, which affects 67% of gamers in this age group. Social media and astrology services have also seen significant growth, leading to financial strain and mental health issues.
- Digital overuse can lead to anxiety, depression, and diagnosable disorders. The Behavioural Addictions Clinic at AIIMS has observed a 20% increase in digital addiction cases, with social media, gaming, and online astrology being primary contributors.
- Social media, gaming, and OTT platforms are specifically engineered to maximize engagement, often leading to addictive behaviours. Digital astrology services, especially post-COVID-19, have seen rapid growth, leading to dependency and financial stress.
- Effective strategies, including education, regulation, and support systems, are necessary to address digital addiction, reduce its impact on society, and promote healthier digital habits.
https://gaming.skoch.in#digital-addiction
Highlights
- SKOCH Centre of Excellence identifies that global indices often assess India using a Global North and European perspective, leading to biased results that overlook India's unique context and development in the Global South.
- SKOCH is developing new indices in areas such as Corporate Digital Responsibility (CDR), ESG, digital governance, digital lending, digital gaming, and human rights to better reflect India’s strengths and create globally applicable indices.
- While UN-EGDI ranks India at 105 in digital governance, SKOCH’s analysis places India 2nd among the top ten economies, highlighting the impact of Digital India initiatives like UPI and public digital infrastructure.
- India has 440 million gamers, and SKOCH has developed a responsible gaming framework focusing on player protection, industry sustainability, and preventing social, psychological, and financial harm.
- SKOCH has studied responsible gaming practices from countries like the UK, USA, and Germany, and organized workshops with diverse stakeholders to finalize a comprehensive CDR framework for gaming, including areas like social responsibility, mental health, and multi-language support.
https://gaming.skoch.in#digital-indices
The Responsibility of Gaming
Mr Sumanta Dey, Head-Public Policy, Head Digital Works at the 98th SKOCH Summit in New Delhi
Highlights
- 440 million players in India engage in digital gaming, highlighting its economic significance.
- Over 100,000 people work in the digital gaming industry, contributing to economic growth.
- A responsible gaming framework is essential to protect against potential social, psychological, and financial harms.
- Platforms reject 80% of new users due to KYC non-compliance, indicating the need for stricter adherence.
- Only 5% of users opt to remove self-exclusion limits, showcasing the effectiveness of responsible gaming measures.
- A task force with diverse stakeholders aims to establish a responsibility framework for digital gaming.
- Emphasizing governance in digital businesses is crucial for scaling and sustaining growth.
https://gaming.skoch.in#digital-indices-sumanta-dey
Digital Mental Health
Dr Yatan Pal Singh Balhara, Professor-Psychiatry, National Drug Dependence Treatment Centre (NDDTC), AIIMS at the 98th SKOCH Summit in New Delhi
Highlights
- Digital spaces influence mental well-being and require careful navigation.
- Expectancy affects how users feel about their digital interactions.
- Digital platforms actively shape user engagement, impacting mental health.
- Negative emotional states and addictions are rising due to excessive digital use.
- Awareness programs in schools are crucial for educating youth on digital wellness.
- New frameworks and indicators are being developed to assess digital mental health.
- Balancing the benefits and risks of digital engagement is essential for mental wellness.
https://gaming.skoch.in#digital-mental-health-yatan-pal-singh-balhara
Responsible Digital Gaming Framework
- Responsible Digital Gaming Framework:
- Core Focus Areas: Responsibility, Integrity Gaming, Risk Management, Professionalism, Marketing & Advertisement, Social Responsibility, Mental Health, Multi-Language Support
- Key Elements of the Framework:
- Player Protection & Safer Gaming: Underage protection, self-exclusion, financial safety, and responsible marketing.
- Financial Safety & Transparency: Anti-Money Laundering (AML), grievance redressal, and user rights.
- Fairness & Regulatory Compliance: Adherence to regulations, licensing checks, and ethical conduct.
- Risk Management & Integrity: Mitigation strategies, compliance monitoring, and regulatory adherence.
- Social Responsibility: Addressing mental health, social messaging, and protecting vulnerable groups.
- Marketing & Advertisement: Transparent messaging, risk warnings, and minor protection.
- Multi-Language Support: Content localization, accessibility, and cultural sensitivity.
- Countries Mentioned:
- Compliant/Framework Adopters: India, United Kingdom (UK), United States of America (USA), Canada, France
- Countries with Compliance Challenges: Brazil (underage gambling restrictions and regulatory gaps), Germany (black market control and incomplete enforcement)
https://gaming.skoch.in#responsible-digital-gaming-framework
Panel Session: Final Frameworks for CDR & Gaming
Final Framework for Corporate Digital Responsibility were accepted at this Multi-stakeholder Roundtable
Copy Linkhttps://gaming.skoch.in#final-frameworks-for-cdr-gaming
Dr Manoj Kumar Sharma, National Institute of Mental Health and Neuro Sciences presenting on the topic 'Astrology: Practice or Addiction' at the workshop Harmonising ESG, CSR, CDR and SDGs
Highlights
- Increased interest in astrology during COVID-19.
- Online astrology services have surged.
- Financial consequences of excessive astrology use.
- Cognitive errors lead to astrology dependence.
- Need for regulation in digital astrology practices.
- Growth of astrological apps and startups.
- Astrology can distract from seeking professional help.
https://gaming.skoch.in#astrology-practice-or-addiction-dr-manoj-kumar-sharma
Dr Gursharan Dhanjal, Vice Chairman, SKOCH Group presenting on the topic 'Responsible Digital Gaming Framework' at the workshop Defining Responsibilty Frameworks: Digital Lending, Gaming, OTT & Intermediaries
Highlights
- Reviewed regulations from multiple countries to create a CDR framework.
- Identified 15 subsections under data security and privacy.
- Emphasized digital inclusion and equitable access in India.
- Highlighted the need for carbon neutrality and e-waste reduction.
- Discussed fair income and employee management in digital contexts.
- Examined integrity and social responsibility in gaming frameworks.
- Stressed the importance of defining regulations to protect India’s digital economy.
https://gaming.skoch.in#responsible-digital-gaming-framework-dr-gursharan-dhanjal
Dr Yatan Pal Singh Balhara, Professor-Psychiatry, National Drug Dependence Treatment Centre (NDDTC), AIIMS presenting on the topic 'Mental Health Dimensions of Digital Business and What can be Done' at the workshop Defining Responsibilty Frameworks: Digital Lending, Gaming, OTT & Intermediaries
Highlights
- Mental health issues arise from various digital activities like gaming and social media.
- The impact of digital platforms on user behavior can lead to mental health concerns.
- Mental health problems can stem from both direct and indirect pathways related to online engagement.
- Behavioral addictions are a significant focus, particularly in vulnerable populations like adolescents.
- Businesses can leverage mental health awareness for growth strategies while ensuring user safety.
- Age-appropriate technology use is crucial for children to mitigate addiction risks.
- A unified regulatory framework is needed for effective management of digital health issues.
https://gaming.skoch.in#mental-health-dimensions-of-digital-business-dr-yatan-pal-singh-balhara
The Government of India has the right reasons to be concerned about game addiction in children, them being exposed to unmonitored in-game purchases, age-inappropriate content and online harassment.
Read More Copy Linkhttps://gaming.skoch.in#children-and-family-safeguards-framework-in-video-games-lokesh-suji
Is the Dice Loaded?
- Cultural and Social Context:
- Gambling has deep historical roots in India and has often shaped its history, such as in the Mahabharata.
- The current rise of the online gaming industry is seen as both an economic opportunity and a societal risk.
- Exponential Growth:
- The online gaming industry has grown rapidly, both globally and in India, with India's market value reaching nearly $3 billion by 2022, growing at an annual rate of 40%.
- Legal and Regulatory Challenges:
- The legal status of online gaming and gambling remains ambiguous in India.
- Recent GST Council decisions have imposed a 28% tax on the full-face value of online gaming, horse racing, and casinos.
- Government Stance:
- The government equates online gaming to gambling and has made clear that taxing these activities does not legalize them in states where they are banned.
- SKOCH Group's Position:
- SKOCH Group advocates for a unified tax and regulation framework for all games, whether skill-based or chance-based.
- Self-regulation is criticized as ineffective, and they emphasize the need for a strong regulatory framework.
- Venture Capital (VC) Influence:
- VCs see online gaming in India as an opportunity due to the lack of strict regulation, often lobbying and litigating to maintain a favorable environment.
- Regulation vs. Self-Regulation:
- The industry prefers self-regulation, but SKOCH argues that it’s prone to conflicts of interest and inefficiency.
- Self-regulation is seen as inadequate without government oversight.
- Taxation and Economic Impact:
- The high GST rate on online gaming is seen as necessary to regulate an addictive industry, but it has sparked fears of job losses and capital flight.
- The job loss argument is countered by comparing the impact to other industries like tobacco, which also face high taxes yet thrive.
- Central vs. State Control:
- Gambling is a state subject, leading to confusion over which authority should regulate online gaming.
- There are constitutional options for central intervention, but they require careful consideration and broad consensus.
- Ethical and Societal Considerations:
- The addictive nature of online gaming raises concerns about mental health and social consequences, particularly for youth.
- Recommendations and Future Steps:
- SKOCH plans to form a National Task Force to address the regulatory framework, taxation, and constitutional clarity around online gaming.
- A Position Paper on Gaming/Gambling is set to be released in early 2024.
https://gaming.skoch.in#is-the-dice-loaded-sameer-kochhar
- Is there a case for reviewing GST on online gaming?
- Whose order of business in the Government is Gaming/Gambling?
- Is it possible to differentiate between games of skill and chance?
- Does India lack policing and enforcement skills in the field of Gaming and Virtual Digital Assets?
- What should be a prudent regulatory framework and structure?
https://gaming.skoch.in#is-the-gaming-dice-loaded
Highlights
- The global online gaming market exceeded $200 billion by 2022, while India experienced a remarkable 40% growth, reaching a value of $3 billion, fueled by cultural roots in gambling.
- The text emphasizes the importance of regulating all forms of gambling, including online gaming, and highlights ongoing debates about distinguishing games of skill from games of chance.
- The proposed 28% GST on the full face value of gaming transactions has sparked controversy, raising questions about fairness and the rationale behind taxing the entire transaction instead of just the platform fees.
- The fantasy sports industry has created thousands of jobs and has the potential to generate even more employment, highlighting the economic significance of online gaming.
- Self-regulation is criticized for lacking accountability and consumer representation, with concerns that it may lead to a fragmented market and allow dominant players to stifle competition.
https://gaming.skoch.in#india-law-forum-feature
Highlights
- The popularity of RMG is attributed to its variety, engaging user experience, and appeal across age groups. It enhances cognitive patterns, offers mindful skill development, and includes incentive schemes such as cashbacks and referrals, driven by data analytics.
- RMG is one of the fastest-growing sectors in India, driven by smartphone penetration, digital payment systems, and a young, tech-savvy population. Technological advancements like AI and the growing participation of women gamers have further expanded the market.
- There is a surge in skill-based games beyond traditional options like rummy and poker. The market is expected to grow at a CAGR of 38%, reaching $1.6 billion. New games catering to diverse audiences are being introduced, emphasizing skill and challenge.
- Casual games gained popularity post-pandemic due to their ease of access and appeal to a broader age and gender demographic. This trend reflects a shift towards providing more inclusive gaming options that suit different preferences and time commitments.
- A robust regulatory framework is essential for sustaining long-term growth in the RMG industry. Proper laws and a structured system can support responsible gaming, ensure user safety, and enhance the credibility of the sector as it matures in India.
https://gaming.skoch.in#ief-and-litfest-economy-and-budget
Highlights
- The Indian real-money gaming segment has experienced rapid growth and is now valued at 49 billion rupees, forming a significant portion of the overall online gaming industry in India.
- There are ongoing debates about the legality and social impact of real-money gaming, including issues related to addiction and financial losses, which call for better regulatory oversight.
- A clear distinction needs to be made between gambling and skill-based gaming, as this will aid in creating a more nuanced regulatory framework. Skill-based games involve player expertise, whereas gambling is determined by pure chance.
- The skill-based gaming industry has the potential to create jobs and stimulate economic development. However, policy clarity and regulations are essential to ensure that the industry grows responsibly.
- Developing a clear, consultative regulatory framework is necessary to differentiate between skill-based games and gambling, without overregulation, to harness the industry's economic potential while safeguarding against social harms.
https://gaming.skoch.in#india-economic-forum
