‘Social gaming growing rapidly in India due to proliferation of smartphones, cheap data’

Trivikraman Thampy, Co-founder and Co-CEO of Play Games24x7

Much like banking, insurance and retail, among others, migrated from the brick-and-mortar model to the online model in the last few years, the gaming industry in India too has moved online. And this industry is growing big-time – by 60-70 per cent a year. But it faces certain challenges, such as those related to perception (gaming being equated with gambling and its vices), and varied rules by some States in India, despite Supreme Court judgments setting the parameters. BusinessLine spoke to CEOs of the two biggest players in the online gaming industry in India – Trivikraman Thampy, Co-founder and Co-CEO of Play Games24x7, and Deepak Gullapalli, CEO, Head Infotech, for their perceptions on the evolving scenario. Excerpts:

What is the size of the online gaming industry in India? At what rate is it growing? How many big players make up this industry in India?

Trivikraman Thampy: The size of the mobile and online games industry in India is Rs. 900-1,200 crore and it is growing at 60-70 per cent. The biggest players are Play Games24x7 and Head Infotech. Smaller players include Adda52, Dream11, Junglee, Octro Inc and Moonfrog Labs.

What is the profile of the people who play online games?

TT: The game-playing audience, both in skill games and in social games, is predominantly male. While males of all age groups over 18 play, over 90 per cent of revenues are generated from people over 25 years of age, that is, those with disposable income to spend on entertainment.

DG: This is an entertainment-only business and our customers are predominantly males aged between 25-40 years of age. The user base largely comprises working professionals and businessmen, but we also have a fair number of housewives and retired senior citizens playing.

There is the offline gaming industry (gaming clubs) and the online gaming industry (gaming websites). What is the difference between the two? What are the different rules that govern these gaming segments?

TT: The rules are essentially the same in offline and online settings. The difference however, is that online games are conducted through certified and tested software and all transactions take place through banking channels. Also, the history of the games played in the past is easily available in online games.

DG: We do not engage in cash dealings; all transactions are conducted through verified and regulated banking channels. The quantum of stakes are capped on our platforms unlike offline games where there can be very high stakes or no-limit tables. We pay GST and Income Tax on all our revenues. We also have strong anti-collusion and anti-fraud detection mechanisms in place that ensure integrity and fairness in gameplay. Our platforms are used only for rummy, which is a game of skill as settled by the Supreme Court. At offline clubs, there are complaints of games of chance being played in the guise of rummy.

The SC has allowed betting in games of skills but not in games of chance. Which popular games played online fall under these two categories?

TT: According to SC rulings, rummy is a game of skill and is allowed for stakes. Poker and Fantasy Cricket are two other games that are being offered under the skill gaming banner in India. While neither of these have been examined by the SC yet, the Karnataka High Court has declared poker as a game of skill and the Punjab High Court has declared fantasy sports as a game of skill. The Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2016 also states that poker, fantasy sports, and rummy are games of skill and has regulated them. The gaming law of Bengal exempts poker from penal provisions of the gambling Act. No games of chance are offered for stakes in India. However, games of chance like ‘Teen Patti’ are offered in a ‘freemium’ format (social games) on the Google Play Store on Android phones and the App Store on iPhones. In these games, people can buy additional chips to play for entertainment but there is no way of winning prizes or money. Since there is no cashing out, these games cannot be treated as gambling games under Indian laws, but are merely games for entertainment.

DG: Judicial precedents laid down by the SC make a clear distinction that rummy, chess and bridge are games of skill, and so playing with stakes is permissible. While the intent is that all games of skill get excluded from the purview of ‘gambling’ when played with stakes, it is only rummy that has been proved to be recognised as a game of skill by the highest court of law in our country. (Thus), games of chance such as Teen Patti, flush, and dice games fall within the purview of ‘gambling’ if played with stakes.

Online games are governed by rules, such as KYC, upper limit of spending and payment of taxes. Walk us through these rules. How much tax does the industry pay the exchequer in a typical year?

TT: Players have to provide and verify their phone numbers before they can play for money. Once they start playing for money, they need to provide their ID and address proof so that we can carry out appropriate KYC checks, much like those mandated by the RBI for mobile wallets like Paytm. Over 90 per cent of our active players who are over three months old in the system are KYC-verified. Those who aren’t, are playing for very low amounts, but they too get KYC-verified at the time they place a withdrawal.

DG: We are a self-regulated market, striving to emulate the practices in the developed markets of the West. Hence, the idea to create a neutral regulatory body — The Rummy Federation (TRF), which can set guidelines for all online rummy operators and bring in transparency and integrity to this industry. We collect identification documents to verify the user, and set dynamic purchase limits based on the user’s gameplay as a part of our ‘responsible gaming’ measures. These limits are set based on the player’s activity which is closely monitored – our objective is to avoid users spending irresponsibly on our platforms. We pay GST on every game played and Income Tax overall. GST and Income Tax account for at least Rs. 150 crore for the industry.

How is social gaming faring in India? How are you Indianising online gaming?

TT: The three biggest Indian companies in this space are Octro, Moonfrog and Play Games24x7. Social gaming in India is growing very rapidly, at over 100 per cent a year, because of the proliferation of smartphones and now extremely cheap data, driven largely by Jio. A future growth driver will be availability of mobile wallets as payment instruments on the Google Play Store, which is currently not available.

DG: Social games are completely free and are not played for real money. A player can make in-app purchases to access certain levels and extend gameplay for longer durations. There are various segments in social gaming such as arcade, action, and first player, but our focus is on the social-casino segment, which is a billion-dollar industry worldwide. Recently, we launched our social gaming vertical, Witty Games India, which develops social casino games for the Indian audience. Our focus is on innovation and not replication, which is why we are developing games inspired by the local community games prevalent across India. An example is our new game, “In-between”, which is a simple three-card game inspired by the card games played on the street corners of India. We want our games to relate to all Indians and not just a select segment of society. Going forward, you will see similar innovations from the Witty Games portfolio.