by Vishal Gondal
Gaming refers to the action or practice of playing video games. In recent years, many have tried to make real money gambling an integral part of the gaming industry. Unfortunately, game development with real money gambling has been fraught with pressing ethical issues. These ethical issues are compounded by business models where online gambling apps, popularly referred to as Real Money Gaming in India, are incentivized to have customers who lose increasingly large sums of money.
In India, the current legal position of online gambling is based on archaic laws that will need to be modernized as soon as possible. The Public Gambling Act, 1867, prohibits the operation of and visit to gambling houses; but exempts the application of the sections to ‘any games of mere skill’. Most of this legislation was enacted prior to the advent of virtual or online gambling and therefore primarily refers to gambling activities taking place in physical premises. It is not a settled position of law as to whether these prohibitions extend to the online medium. However, it is clear that online gambling is fraught with the same issues that exist in offline gambling sites.
This unsettled position has led to the law around online gambling in India to be unclear and grey. Roulette, blackjack, poker, bingo, sports betting, fantasy sport betting, lotteries, rummy – all have piecemeal regulation through state legislations. However, these measures have not been elaborate enough to ensure online gambling is run ethically and legally.
In 2018, the Law Commission had recommended that sports betting and gambling be legalized and heavily regulated. Congress Member of Parliament Shashi Tharoor took the recommendations and proposed a private members’ bill, the Sports (Online Gaming and Prevention of Fraud) Bill, 2018, to prevent sports fraud and regulate online sports betting. It proposed the formation of a commission to oversee the functions of online gaming websites and to track illegal online sports gaming and betting patterns. This proposition is highly relevant given the rise of online sports betting and the need to regulate it.
Online gambling platforms advertise themselves as a source of reliable income, rather than as a source of entertainment. This misrepresentation has not just caused loss of income and economic hardship to lakhs of customers,it has even led to suicide in some cases. People are not signing up to these platforms for the joy of gaming, but rather a chance at making a quick buck. When their luck runs out, who will be holding the buck?
The current evolved industry-wide standard on determining whether a game is skill-based or chance-based is the two-test method. For a game to pass off as a skill-based one, the first test is that a player must be able to choose to lose; he must exercise some agency in winning. The second text is that a player’s performance must improve over time, consistently and steadily. Industry insiders have commented that the second test is difficult for the gambling segment; as in the real world, performances often plateau, or rise and fall cyclically.
In August, a Chinese man was arrested from Delhi for illegally running betting applications and duping Indians of crores of rupees. He is presently lodged in a Hyderabad jail on remand. This is a mere example of a gambling mobile application found to be engaging in fraudulent activities. Until there is meaningful regulation, Indians will continue to be at risk when engaging with these platforms.
Online Gambling: Areas of concern
Favouring the house
Many online gambling sites prominently feature games that favor the house. Furthermore, most online gambling makes use of a computer science concept known as random number generators (RNGs). These RNGs are well-known as being prone to rigging if not audited effectively. It is critical to note that even if opponents seem human, there is no way to verify that they are not bots.
Celebrity endorsements without oversight
The issues of ethics and legality in online gambling are further compounded by extravagant marketing schemes designed to entice people to spend their wages at a miniscule chance of winning outsized returns. JeetWin, an online casino that operates a mobile application, partnered with Sunny Leone as their brand ambassador. This application is now banned in many states. Similarly, Virat Kohli endorsed Mobile Premier League (MPL). The MPL is now banned in Assam, Odisha, Nagaland, Sikkim, Tamil Nadu, Andhra Pradesh and Telangana. These mobile applications have been banned as a result of the effect they have on their users – leaving many destitute and without any suitable recourse available.
It is disheartening to see celebrities with mass following endorsing these mobile applications, without any regulatory oversight to ensure that advertising is taking place in an ethical manner. This is especially crucial in an area like gambling, where people can lose their livelihood and get trapped into cycles of addiction.
How gambling companies leverage data and algorithms
Aside from the clear legal issues, online gambling platforms are now able to search for patterns of play with improved data science algorithms and machine learning. They formulate promotions, deals, rewards, notifications with the opportunity to win huge cash prizes. These formulations are tested to determine which of them are more efficient in delivering the behavior the platform owners are aiming for: maximize addictive behavior. These platforms can measure emotions, such as annoyance and regret, to further incentivize customers.
The e-wallet used on these online gambling sites also provide significant details on consumer spending. The platforms can see frequency and volume of deposits and withdrawals, as well as the specific wagers being made and engagement duration. This context is invaluable for the platforms as they try and maximize wagers made.
No restrictions on access to minors
These gambling mobile applications make no effort towards ensuring that minors or children below the age of 18 are not gaining unlawful access to their services. The parents of these children have no way of knowing if their children are on such platforms. The services are designed to be highly addictive and misleading, with the potential to cause harm to individuals and society.
The necessary regulatory framework for India
The United States has strong legislation to protect citizens and residents from the perils of online gambling. The Unlawful Internet Gambling Enforcement Act,2006, prohibits gambling businesses from “knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the Internet and that is unlawful under any federal or state law,” thereby effectively banning all unregulated gambling sites. Similarly, Singapore has enacted Common Gaming Houses Act and Remote Gambling Act. These acts make online gambling legal only if it is done through an exempt operator.
In India, gambling mobile applications are currently operating under a regulatory grey area. It is crucial that the Indian consumer is protected while participating in wagers. The Indian Government should follow the example set by the United States and Singapore to create strong, centralized regulation in this area. The government needs to take the first steps to protect consumers across the country, as without adequate regulation – consumers will continue to have their livelihood and familial responsibilities jeopardized.
Online gambling platforms are majorly allowed to operate without any restrictions, even though their offline counterparts are not allowed to operate without significant governmental oversight. Even without rigging, platforms can easily place players with bots or experts to give the house an edge over unsuspecting players. It is important to note that Google, Apple and other app store owners are liable for mobile applications on their store that do not abide with Indian law and are blatantly rigged.
Given the precarious nature of online gambling, it is absolutely critical the gaming industry comes together to clarify the difference between online gambling and video games. Lokesh Suji, director of the Esports Federation of India (ESFI) & VP – Asian Esports Federation noted, ‘comparing video games like FIFA21, Clash Royale, etc. to Fantasy, Teen Patti, Poker, etc. is hard to digest. Esports refers strictly to credible, competitive and organized video game competitions where individuals play professionally, like any other sport. The laid-out rules and regulations of the game are key while playing more than anything.”
The menace of unregulated gambling existing freely in society will lead to an increase in suicides attributed to gambling. Aside from the increased prevalence of suicide, the country can expect to also witness a growth in crime attributed to gambling. As online gambling platforms show tremendous growth and revenue figures, more people will be required to enter a life of crime to continue funding their habit. Especially with the lack of treatment options available domestically for problem gamblers.
While fantasy sports have been looked at, the entire sector of online gambling needs to be looked at in detail by regulators. Wagers, whether online or offline, need to be regulated.
There are numerous state legislations in India which either ban or permit betting on horse races which can be closely compared to fantasy gaming, as results are linked to a real world outcome. Goa and Sikkim are the only two states which seem to have authorised horse betting in their states.
Just as NITI Aayog drafted guidelines for fantasy sports regulation, there is a critical need for legislation to bring online gambling under effective government control. Real money gaming has to be treated as gambling, with the online gambling platforms effectively scrutinized under applicable regulatory standards. Further, the platforms need to be regulated & the government should create support programs for those affected by the societal ills attributed to the problem of gambling.
Vishal Gondal is best known as the father of the Indian gaming industry. He sold his first entrepreneurial venture, India Games, to the Walt Disney Company. He is the founder of GOQii and nCORE Games, driving innovation across the healthcare and gaming sectors.