Untangling the Gaming Landscape: Defining the Boundaries Between Video Games and Real-Money Gaming

For over a decade, the gaming industry has grappled with the blurred lines between video games and real-money gaming. As these businesses face increasing regulatory scrutiny, a coalition of more than 70 video game companies in India is urging the government to create a clear distinction between their industries, seeking to protect the authentic video game sector and foster its growth.

Navigating the Complexities of India's Gaming Ecosystem

Differentiating Video Games and Real-Money Gaming

The coalition of video game companies in India is advocating for the government to abandon the umbrella term "online games" in favor of distinct categories: "video games" and "real money games." This push for clear definitions comes in the wake of recent tax amendments that moved real money games to a 28% bracket, while video games remained at 18%. The lack of clear differentiation has led to unintended consequences for video game companies, who have faced multiple show cause notices, tax raids, and denial of services from banks and payment gateway companies.

Addressing Misconceptions and Public Perception

The video game industry is also requesting that the Ministry of Information and Broadcasting restrict media outlets from using images of video games when reporting on real money games or gambling. This aim is to curb public misconceptions and ensure that the entertainment medium of video games is well-accepted and celebrated by the general public. The industry emphasizes that for the video game sector to thrive, it must be recognized and supported by the public.

Aligning with the Entertainment and Media Verticals

In a broader regulatory context, the video game industry is advocating for the Information & Broadcasting Ministry to be designated as their nodal agency, aligning them more closely with other entertainment and media verticals. This contrasts with the real money gaming sector, which falls under different regulatory purview, further highlighting the need for a clear distinction between the two industries.

Addressing the Challenges of the Video Game Industry

While India has solidified its position as one of the world's leading startup ecosystems and is rapidly emerging as a global manufacturing hub for tech giants, its video game industry remains underdeveloped. This disparity underscores the urgent need to address the sector's challenges, which the consortium is seeking to address through a range of proposals.

Catalyzing Growth and Fostering Sustainability

The consortium is calling for the establishment of a Catalyst Fund to provide financial backing to startups and micro, small and medium enterprises in the video game industry. Additionally, they are advocating for initiatives to encourage banks to recognize digital IP as collateral for business loans, and measures to improve higher education in game development. The industry is also seeking a reduction in GST on video games from 18% to 12% and corporate tax holidays to attract investments and support the industry's sustainability.

Navigating the Regulatory Landscape

The push for clear definitions and industry differentiation also comes as fantasy sports startups increasingly overshadow the traditional video gaming sector. This dominance has resulted in lawmakers largely overlooking the authentic concerns and policy proposals of legitimate video game companies, further emphasizing the need for distinction between the two industries.By addressing these challenges and advocating for clear regulatory frameworks, the video game industry in India aims to unlock its full potential, fostering innovation, investment, and growth in the sector.