Online gaming needs a synchronized policy framework

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Source: The post is based on an article “Online gaming needs a synchronized policy framework” published in The Live Mint on 30th August 2022.

Syllabus: GS 2 – Government policies for various sectors

Relevance: benefits and challenges associated with online gaming

News: This article discusses the issues associated the online gaming and its economic benefit to India.

What is the current situation of online gaming in India?

1) This industry is valued at about $2 billion currently and is expected to reach $5 billion by 2025.

2) Foreign investors have invested more than $1.6 billion in just the last 18 months.

3) Industry estimates suggest that the industry provides 50,000 jobs directly and many more jobs indirectly.

4) The Union ministry of electronics and information technology has been holding consultations to bring in positive and comprehensive regulations for online gaming.

5) Our Prime Minister called for making games in India and gave slogan of ‘Create in India’ and ‘Brand India’.

What are the problems associated with online gaming?

Indian online gaming firms are facing difficult problems, like

First, the group of ministers (GoM) suggested a crippling goods and services (GST) regime on casinos, horse racing and online gaming.

The GST structure is such that players will pay GST not only for the service provided to them but also for their own money that goes into creating prize pools.

Reports suggest that this situation has arisen as the GoM may have equated games of skill with gambling for taxation purposes.

What is the difference between online gaming and gambling?

Supreme Court and various high courts have held that games that have a predominance of skill involved in their outcomes are classified as games of skill, while games based on the predominance of chance are gambling.

Online games of skill are protected under the Constitution while gambling is outlawed in most states.

To avoid such confusion, the central government has thought to bring uniform regulations for online gaming.

What can be the further course of action?

This industry needs a rational and synchronized framework under which our tax policy is consistent with a positive vision for online gaming.

There must be a convergence of government policies across domains to support and incubate any new and innovative industry.

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