Indian group calls for cap on entry fees for online gaming amid regulatory push

The Dream11 and MPL logos are displayed in front of the Indian flag in this illustration taken on September 14, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

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  • Group to push Rs 50 cap on paid online games
  • India panel works on regulations for booming sector
  • The move could affect the platforms’ revenue and growth potential: sources
  • Industry plans to lobby against regulations: sources

NEW DELHI, Sept 20 (Reuters) – An influential Indian nationalist group will push for caps on entry fees for paid online gaming players, potentially increasing pressure on a multi-billion dollar industry preparing to lobby against tougher rules. .

The growing popularity of real money gaming, fueled by endorsements from major cricket figures, a subcontinental craze, has fueled regulatory efforts to combat the risk of addiction and reports of financial loss and suicide among young people.

Such games could account for as much as 53% of a games market set to reach $7 billion by 2026, or three times its size last year, says research firm Redseer.

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“The size of the tickets should be regulated. It should not be more than 50 rupees. This is an addiction,” said Ashwani Mahajan, a Swadeshi Jagran Manch official who is seen as having significant influence on Indian policymaking.

“We will talk to all interested ministries about this,” he told Reuters.

Although it is equivalent to only 62 cents on the dollar, the proposed cap represents a significant proportion of the 25 rupees, or 31 cents, that is normally spent by 97% of users on an application such as the mobile Premier League, for example.

The remaining tiny 3% of users contribute 30% of the platform’s revenue by playing larger ticket-sized games, an industry source estimated.

Tuesday’s comments from the group, the economic wing of the ruling Bharatiya Janata Party’s (BJP) ideological parent, come after a government panel called for a new regulatory body and recommended deposit and withdrawal limits. read more

The measures, in a confidential draft reported last week by Reuters, have alarmed an industry where Tiger Global and Sequoia Capital have invested in fantasy sports game providers such as Dream11, MPL and Games24X7 that offer cricket and other paid contests.

Dream11 is valued at $8 billion, while MPL and Games24X7 are valued at around $2.5 billion each, data from PitchBook shows.

Although the panel report did not set any upper limit on fees, four gaming industry sources who spoke on condition of anonymity said such a move would hurt the platforms’ revenue and growth potential.

They promised to raise their concerns with the government.

India’s information technology ministry, which created the government panel, and some senior officials from ministries such as revenue and sports listed on it, did not immediately respond to a request for comment.

MPL declined to comment. The other two firms did not immediately respond to requests for comment.

Sameer Barde, chief executive of the E-Gaming Federation, a group representing the MPL and Games 24X7, said companies “can’t really function” with a uniform restriction on deposits, calling such limits “unfair” to players.

The new federal rules are aimed at resolving industry complaints about “inconsistent” regulations by Indian states, differing court rulings on which games are governed by skill or chance, and addiction concerns, the report showed. panel draft. read more

Another concern for the industry is a government plan for a regulator to assess whether a game is based on skill or chance.

Such federal scrutiny, two sources said, will have a bigger impact on the Sequoia Capital-backed MPL, as it offers about 70 real-money games, while Dream11 has just seven fantasy sports games, including cricket and soccer.

“It’s pretty clear to most of the mature industry that regulation will only help,” Barde said.

“But the concern is that if the approvals take too long to come in, by then it could become irrelevant in the market.”

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Reporting by Aditya Kalra in New Delhi and Abhirup Roy in Mumbai; Edited by Clarence Fernandez

Our standards: the Thomson Reuters Trust Principles.

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