This article is a part of a larger series on Online Gaming in India. The previous article deals with how betting apps and fantasy league games have appropriated and corrupted the term, ‘online gaming.’ Click here to read the article.
With the advent of online gaming and the perception that it has of gambling, you will see several online gaming brands bombard their potential customers with the phrase “game of skill.” They will also say that as opposed to online games, gambling and betting is a “game of luck” but what exactly do these terms mean?
More importantly, how do they relate to the online gaming industry in general? Why, for some bizarre reasons, do online gaming platforms that let their users play games like poker, rummy or even place bets on fantasy leagues, insist that they are games of skill and not games of luck?
Luck vs Skill: The debate
In its most basic form, a game of luck is any game that requires no particular skill for a player to emerge victorious. The results of a game are based purely on chance or luck. Most elements of the game are so random, that it is almost impossible for anyone other than a very seasoned player to see a pattern.
On the other hand, a game of skill is exactly the opposite – a game that requires some skill from the player, be it mental acuity, intellect, some special skill or even brute strength. The chances of a player winning a game depends on their skill, the strategies they use and the experience they have in that game.
The issue is, that most online games that pose themselves as a game of skill, actually have a major component of luck, or chance involved. On the other hand, it is also true that games like poker, rummy and blackjack, do require some skill and strategy from a user, whether they are a novice or a skilled player.
What does the law say?
The stance that the Government of India has taken on this sends mixed signals – on one hand, it has recognised games like online rummy, poker and other e-sports which involve a major bit of luck as games of skill, and is therefore taxing them at 18 per cent. On the other hand, it is looking for ways to tax such games at 28 per cent. According to the most recent GST guidelines, only games of luck are to be taxed at that rate.
Then, there is the case of fantasy leagues. In any given fantasy league game, the idea is that a player will create an imaginary team, comprising real-life players, and bet on the team to win. While a user may use a bunch of different strategies and analyses to create the team, at the end of the day, they are betting on their team. The act of betting means that there is a bit of luck involved, that a player is taking a chance.
The Supreme Court of India, on two separate occasions, has ruled that fantasy games, like online poker and rummy, are games of skill, even though several people who want these industries to be regulated and not just taxed, believe that these games are in fact games of luck.
According to a joint report by ASSOCHAM and Ernst and Young, online skill gaming has multiple unique features that led them to the conclusion that the industry deserves a helping hand from the Government for it to flourish. By 2023, the sector’s size is expected to reach $2 billion in India alone. Imagine the tax revenue coming in from an industry that still is in its nascent stage. Online gaming businesses are protected under Article 19(1)(g) of the Indian constitution – the freedom to practise any profession, or to carry on any occupation, trade or business – and operate as legitimate business entities.
Be that as it may, online gaming is facing a real perception problem, and for some pretty valid reasons. It is extremely difficult for a regular person to differentiate between a game of skill and a game of luck. That is the reason why online gaming platforms, especially the ones that are based on rummy, poker, or any sort of fantasy leagues, often bend over backwards to position themselves as games of skill.
That is why you will come across arguments from the online gaming lobby that these platforms are just technological products, to facilitate the gaming experience for the end user. They also argue that the operators have no participation in how a particular instance of a game plays out, a claim which has time and again proven, to be false.
Irrespective of what one’s stance is on whether online games like poker, rummy and fantasy leagues are games of skill or games of luck, what one cannot deny is the fact that these games need to be regulated.
This article is a part of a larger series on Online Gaming in India. Click here to read the other articles that are a part of this series.
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