Explained | Why did the real money gaming industry come out with a code of ethics? Premium

Real money gaming industry's main organizations sign code of ethics to conduct business ethically and transparently.

The story so far: The real money gaming industry’s main industry organisations — the Federation of Indian Fantasy Sports (FIFS), the E-Gaming Federation (EGF) and the All India Gaming Federation (AIGF) all signed a code of ethics earlier this week. The code sets out standards for real money gaming firms to conduct business ethically and transparently.

What is the real money gaming (RMG) industry?

The RMG industry represents firms like Dream11, PokerBaazi and others who offer games where users can risk money that they either lose or win returns on. While many countries would classify these firms as gambling operators, the Indian judiciary has repeatedly upheld that games where there is a “preponderance of skill,” such as poker, where players can benefit better from playing a game well than those who don’t, are not classifiable as gambling.

As such, these firms are hard to regulate for States, even though under the Constitution, “betting and gambling” is a State subject. In Andhra Pradesh and Telangana, the industry is fighting a ban on fantasy sports in particular. Fantasy sports services entice player to create their own teams in an app, with real world player performance impacting outcomes on the fantasy apps. This is somewhat distinct from sports betting, where real world teams are directly wagered upon.

The RMG industry is extremely valuable, and has clocked revenue of $3.8 billion in the 2023-24 financial year, according to venture capital firm Lumikai. As the cost of providing the service is far cheaper than operating a real-life gaming house, the theoretical returns on this industry are massive. However, the industry has seen a slowdown in growth since a 28% GST rate was applied in 2023 to deposits players make with these platforms.

Why have these firms put out a code of ethics?

While the RMG industry has thwarted several legal challenges from States seeking to ban poker and rummy apps — such as in Tamil Nadu — the efforts by State authorities continue. The Tamil Nadu Online Gaming Authority (TNOGA) has published rules that have faced resistance from the RMG firms. These include Aadhaar verification and a blackout from midnight to 5 a.m., something the RMG firms have argued is arbitrary.