Untangling the Video Game Industry: Separating Fact from Fiction

In India, a coalition of over 70 video game companies is urging the government to distinguish their industry from real money and fantasy games. The lack of clear definitions has led to negative consequences for video game companies, including tax raids, banking issues, and confusion among international investors. The coalition is now seeking distinct categories of "video games" and "real money games" to address these challenges and foster the growth of the video game industry in the country.

Empowering India's Video Game Ecosystem: A Call for Clarity and Support

Distinguishing Video Games from Real Money Games

For over a decade, real-money gaming companies and fantasy sports startups have marketed themselves as video game companies. However, as regulatory scrutiny increases, these video game firms are seeking clearer definitions to avoid being grouped with gambling-related entities. The coalition has requested the government to establish distinct categories of "video games" and "real money games" in Indian policy frameworks. They argue that this differentiation is crucial, especially following recent tax amendments that placed real money games in a higher tax bracket (28 per cent) compared to video games (18 per cent).The lack of distinction has led to various challenges for video game companies. Local police have mistakenly raided video game parlours, thinking they were gambling establishments. This confusion has also complicated investment deals as companies continually need to clarify that new regulations target real money games, not video games. The coalition suggests that the Ministry of Information and Broadcasting should serve as the nodal agency for the video game industry, aligning it with other entertainment and media sectors, unlike the real money gaming sector, which falls under different regulatory oversight.

Fostering Growth and Development in India's Video Game Industry

Despite India's position as a leading startup ecosystem and emerging tech manufacturing hub, its video game industry remains underdeveloped. To support the sector, the coalition proposes several key initiatives:Establishing a Catalyst Fund for financial backing of startups and small businesses: This fund would provide much-needed capital to fuel the growth and innovation of India's video game companies.Encouraging banks to recognize digital intellectual property (IP) as collateral for loans: This would enable video game companies to access financing more easily, allowing them to invest in research, development, and expansion.Improving higher education in game development: By enhancing the quality and availability of game development programs, the coalition aims to cultivate a skilled workforce to drive the industry forward.Reducing the Goods and Services Tax (GST) on video games from 18 per cent to 12 per cent: This tax reduction would make video games more affordable for consumers and increase the industry's overall competitiveness.Advocating for corporate tax holidays to attract investment and ensure industry sustainability: Tax incentives would help attract both domestic and international investment, fostering a thriving and sustainable video game ecosystem in India.These measures, if implemented, would help to foster the growth and development of India's video game industry, ensuring it receives the recognition and support needed to thrive independently of the real money gaming sector.

Addressing the Misconceptions and Challenges

The coalition also points out that fantasy sports startups are overshadowing traditional video gaming, causing lawmakers to overlook legitimate video game companies' concerns and policy proposals. To address this, they propose clear definitions in Indian policy frameworks, distinguishing video games as digital entertainment products played for leisure or learning, without monetary staking, from real money games that involve monetary stakes.The group also requests that media outlets avoid using images of video games when reporting on real money games or gambling, to prevent public misconceptions. This would help to establish a clear distinction between the two industries and ensure that video game companies are not unfairly associated with gambling-related activities.Overall, the coalition's efforts to differentiate the video game industry from real money gaming are crucial for the long-term success and sustainability of the sector in India. By addressing the current challenges and advocating for targeted support, the industry can unlock its full potential, contributing to the country's economic growth and technological advancement.