Inside Asian Gaming

inside asian gaming May 2014 26 that historically were very much against it. Regulation in India is going to happen inevitably. Now, the big question is when. There’s one thing that’s important to mention, and that’s the Public Gambling Act in India, which is the gaming law that was written in the 19th century by the British and is still the law that is being used and excludes games of skill as gambling, therefore they are legal to be conducted for real money. So, what constitutes a game of skill? That is the big question. Now, rummy has already been considered by the Supreme Court of India a game of skill. So we can assume that rummy is legal in India. The clear example is that rummy sites are already operating in India generating serious revenues. There are another couple of court decisions pending—for poker, there’s one in the Delhi High Court, and there’s another one in the Supreme Court of India regarding rummy. The SC decision is whether rummy can be played for real money or not. If any of these decisions go favorably we will see a big opening in the market because all the poker operators and even the sports betting operators, those international brands will want to start leveraging this games of skill thing. However, games of chance will require political will to be regulated, and that is always more complex and slow. So how much is up to states and how much the national government? It seems both have a hand in regulation. It’s 100% states. States are the ones who decide to regulate anything relating to gaming or gambling. What the central government can do is offer guidelines, and what they have is the Public Gambling Act, which is a central government law, and any state that wants it can adopt it as their own. However, the real power of regulating or legislating on gambling activities is 100% with the states. Recently, police raided poker and rummy clubs prior to state High Court rulings that they were games of skill and playing for stakes was therefore allowed. Could these rulings build momentum in the national sphere? Absolutely. The whole objective of these gaming companies is to generate enough legal evidence to support their respective business models. As I said, games of skill can be legalized through judiciary decisions, but games of chance will need political will and a regulatory body, and that will take longer. All these companies and gaming associations, which I cooperate closely with, are trying to seek several favorable opinions of High Courts to operate legally, but there needs to be a focused and joined plan to use all this effort to push the central government to look at the issue seriously and come up with a regulatory entity, to say “OK, you know that Karnataka state agreed already, you know that Delhi may agree soon, you know that Goa, Sikkim and West Bengal have agreed already, isn’t it time to actually look at it on a central government level?” What’s your best estimate of the size of the Indian gaming market? There was a widely quoted figure of US$60 billion a few years back, with about half illegal. I think that calculating the size of the market for Indian gambling is very tricky and very complex, because of the huge part of the market controlled by clandestine operations. My estimate is that a lot more than 50% is illegal. We can probably stick with the figure of in excess of US$60 billion that KPMG came up with. I’ll give you another figure: It is estimated by Interpol that about 40% of India’s GDP is being transferred outside India in terms of money-laundering and underground activities every year, through hawala activities—like a kind of Western Union system which is based on honor that sports bookies use to try to pretty much launder money and conduct their businesses. So if all this activity was monitored by the government, in one day the GDP of India would increase 40%. Can you imagine that? I should also say that’s not all gambling—it includes the entire black economy, but gambling is a significant percentage of that. So, yes, it’s difficult to calculate, but what I can tell you is that India is a gaming-loving nation. You see gaming on the street level very often. Of course, these are all cash- based transactions, and based on trust and based on personal relationships. You just need to go to a small local cricket game—it doesn’t have to be a big cricket game, just a second-division sort of game—to witness and experience the massive betting culture in India. Just one game is potentially worth tens of thousands of dollars. It’s interesting that you say gambling is so prevalent. Some people say Indians have a propensity to gamble, others say it’s frowned upon. Well, gambling has been accepted socially for a long time. However, there’s still that moral debate about whether it should be made legal. Religion is a strong factor in India and “It’s estimated that about 40% of India’s GDP is being transferred outside India in terms of money-laundering and underground activities every year, through hawala activities—like a kind of Western Union system which is based on honor that sports bookies use to try to pretty much launder money and conduct their businesses.” Insights