By Ragini Saxena and P R SanjaiWatching cricket and playing rummy are online passions for hundreds of millions of Indians, fueling a nascent gaming industry on the verge of quadrupling its revenue. That’s attracting attention from some of Asia’s biggest internet companies.Tencent Holdings Ltd., Alibaba Group Holding Ltd. and SoftBank Group Corp. are investing hundreds of millions of dollars in Indian apps that use loopholes in anti-gambling laws — some dating to India’s colonial era — to offer bettors cash prizes, vacations to Macau and new iPhones.About 300 million players use apps such as Dream11, Play Games24x7, Paytm First Games and FanFight to gamble on “fantasy cricket” and rummy card games — a player base expected to at least double by year’s end. Industry sales are forecast to reach about $3.3 billion by 2024, prompting India’s richest man, Mukesh Ambani, to say the business eventually will surpass that of music, movies and TV shows combined ($12 billion).“India is sweetly positioned to exponentially grow the gaming industry,” said Vishal Seth, a managing director overseeing mergers and acquisitions for Protiviti India. “The online platform has a very strong outlook considering India has the world’s largest youth population and the second-largest internet penetration.”75173773Winning BetWhile e-commerce and video streaming are gaining in popularity, online gaming is considered a better business proposition because the individual transactions are immediately profitable. That’s because operators don’t have to invest much in building up logistics, inventory or content.The boom is driven by Indians who prefer vying for cash and prizes as a better use of their online time than watching movies or playing video games that don’t offer any rewards. And business should pick up for some games with the country on lockdown through May 3 because of the coronavirus pandemic.Lingaraj MK, a 29-year-old software engineer, said he started playing rummy online on a whim and eventually earned a free trip to Hong Kong and $3,500 in cash.“My parents used to scold me for playing rummy,” he said. “After I won the cash prize, they started encouraging me to play more and would ask me when the next tournament is.”More than a third of India’s 1.3 billion people are internet users, and most of that is via budget smartphones with cheap data-usage plans. Before the coronavirus outbreak crushed the global economy, the local smartphone market was growing at a 10% rate.75173783Soaring AwayAs much as 90% of gaming in India happens on phones, said Girish Menon, head of media and entertainment for KPMG in Mumbai.“That is attractive to Alibaba and Tencent because their entire ecosystem is developed around mobile phones,” Menon said. “The time spent on gaming is far higher than any other form of entertainment.”The country also offers something that mainland China does not: a form of legalized gambling.National bans date to 1867, but India’s constitution allows state governments to place games outside the prohibitions if they are recognized as being based on skill and not just chance.The recognized games include rummy and fantasy sports, in which participants pay a fee to assemble a fantasy team of professional players and then win cash or prizes based on how those players perform in real-life games.U.S.-based DraftKings Inc. and London-based William Hill Plc run similar businesses covering numerous sports, but in India, one sport stands above the rest: cricket. The professional Indian Premier League, which plays a faster version of the traditional game, is valued at an estimated $6.8 billion, with investors including Fox Corp. Chief Executive Officer Lachlan Murdoch and billionaires Ambani and Kalanithi Maran.“Cricket is not just a sport in India, it’s a religion,” says the website of Dream11 Fantasy Pvt., a fantasy sports platform with 80 million users that’s backed by investors including Tencent. During last year’s IPL championship match, its users created more than 10 million fantasy teams.75173795Market TriplingThe Mumbai-based company, which advertises as the official fantasy game of the IPL and the National Basketball Association, declined to comment. Dream11 reached a $1 billion valuation last year, according to CB Insights.Tencent, China’s largest gaming and social-media company, also declined to comment. The Shenzhen-based company will tap into the experience it gained during the early days of China’s internet usage, said Vey-Sern Ling, an analyst for Bloomberg Intelligence.“Tencent already has a strong portfolio of games that it can roll out in India,” Ling said, citing collaborations with Activision Blizzard Inc., Supercell Oy and Riot Games Inc. “Online games carry high margins, so they can be profitable from the start.”To be sure, the national government could reverse course and either close that loophole, shutting off a revenue stream that KPMG said grew by 42% last fiscal year from a year earlier, or change the mix of approved games, said Utkarsh Sinha, managing director at Mumbai-based Bexley Advisors.“Whether those gains remain sustainable is yet to be determined,” he said.Alibaba’s lottery subsidiary AGTech Holdings Ltd. and SoftBank digital payments subsidiary Paytm jointly back Paytm First Games, an app offering 200-plus games, including Fantasy Cricket, rummy and poker.The app, unveiled in 2017 as Gamepind, has raised more than $35 million from investors, Chief Operating Officer Sudhanshu Gupta said. Gambling makes up more than 40% of all revenue earned by games, he said.“Mobile gaming is what has led the revolution in India,” Gupta said.Immersive ExperiencePlay Games24x7 touts its RummyCircle as India’s top-grossing game. The company’s backers include New York-based Tiger Global Management, which declined to comment.Play Games24x7 co-founder and Chief Executive Officer Bhavin Pandya said he expected his Mumbai-based company to triple its revenue because India’s younger gamers want a more immersive experience than movies or TV shows can provide.“The world is becoming very interested in the potential of gaming in India,” Pandya said. “It is only a matter of time before we see true gaming success stories coming out of India.”— With assistance from Saritha Rai and Zheping Huang.
Read more: economictimes.indiatimes.com