Fantasy Sports began in 1962 with a Football Fantasy League. Since then, its popularity has skyrocketed, largely due to superior connectivity, dynamic needs for social interaction, availability of avant-garde smartphones, improving demographics, a surge in disposable income, and an expanding youth population base. The global fantasy sports market is expected to reach USD 34.66 billion by 2027, growing at a CAGR of 11.47%.
However, the Indian fantasy sports market gained popularity in 2001 about two decades ago when ESPN Star Sports launched the Super Selector Fantasy Game. The game’s popularity grew exponentially and in 2003 it had over 500,000 participants. The game was the brainchild of the current Director General of Fantasy Sports (FIFS), Joy Bhattacharjya.
Participation in fantasy sports has increased by 2,500% over the past decade. The number alone shows the enormous fan base of the niche domain in India. Fantasy sports are undoubtedly becoming a forum for developing game strategies and promoting virtual sportsmanship. By the end of 2022, India will have over 829 million smartphone users which will increase the number of sports enthusiasts participating in fantasy sports. The current number of mobile phone gamers in India is 430 million. By 2025, it is expected to grow to 650 million.
The gaming sector has undergone a radical transformation with the advent of television, digital and online gaming models leading to a proliferation of online gaming sites in recent years. According to an EY report, online gaming is the leading entertainment category with a penetration rate of 55%.
What are fantasy sports?
Fantasy Sports are digital sports engagement platforms that allow users to strategically build virtual teams with proxies of actual sports players participating in an upcoming game (or game day). Competition on these DFS (Daily Fantasy Sports) platforms is based on real statistical performances of these players in a full, officially sanctioned sports game. The users act as coaches or managers and possess the power to drop, recruit or trade a desired player.
Proper knowledge of the sport, a skillful understanding of weather and soil conditions, and knowing the strengths and weaknesses of the real athlete are all critical to choosing the fantasy squad.
“Games of Skill” vs. “Games of Chance”
The gambling industry in India is divided into offline gambling sector (gaming clubs, casinos) and online gaming sector (gaming websites). Corporations make up almost the entire portion of operators in the above segments. These companies are registered in India as limited liability companies.
Furthermore, Indian legislation has divided the gambling industry into two major areas viz. “Skill Games” and “Gambling Games” to regulate the sector’s money supply.
A skill-based game is one in which the outcome depends primarily on the skill of the players rather than some random event. They are therefore considered legal in social settings, clubs, casinos and online. Popular online games recognized as skill games in India include horse racing, rummy and fantasy sports.
On the contrary, gambling relies on luck and encourages gambling. As such, they are banned, and the practice can lead to legal ramifications.
But Google has now decided to conduct a “time-limited applications-only pilot program that will allow real money games (RMG) such as DFS (Daily Fantasy Sports) and rummy apps to be distributed by developers based in India to users on the Google Play Store in India to distribute . The pilot run begins on September 28, 2022 and runs until September 28, 2023.
All applicants must successfully complete the application process to be eligible to participate in the pilot program and are eligible to distribute their apps on Google Play for the aforementioned duration.
The reason Google cites for this significant move is the rapid development of the fantasy gaming sector and collecting sufficient data on potential user harm and safety of such apps. The unpredictability of the regulatory landscape in the online gambling industry has been very evident in the past. Several states, including Telangana, Andhra Pradesh, and Odisha, among others, have banned fantasy gaming apps despite the affirmative ruling from the Supreme Court and other high courts that they are games of skill and therefore legitimate.
Developers must ensure that users residing in jurisdictions that do not allow DFS and rummy apps do not access their apps.
Will Google’s temporary nod to RMG games on the Play Store be a game changer?
Kumar Saurav, Global Mobile Business Head, AdCounty Media, strongly believes that bringing fantasy games to Google Play can be a revolutionary move that will impact app developers and users alike. He said, “It would clearly help the industry grow much faster, increase awareness of these games and consequently increase user engagement. The move would also expand the Play Store’s user base by reaching gamers who previously did not have access to these games on the store.”
However, it will be an arduous task for Google to retain its user base and developers while adhering to government and other internal guidelines.
Developers selected for the trial program cannot use Google’s in-app payment system. Instead, they must provide third-party backup billing options in their apps. Google adheres to its service fee policy for similar apps worldwide and does not add any commission to transactions made using these apps.
Earlier this week, Google released a statement mentioning that as part of a pilot initiative, it will allow non-gaming Android app developers from several countries, including India, to offer third-party payment options, reducing the service fee by 15-30 is reduced by 4 percent.
India is the fastest growing FS market with the largest user base at 13 crores expected to grow 32 percent in the coming years. In other words, the industry is set to grow from INR 34,600 billion in FY21 to an estimated INR 1,65,000 billion in FY25 according to FIFS estimates. 50% of transactions on FS platforms are initiated by Tier 2 and Tier 3 cities.
Cricket as a sport captured the most significant part of the fantasy gaming universe with a whopping 85% market share, followed by football, hockey and others. Cricket is expected to generate INR73,000 billion in CEA for FSPs by FY25, up from INR25,000 billion in FY21. The critical user demographic falls in the 25-40 age range (59% of the total user base). One of the most important results is that 80% of Fantasy Sports users participate in free competitions.
Skill game operators need to adopt and enforce a high level of governance and self-regulation given the current regulatory environment. The industry has taken/proposed several steps such as: B. Interacting with stakeholders and users to get a clear picture of needs and expectations, having identified the need for self-regulation.
Fantasy sports’ breakthrough growth by the day has attracted over $112 million in investment over the past five years. The sector has so far attracted INR 10,000 crore of FDI and is expected to attract over INR 15,000 crore in the next three years.
The arrival of 5G would reduce technical disruptions and eliminate latency and low concurrency issues, allowing a broader user base to participate in a tighter-knit gaming community. The transition to 5G along with the incorporation of AR and VR into sports and cloud gaming will pave the way for the next big wave.
In addition, the sector has contributed significantly to job creation in the country. By 2023, the potential for growth in job creation is expected to increase to more than 5,000 direct jobs and more than 7,000 part-time jobs.
The views expressed are personal.