Overregulation Destined to Stifle Tech Markets and Fail Social Goals, Experts Insist

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Recently, more States and countries have been tempted to go heavy-handed on tech companies, with online gaming particularly targeted by authorities. Banning or restricting market dynamics rarely produces desirable effects, as users find alternatives and local companies end up with the short straw.

Overregulation Destined to Stifle Tech Markets and Fail Social Goals Expert Insist

Policing Entertainment “Irrational”, Courts and Businesses Agree

The latest attempt to ban online gaming for money in Karnataka has inevitably caused a stir in the digital industry. With impact beyond Bengaluru’s tech hubs, a number of analysts pitched in with examples why a blanket ban on paid gaming will not work, stressing a poor grasp of technology and social dynamics.

The Karnataka Police (Amendment) Bill of 2021 is one of the laws trying to limit or ban online games for monetary stakes and prizes. Similar statutes have been passed in Tamil Nadu, Andhra Pradesh and Telangana. Yet some – notably TN’s 2021 Gaming and Police Act – have been struck down by High Courts just this summer, while the Supreme Court has formally upheld the legal nature of skill games for money.

Trying to outlaw the best online casino in India may seem morally justified but placing an indiscriminate ban on online and mobile games for stakes is simply “irrational” and “unreasonable”, Madras High Court stated. While this new-age “digital paternalism” is targeted at appeasing conservative voters, lawmakers need to consider the impacts and effectiveness of similar rash measures.

Some fear that the next step would be similar to what China did just a few weeks ago. Introducing strict limits on video games for the youth, Beijing allows them to play in three specific hour time frames, between 8 and 9 pm on Fridays, weekends and major holidays. Even without judging the motivation behind such a move, experts urge authorities to think long term and avoid certain economic and social “disasters”.

Disastrous Economic Impact

Over-regulating technology has often been proven to have negative effects on innovation and market growth. The Chinese experience testified once again that the immediate effects of the new rules were absorbed by digital businesses – Tencent and Netease, a couple of its largest gaming companies, plunged in market value and drive away investors and consumer groups. India can barely afford to muffle its booming digital gaming sector (estimated at Rs 155 billion in 2023), with thousands of tech startups and over 400 million active online gamers both on the receiving end.

On the contrary, research studies have shown that establishing national gaming licenses is a working solution, stopping the penetration of illegal offshore gambling and raising national regulatory standards. Casual mobile games, casinos in India, betting exchanges and lotteries big and small need to be only accessible through a well-regulated national market. This is the only feasible way of offering proper consumer protection, reliable payment channels and improving overall quality of user experience and market stability.

The alternative is called black markets, with no customer care, market efficiency and tax transparency. Gaming operators and IT support companies have repeatedly shown an interest in legalized and well-regulated gaming, allowing them to offer high standards and plan safely for the future.

Losing Social and Technological Fights

Other case studies from Asia are also emblematic: the South Korean law targeting minor gaming was abolished by the Government just recently, after showing no apparent efficiency. China’s previous attempt in limiting video gaming included a curfew between 10 pm and 8 am, spending ceilings and much more. Yet all it did was teach kids to find ways around the ban, with online marketplaces selling gaming accounts and virtual private networks (VPN) a proven solution to bypassing the bans.

Ethical concerns have not proven good counsel as well, as full bans risk pushing consumers to easily available online platforms with zero rules and regulations. Government interference with market logic is not only questionable, however, it is technically difficult to pull through. Digital markets and tech advancements are simply too dynamic when compared to the ability of law-makers to stay informed. Authorities need to stay in touch by talking to industry and consumers, digital industry analysts agree.

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