INDIA

Paving a path forward in India

Kit L. Szybala* | Partner and ExecutiveDirector of Operations,Global Market Advisors

Throughout the COVID-19 pandemic, India’s gaming market has been subject to the same litany of impacts experienced in the rest of the gaming world. Goa and Sikkim’s land-based casinos were forced to be closed for several months.

The government in Goa even waived license fees for its market’s casinos to help them navigate this difficult time. Nearby casinos in Nepal, which are heavily reliant on Indian customers, have also felt the brunt of the pandemic as their casinos were forced to be closed on March 20, 2020 and have not yet been able to reopen.

Like many other jurisdictions across the world, several Indian state governments have focused on the gaming issue during this time. Some decided to outrightly ban gaming offerings within their communities.

Vidushpat Singhania, Managing Partner at Krida Legal, opined on these recent bans, “Card games of skill are facing a bit of a challenge in India with the recent ban on games of skill for stakes in Andhra Pradesh and Tamil Nadu.”

These states have joined Telangana in a ban of poker and other card games of skill. Many pundits believe that Karnataka and potentially Kerala are likely to follow. These bans were largely driven by gaming addiction and related health concerns that were observed throughout the quarantine period.

Other states have somewhat stalled their progress regarding gaming expansion. As an example, the populous state of Maharashtra (home to Mumbai) has still not moved forward with land-based gaming expansion despite the fact that the Maharashtra Casinos Act of 1976 already exists and only needs to be notified. However, the state has made some expansion progress with the Royal Western India Turf Club recently receiving permission to take online bets on races held at the race courses in Mumbai and Pune. Through the Paytm First Games platform, the group has been taking bets since January 10, 2021.

This is one sign among many that provide hope for the broader Indian gaming market from an expansion perspective. Casinos in Goa and Sikkim have now been open for the last few months. According to Jay Sayta, a gaming lawyer based in India, the two market’s casinos are almost back to normal in terms of footfall and revenue.

The pandemic has led several states, neighboring markets, and operators to look at new opportunities. Sayta extrapolates, “Meghalaya is one state which is actively looking at allowing land-based casinos and has recently passed an ordinance for regulation of all kinds of gaming activities. We will have to see the rules and licensing norms that they come up with, but it looks as if there will be positive movement in the state.”

Like many other jurisdictions across the world, several Indian state governments have focused on the gaming issue during this time.

This gaming expansion will include online gaming activities surrounding games of chance and sports betting.

Puducherry is another union territory that has been exploringcasino expansion, mainly targeting offshore casino expansion. However, their decision on the matter has been delayed due to political considerations. Additionally, Singhania points out further online expansion is occurring in West Bengal where the “government issued an online betting license to the Royal Calcutta Turf Club.” He states, “these operations are likely to start soon.”

India’s largest gaming operator, Delta Corp Limited, recently announced that they will be developing an “integrated resort” in the northern border city of Pernem in Goa. This facility is expected to offer a diverse array of non-gaming amenities, albeit with limited electronic-only gaming, and will target nearby residents of Maharashtra among other markets. While the Goan government originally planned to open an integrated resort zone near the Mopa Airport in Pernem and move the offshore casinos in Panaji onto land, this move by Delta could be a play to solidify itself as first to market ahead of this broader land-based expansion.

Some local pundits believe that this could spur further expansion in neighboring Maharashtra, but it is still unclear whether this expansion will be a catalyst for gaming progress in that state. Two of the challenges that have always limited the opportunity for non-locals to enter the Indian gaming market are the lack of gaming regulations and the issue surrounding foreign direct investment. Both of these issues need to be addressed in the near future to fully develop the Indian gaming market and attract outside investment.

Other nearby markets and operators have also become more interested in the Indian gaming opportunity. Gaming expansion is expected in certain provinces of Nepal. It has been reported that new, large casinos will be developed in the Jhapa province, with some new casinos expected to open in 2021. Additionally, there are several new gray and black market developments occurring from an online gaming and sports betting perspective.

Tim Shepherd, Senior Partner of Fortuna Investments, who invests in gaming projects across the region, notes that “the market used to be dominated by British bookies and underground Indian groups. However, more recently several European operators and Chinese groups began targeting India in a very big way. Interestingly, it seems that these groups have not taken market share, but instead have made the market a lot bigger.”

As outside groups begin to illegally capitalize on the Indian market and as legal operators begin to build out new markets in various states, other Indian legislators will likely take notice and begin to consider expansion in their own communities. Despite the hurdles that this pandemic has put before India’s gaming market, stakeholders continue to pave a path forward for gaming across the country.

*Kit L. Szybala is a Partner and Executive Director of Operations with Global Market Advisors (GMA).

Delta creates ripples with Goa IR plans

One gaming operator to watch in 2021 will be India’s Delta Corp., whose stock got a mid-month bump in December after it announced it had received approval in principle to build an integrated resort on shore in Goa.

The company is India’s largest and only listed casino operator and holds three of the six offshore licenses in Goa’s Mandovi River. It also has a casino in the northern state of Sikkim, is expanding into Nepal and has an integrated resort in the Union Territory of Daman for which it’s awaiting a casino license.

In addition, Delta also owns online poker and cards company Adda52, giving it a significant position in the booming online gaming market.

However, the news the company will push ahead with a resort in Pernem in northern Goa may be a game changer for the industry in the country. Investors thought so, pushing its shares up more than 3 percent on the day of the announcement.

The company will transfer all of its offshore operations to the new resort, which will include hotels, a water park, retail, a convention center and a multiplex cinema. Delta specified that the IR will have an “electronic” casino, indicating however that the government has not yet changed its stance when it comes to offering table games in land-based properties.

Delta has acquired about 100 acres of land in Pernem, and expects the cost of shifting its operations from its floating casinos to be between 1,200 and 1,500 crore.

“The integrated resort is expected to be one of its kind in the country,” Delta said. “The project is expected to boost tourism, employment and infrastructure of the state of Goa.”

India is seen as one of the most promising gaming destinations in Asia. Online skill-based gaming is legal and booming, despite court challenges at the state-level in several areas. Its tourism sector is also expanding as consumer spending power grows, with a 25.3 percent jump in domestic visits to individual states in 2019

The project is expected to boost tourism, employment and infrastructure of the state of Goa.

Delta now has more than 2,000 gaming positions in India. It’s also expanding its operation in Sikkim following the opening of the Pakyong Airport, which has greatly improved accessibility to the remote area.

It received a license to open at the Marriott Hotel in Kathmandu in Nepal in January last year, when it said operations would begin “soon,” before the Covid-19 crisis took hold.

Delta describes its luxury resort in Daman as being “casino ready,” but it still has not received government approval more than six years after opening.

Despite that, Chairman Jaydev Modi said prior to the pandemic that its hotels in Goa and Daman were breaking even at an EBITDA level, as the latter is the only five-star property in the region and is being seen as a weekend getaway.

“It has fast emerged as a perfect destination for large-scale weddings and also caters to the MICE segment,” he said.

In 2019, the company also entered the gaming cruise industry through a $10 million investment in the Essel Group’s Jalesh Cruises, under which it will become the preferred partner for gaming centres and casinos on all their cruise liners.

In the online sphere, it added to its portfolio with an investment into fantasy gaming portal HalaPlay.

As with nearly all other casino operators, Covid-19 put a dent in the company’s rapid growth in 2020. The casinos were shuttered in March and reopened for operations in the first week of November.

“The general expectations are that normalcy could be gradually restored by the end of financial year 2020-2021,” Delta said, after reporting it had swung to a loss of Rs2.05 in the three months to end-September, compared with a profit of Rs 2.18 in the same period a year earlier.

Meghalaya to regulate online gaming

NAGALANDThe state of Meghalaya has approved an ordinance to regulate online gaming to raise revenue. Cabinet Minister James Sangma said gaming today has emerged as one of the most popular pastimes globally and Meghalaya is no exception, and the decision was also taken after taking the views of the law and finance departments.

“In order to regulate gaming within the state and to bring revenue to the state government, we felt it necessary to enact a law for the same, and therefore, the cabinet has approved the draft ordinance,” he said.

Industry pushes for regulation for all skill games

India’s online skill gaming industry has collectively recommended a policy think tank of the Indian national government, NITI Aayog, to establish a new institution to standardize regulations governing the whole of the skill-based industry and not just fantasy sports.

Sameer Barde, CEO of The Online Rummy Federation issued a statement noting, “It is a brilliant move to have fair regulations for the online skill gaming industry in India… But at the same time, it is paramount to understand that fantasy games are only a part of the entire skill gaming industry. There is an equal, if not a larger need, to regulate the broader skill gaming industry.”

The industry is arguing that a national regulatory body can ensure that taxes are fairly paid and that illegal operators can be identified and eliminated. This would be of significant economic benefit to the public.