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India’s Online Fantasy Gaming Industry’s Exponential Growth during the Pandemic and Economic Prospects

The Online Fantasy Sports business has seen a meteoric surge in popularity in India in recent years. Fantasy gaming applications like Dream11 and MPL have amassed a sizable market share by providing a means of earning money to a diverse range of sports enthusiasts.

By Amit KrPublished 3 years ago 6 min read
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India’s Online Fantasy Gaming Industry’s Exponential Growth during the Pandemic and Economic Prospects
Photo by Priscilla Du Preez on Unsplash

Following the COVID-19 epidemic, there was a shift in media and entertainment consumption habits, particularly in India. While the epidemic had a negative socioeconomic impact, demand for virtual recreation with pals arose. This was quickly followed by a surge in the gaming sector. Over time, India ascended to the number one position in mobile game downloads by 2020. The Indian gambling sector is currently anticipated to expand to around $3.8 billion by 2024.

The Online Fantasy Sports business has seen a meteoric surge in popularity in India in recent years. Fantasy gaming applications like Dream11 and MPL have amassed a sizable market share by providing a means of earning money to a diverse range of sports enthusiasts. With the OFS sector and massively multiplayer games like BGMI driving industry development, the Indian gaming industry is just getting started.

However, a rising business raises issues like regulation, foreign investment, and data privacy. In India, the OFS industry has always been a murky area, with each state having its own set of rules governing the functioning of these businesses. As a result, in some states, these apps are unable to operate clearly. The absence of regulation and transparency in sector-related legislation limits industrial growth potential because a lack of rules puts additional strain on the legal system.

This is due to the fact that many disputes using these applications wind up in court. People's worry about their data privacy has also grown over time. As a result of the possible threat of data sharing or leaking, data privacy regulations have been placed to the forefront of this conversation, resulting in applications such as PUBG Mobile being banned and then re-launched locally owing to data security concerns.

Contribution of the Online fantasy games Industry in the recent times-

The economic impact of the fantasy sports business is classified into two categories:

Direct Impact-

Revenue generation, job creation, and tax payments all contribute directly to the economy.

Furthermore, the sector runs in such a way that it generates increments for participants, therefore adding to household income. TDS on wins is another source of revenue for the government.

Another direct factor is the infusion of Foreign Direct Investment into the Indian economy as a result of the great potential in the fantasy sports sector.

Indirect Impact-

The online fantasy sports business also benefits the economy by increasing the number of auxiliary and support service providers. This covers income generating as well as prospects for expansion in linked service industries.

The multiplier impact of the Online Fantasy Sports sector also results in indirect employment and greater tax payments from auxiliary markets.

Along with these measurable achievements, the Online Fantasy Sports business has been a significant contributor in catalyzing digital adoption in the Indian economy, outpacing the projection of India having a digital economy of INR 70 lakh crore by 2025. It has also aggravated and cultivated the sports attitude of television and digital viewers. This translates economically into potential generation in terms of advertising and subscription income for OTT platforms, sponsorship opportunities for sports organisations, and research platforms focused on sports events.

COVID-19 has resulted in significant growth in India's online gaming business. Experts are likewise pretty optimistic about the Industry's development prospects. According to a recent research on the online fantasy gaming business, the sector is expected to develop at a CAGR of 21% between FY21 and FY25. This will result in a boost in market capitalization, valuing the industry at over Rs 29,000 crore. A variety of macro variables, including but not limited to rising smartphone prevalence, internet penetration, a youthful population, and the acceptance of digital payments, have contributed to the industry's rapid rise.

As a result of the widespread expansion of digital consumption, the country's online gaming sector has emerged as a popular entertainment choice. Along with that, supply-side reasons such as a rise in the supply of world-class titles, games with localized content, new features such as multiplayer and social aspects introduced to games, and an increase in investor interest in general have all played a role in the industry's growth.

This industry's Online Fantasy Sports section, which includes games like Dream11, Myteam11, and MPL, is a significant FDI drawing market. OFS FDI inflows were INR1500 crore in the fiscal year ending 2019. Furthermore, the OFS has proven to be a significant source of tax income for the government.

Compound Annual Growth Rate of the Industry-

The industry's CAGR has been almost 32%, with gross revenues reaching INR2400 crore in FY20, up from INR920 crore in FY19, a nearly triple rise. The Indian fantasy industry is estimated to be worth INR3.7 billion by the end of 2024.

In the fiscal year ending 2019, the industry received INR1500 crore in FDI.

The business generates tax income in three ways: Goods and Services Tax (GST)-The industry's GST tax payments have increased considerably in the last two years, with a tax payment of INR166 crore in FY19 and INR445 crore in FY20, according to industry estimates.

Tax Deducted at Source (TDS) on winnings-

TDS on wins was INR93 crore in FY 2019 and would be raised to INR250 crore by FY 2020. This is directly proportional to the additional wins generated by the Online Sports Fantasy platform, owing largely to their format, which increased from about INR 5230 crore in FY19 to INR 13,997 in FY20.

Income tax paid by Direct Employees-

Total sales grew from INR43 crore in FY19 to INR81 crore in FY20.

The user base of the Online Fantasy Sports industry-

According to a research issued by Statista Research Department, the user base of the Online Fantasy Sports business in India was around 72.2 million users by FY19.

Incremental earnings of INR 13,997 crore at the end of FY20 also directly contributed to the translation of improvements in discretionary consumption to families.

Employment creation by OFS operators-

Direct employment was at 2800 at the end of FY19, rising to 3400 on-payroll workers by FY20.

Indirect job generation occurs via the auxiliary industry and formal sector service providers. By the end of FY19, the figure had risen to over 4200, with a projected increase to 5100 by FY20.

OFS operators spent about INR 214 crore on pay and compensation in FY19 and INR 420 crore in FY20.

Marketing Media and Agencies-

OFS operators' operating expense resulted in incremental revenue generation of INR 857 crore in FY19 and INR 2293 crore in FY20. The country's outsourcing hub is likely to witness several growth petals in the present time as well, which is a promising indication for the fundamentally altering economy.

Payment Gateways-

Revenue generation increased from INR 25 crore in FY19 to INR 66 crore in FY20. This is regarded as a big contribution by this sector since it opens up more opportunities for other comparable companies to enter the innovatively overflowing Indian marketplaces.

It is possible to infer that the online fantasy gaming business has taken up a quick pace and is therefore proving to be a key industrial contributor to the Indian economy. India may gain a variety of anticipated benefits from this expanding area if suitable rules and policy tools are put in place to properly govern and operate the business. While some governments have prohibited the major industry participants, it is not surprising that the sector has given a broader berth to innovation, and if things continue as expected, we might witness a sensible growth of similarly contributively inventive industries in the future.

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About the Creator

Amit Kr

Hi I am Amit Kr from India. I love writing on various topics. I love nature, music, pets and weekend traveling.

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