- The vast scope and potential of blockchain technology has attracted the gaming industry over the past few years. In India too, gaming industries are exploring this option.
- Blockchain is a decentralised database that stores information. It relies on technology that allows for the storage of identical copies of this information on multiple computers in a network.
- Blockchain games are online video games that are developed integrating blockchain technology into them.
- It includes elements that use cryptography-based blockchain technologies like Cryptocurrencyor Non-Fungible Tokens (NFTs).
- These elements are used by players to buy, sell, or trade with other players, with the game publisher taking a fee from each transaction as a form of monetization.
- Example of Blockchain Game: In 2017, Dapper Labs’ had developed the first ever blockchain game called CyrptoKitties.
- In the game, people can virtually experience the joy of adopting and breeding a cat (CryptoKittie), without taking up the responsibility of bringing one home.
- Each CryptoKittie is a Non-Fungible Token (“NFT”).
Elements OfBlockchain Games
- NFTs: NFTs represent in-game virtual assets that can be owned by players, such as maps, armor or land.
- These NFTs act as asset tags, identifying ownership of the in-game assets, and are stored on the blockchain.
- Being on the blockchain allows the player to have a secure record of ownership of the in-game assets and also gives the assets the ability to outlive the game itself.
- Based on the manner in which the games are designed, it also allows for the in-game assets to be transferred from one game to another.
- It also creates transparency, since ownership records can independently be verified by any third party as well.
- In doing so, it makes in-game assets marketable and creates a decentralized market, where they can be bought and sold by people.
- Cryptocurrency, such as tokens based on the Ethereumblockchain, may be used for the purchase of in-game assets.
- These in-game purchases usually enable gamers to buy items like extra lives, coins and so on directly from the game.
Legality Of Games In India
- The state legislators are, vide Entry No. 34 of List II (State List) of the Seventh Schedule of the Constitution of India, given exclusive power to make laws relating to betting and gambling.
- Types Games in India: Most Indian states regulate gaming on the basis of a distinction in law between ‘games of skill’ and ‘games of chance’.
- Test of Type of Game: As such, a ‘dominant element’ test is to be utilized to determine whether chance or skill is the dominating element in determining the result of the game.
- This ‘dominant element’ may be determined by examining whether factors such as superior knowledge, training, experience, expertise or attention of a player have a material impact on the outcome of the game.
- Status of Type of Games Allowed: Staking money or property on the outcome of a ‘game of chance’ is prohibited and subjects the guilty parties to criminal sanctions.
- However, placing any stakes on the outcome of a ‘game of skill’ is not illegal per se and may be permissible.
- It is important to note that the Supreme Court recognized that no game is purely a ‘game of skill’ and almost all games have an element of chance.
- Common Gaming House:
- Another concept common to the gaming law in most states is the idea of a ‘common gaming house’.
- Owning, keeping, or having charge of a common gaming house or being present for the purpose of gaming in any such common gaming house is ordinarily prohibited in terms of these state gaming laws.
- Common gaming house is defined as any house, walled enclosure, room or place in which instruments of gaming are kept or used for the profit or gain.
- Pertinently, courts have clarified in the past that the mere charging of an extra fee to facilitate playing the game and / or to maintain the facilities may not necessarily be seen as making a profit or gain.
Games Of Skill
- A “game of skill” is based mainly on the mental or physical level of expertise of a player, rather than a chance.
- One of the most significant benefits of a game of skill is that it provides freedom to the players to explore their capabilities in the sport.
- These games invigorate the players to get accustomed to a certain set of rules while looking for ways to improve and implement different strategies through consistent practice.
- It is false that the game of skill does not have a chance component, in fact to a certain extent they do. However, it is the individual skills that determine the success rate.
Example: Chess, Carrom, Rummy, and Fantasy Sports are said to be games of Skill.
Game of Chance:
- A “game of chance” is determined mainly by a random factor of any type.
- In games of chance, the usage of skill is present but a higher level of chance determines success.
- Games like playing cards, roulette, rolling a dice, or even picking a numbered ball are reflected upon as chance-based games.
- It is pertinent to note that players here do not have control over the outcome of the result. Example: Blackjack, Roulette.
- The use of blockchain technology for online games is likely to be beneficial for game developers, publishers, and players.
- However, key to their growth is regulation which ensures that it is permissible to offer such games in the Indian territory and also offers protection in the form of intellectual property rights.
- Other concerns, such as privacy and cyber security, along with how financial regulations would apply to blockchain games, would also need to be addressed.
SOURCE: THE HINDU,THE ECONOMIC TIMES,MINT