Ashneer Grover: Banning or targeting gaming has become a politically fashionable move

Even as the gaming industry faces churn having been clubbed in the ‘sin tax’ slab of 28 percent under the goods and services tax (GST), CrickPe, the cricket-centred fantasy sports app under Ashneer Grover's tech startup, Third Unicorn, has just made a significant announcement. It is eliminating platform fees and introducing a subscription model, which it believes will benefit players in these challenging times.

In an exclusive interview with Storyboard18, Grover discussed his views on whether real-money gaming is a game of skill or chance, strategies for survival in these trying times and much else.

Edited excerpts:

The introduction of CrickPe Pro with no platform fees is a significant departure from industry norms. Can you throw some light on the strategic thinking behind this move and how it benefits both CrickPe and its users?

We launched CrickPe IPL with a plan to share winnings with cricketers. However, user feedback showed a preference for maximising their winnings without sharing. So post-IPL (Indian Premier League), we pivoted to meet gamers' preferences.

After six months in business, I realised there were minimal costs on our side, similar to my experience with BharatPe, where we disrupted the market by eliminating fees. With CrickPe, we're making fees technically zero.

In most platforms, if two players each contribute Rs 50 to a game, the winner gets Rs 90, including the platform fee. We've changed this by always keeping the pot full. If two players put in Rs 50 each, the pot shows Rs 100. We deduct a 10 percent fee from the wallet, not the pot. Subscribing to CrickPe Pro (Rs 200 per month or Rs 1,000 per year) means no 10 percent fee deduction from your wallet. In essence, you keep the full Rs 100 when you win on CrickPe. We believe charging a platform fee is unfair and doesn't reflect actual costs.

In the recent months, we've witnessed downsizing and even closures of several gaming and fantasy sports platforms. Do you believe the introduction of 28 percent GST on the full face value of bets is the primary reason behind this?

It is clear that this sector will be significantly impacted, and the extent of that impact remains uncertain. People who relied on investors coming in may face challenges as that source of funding has dwindled. If you were investor-dependent in the short term, shutting down may become the only option, as cost reduction isn't feasible in the next few months.

For players like us who are now charging zero fees, this puts additional pressure on the gaming space. Newer players without legacy costs, like us, are less affected by the current situation. However, older players who have already invested may struggle to justify valuations or raise more funds from investors, putting them in a challenging position.

There are multiple state-level discussions on bans. What is your assessment of the game of skill versus game of chance debate?

My view on this matter has always been clear. The gaming industry is a decade old, and the distinction between games of skill and games of chance has already been legally settled in the courts, including the Supreme Court. The only path forward, once approved by the courts, is through legislation.

In an election year, justifications can be made without regard for logic or semantics. Gaming hasn't led to any mass-scale destruction of lives. It's important to note that we lack actual data on this. We may be unnecessarily stigmatising gaming as a vice when it isn't.

Banning or targeting gaming has become a politically fashionable move, similar to restricting alcohol consumption. Does it lead to lesser consumption? No, it doesn’t. Does it lead to revenue leakage for the government? Certainly, and it creates a parallel economy. The same applies to gaming. My belief is that gaming is not a vice; it has functioned well for the past decade and has the potential to generate significant employment and government revenue. However, the recent GST rule change has complicated matters.

How can the industry effectively convey the distinctions to the government in order to establish clear classifications?

It's not easy to convince the political class about this issue, mainly because there's a generational gap. When you attempt to explain it to them, the immediate association in their minds is often "Yeh toh satta hai (This is Satta, a form of of gambling)” because in their time, satta was the only point of reference. Politics often revolves around simplification, making it challenging to convey the nuances of real-money gaming versus speculation or satta to politicians.

I would love to see the government publish data on how much revenue they generated before and after the GST rule change. This objective information could help determine whether the government's decision was right or wrong. The political class might reconsider its stance when they witness job losses, companies shutting down and a decrease in revenue, contrary to their expectations of an increase.

In the light of the evolving regulatory landscape and financial pressures on the industry, what survival strategies or initiatives do you suggest for fantasy sports platforms?

I believe it's necessary for everyone to reduce their marketing expenses. Currently, approximately Rs 20,000 crore are spent on marketing in the gaming industry each year, and this spending may need to come to a halt. Survival now hinges on organic growth and a pausing of marketing expenditures. The margins are too thin to justify continued marketing spending. In the past, when margins were at 10 percent to 20 percent, it made sense to invest in acquiring more customers and eventually recovering those costs. However, with the current situation, either due to increased GST or heightened competition, margins are under threat, and it's imperative for people to cut back on marketing.

Shifting gears to your personal brand, how do you manage it and how do you plan to use it in the days ahead? Like some of your peers do you have plans to become a podcaster?

I believe my personal brand is more organic. When it comes to managing my brand, I don't have a manager or a PR person. My wife and I manage our respective social media accounts, and it's quite straightforward. I know how to use my phone and how to create content, so I don't feel the need for additional assistance. As for podcasts or starting my own channel, that's not something I see myself doing in the near future. Building a personal brand is about staying true to your core values and being smart about sharing that with a larger audience. It's also about having fun along the way. Of course, if I can use my brand to promote my businesses, that's a bonus.