Karnataka’s online gaming ban will dent Bengaluru’s image as start-up hub: study

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According to a study conducted by Startup Business Academy, Bengaluru’s image as a start-up hub will be severely dented if Karnataka implements a ban on online gaming for stakes.

The bill, which is currently awaiting the governor’s assent, is expected to become law within a span of two months after the government notifies draft rules under the amended first law and issues a final notification after incorporating suggestions and addressing concerns of all key stakeholders.

Startup Business Academy, an organization that aims to boost the growth of startup entrepreneurs, carried out a survey among 650+ respondents from within the start-up community. A majority of those who were surveyed said that not only will the ban affect Bangalore’s image but it will also have a cascading effect of gaming ban on other start-up and IT segments.

Around 70% of respondents believe that a ban on online gaming will have a high negative impact on other segments of the IT industry and start-ups as well, which will suffer in its wake.

80% of respondents firmly espouse the view that if gaming start-ups shift out of Bengaluru to other start-up destinations in India owing to the lack of policy support, there will be a huge negative impact on the image of Bengaluru and Karnataka as a start-up destination.

The broad and unclear nature of the bill, which was originally aimed at tackling the menace of gambling, will further impact all gaming segments including strategy games and esports which are booming in the country. Bengaluru is home to several homegrown gaming entities too including Sequoia Capital-funded Mobile Premier League. As many as 92 gaming companies are registered in the state capital, employing around 4000 people, and have attracted around Rs 3000 crores of investment in the last three years alone, according to the Mobile Association of India (IAMAI).

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This bill is a triple whammy as it will not only impact companies in terms of unemployment and revenue but it will stymie the growth of this segment and have what can be termed as a cascading effect on the entire start-up sphere and IT sector in the region. Gaming in India has been on the rise and the Covid-19 pandemic only accelerated its growth, making India a prime destination for gaming investments.

69% of respondents feel that Bengaluru will risk its attractiveness for start-ups because of a host of compounding factors such as problems of infrastructure, traffic, lack of public transport, and lack of clear startup-friendly state government policy.

Around 31% of respondents blame the trend of overregulation of high growth and investment magnets like gaming continues will harm the state’s attractiveness.

33% of respondents believe that other cities like Delhi NCR, Pune, Chennai, and Hyderabad will benefit from their better policies and environment for high-stake start-up entrepreneurs and investors. There is a certain section of respondents (33%) who attribute the rise of Bengaluru to the progressive policies of the Karnataka Government.

Around 5% of respondents believe that there is absolutely no threat to Bengaluru’s position as an international start-up hub, while another 6% believe that there is an insignificant threat. 

Neeraj Kapoor, Founder & CEO, Startup Business Academy, told BW Disrupt, “Karnataka, led by the city of Bengaluru has been India’s flag-bearer as a global hub for IT development and start-ups on the back of a vibrant private enterprise led by young, energetic entrepreneurs. The recent developments threaten the State of Karnataka’s pole position as compared to other Indian states when it comes to its friendliness and readiness to drive the next level of growth from IT and related services.”

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To maintain its start-up-friendly image which has helped the state to rapidly grow in the last decade, Karnataka must pave the path by adopting progressive policies by adopting ‘Right Regulation’ and developing IT Laws that are based on science and technology.

Online gaming has huge growth potential in the IT development segments in the world today, and with the way, growth has been recorded, many Indian companies can be established as leaders in the global gaming scene if they get the right kind of support.