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The opinion trading industry in India appears to have largely gone unreviewed and unnoticed, despite having an estimated 5 crore users and rapid investment growth.

What is Opinion Trading and how does it work?

Opinion trading is a platform where users may gamble real money on the outcome of future events such as sports scores, election results, or cryptocurrency trends.

These platforms allow users to make bets and win based on how accurately they predict future events.  Users, for example, could bet on whether India will take three wickets against Australia in six overs or whether Bitcoin will rise above a certain price. 

Popular platforms such as Probo and MPL provide these services and have received significant investment, with Probo focussing on a variety of industries and MPL mainly dealing with cricket-related predictions.

What has contributed to the growth of Opinion Trading platforms in India?

Opinion trading platforms have grown rapidly due to their popularity in betting on various future outcomes. With over 5 crore users and annual transaction volumes exceeding Rs 50,000 crore, the sector is growing. 

These platforms have received funding of over Rs 4,200 crore from investors such as Sequoia Capital and Y Combinator. 

Advertising on platforms such as Google and Meta has played an important role in acquiring new users, increasing the sector's growth. The industry is expected to generate more than Rs 1,000 crore in revenue during fiscal year 2024-25.

What are the legal challenges that Opinion Trading platforms face in India?

The major legal challenge for Opinion Trading platforms in India is a lack of clear regulations. There is currently no dedicated law to govern these platforms, so users are not adequately protected. 

Opinion trading platforms frequently operate in a legal grey area due to ambiguities in the Information Technology Rules. It is unclear whether these platforms should be classified as skill games or chance games. 

In India, games of skill are permitted, but games of chance, such as traditional betting, are not. The lack of regulation has raised concerns about user safety and fairness in these platforms.

How do Opinion Trading platforms position themselves in terms of skill v/s chance?

Opinion trading platforms claim their model is based on skill rather than chance. For example, Probo uses an internal auditing system to determine the skill score for each question. The company argues that if the element of chance overpowers skill, the question will not be published. 

Critics claim that opinion trading is a form of betting because users put bets on unpredictable events without requiring significant skill. 

Why do Opinion Trading platforms avoid stock market-related questions?

Opinion trading platforms avoid stock market-related questions to avoid attracting the attention of the Securities and Exchange Board of India (SEBI). 

Because the stock market is highly regulated, any questions about it could bring these platforms under SEBI's jurisdiction. This could lead to stricter regulations and increased scrutiny, which the platforms are attempting to avoid. As a result, they concentrate on non-stock market industries such as sports, elections, and cryptocurrency.

Way Forward  

India can learn from the experiences of countries such as the United States and Australia, which regulate opinion trading platforms as securities. 

There is a need for a clear and comprehensive regulatory framework. Stakeholders, including platform founders and industry representatives, have called for a single law to govern opinion trading platforms to address user safety concerns while also ensuring transparency and fairness in the industry. 

A balanced regulatory approach is required to protect users while encouraging innovation and the continued expansion of the online gaming industry.

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Source: 

Indian Express