growth opportunities in the gaming industry - sikkim, india

Brief

This presentation will explain some of the keytrends shaping the Gaming industry in India, whichmainly comprises of online gambling, casinos, andlotteries.

Our objective is to provide our perspectives on theripe investment opportunities in this market inSikkim, India and provide insights on how thismarket is expected to shape up in the near future.

This presentation is targeted towards investmentcompanies, hospitality providers, and casino andgaming operators interested in identifying andtapping into new areas of growth opportunity.

Summary

Objective

TargetAudience

Source: Runaway Insights Analysis, Secondary Research Articles and Publications

PART 1

SPOTLIGHT ON THE GAMING MARKET IN

INDIA

India’s Gaming market, which comprises of legal and illegal gambling is valued

at close to $ 30 Billion per annum.

The main Markets for gaming in India are Goa, Daman, and Sikkim. Goa leads

the market with close to 90% of market share by revenue.

In India, gaming is mainly conducted through online betting and lotteries,

paper lotteries, and casinos.

The state-wise differences in laws and regulations govern the geo-availability

of online gaming services and will shape the industry.

The Indian casino market is dominated by a few competitors and is yet to

witness near-optimal penetration due to demand over-running supply.

In the near future, majority of the Indian gaming market is expected to be

driven by mobile games, online gambling, betting and lottery software.

Overview

1

2

3

4

5

6Source: Runaway Insights Analysis, Secondary Research Articles and Publications

Overview

Sikkim

No. of Casinos: 3

Major Players:

-Delta Corp

-Mayfair Group

Daman

No. of Casinos: 1

(Awaiting

Approval of

Gaming License)

Major Players:

-Delta Corp

Goa

No. of Casinos: 15

Major Players:

-Delta Corp

-Pride Group


Growth Drivers

Increasing Population of Wealthy Individuals

Opportunity for Economic Development

Penchant and Demand for gambling


Growth Drivers – Explanation

Increasing Population of

Wealthy Individuals

Over the next few years, the average household income of Indians isexpected to increase significantly. This increase in income coupled with aconsumerist mindset is expected to drive the demand for vacations inpopular tourist destinations as well as for recreation and gambling.

Opportunity for Economic

Development

Penchant and Demand for

gambling

Individual states are taking heed of the tremendous opportunity that thegambling industry holds for contribution to the local economy. Theregulation of gambling laws which prohibit state locals from participatingin gambling whilst encouraging out-of-state citizens to gamble has beencontributing to these States’ revenues.

There is a huge demand for gaming amongst the country’s population.The inaccessibility of casinos has also given rise to the massive illegalunderground market for gaming. This signifies a huge demand across thecountry and the potential for growth of this industry if this demand is met.


Growth Restraints

Stringent State Laws

Lack of Accessibility and Quality

Regional Competition


Growth Restraints – Explanation

Stringent State Laws

Gaming operators obtain a major share of revenue by way of offeringonline gaming services to citizens in Indian states other than their origin.However, recent legal changes have geographically illegalized participationin online gaming by citizens from states other than the state of origin ofthe gaming operator.

Lack of Accessibility and

Quality

Regional Competition

Although there is a widespread demand for gaming across the country,majority of the people in the big cities are unable to access casinos due tostringent local restrictions. Locations such as Sikkim are difficult to reachvia road, which in turn discourages citizens wishing to gamble. This isresponsible for a large untapped potential for market penetration.

The comparatively better quality of casino gambling experience offered byregional gambling destinations such as Nepal, Macau, and Sri Lankaencourages gamers to travel to these destinations rather than Goa,Daman, or Sikkim. These destinations offer better ambience and facilitiesand a more comprehensive gaming experience.


Market Penetration Trends & Updates

Australia based Silver Heritage Ltd is one of the major overseas companies that may decide to enter the Indian Casino market in the near term future.

The group has recently engaged in Greenfield developments along the Nepal-India border.

Another Australia-based operator, Crown Resorts is likely to consider opportunities in India in the near future.

Apart from this, it is also expected that casino operators from Singapore and Macau are likely to see the growth opportunities and consider setting up shop in India


PART 2

SPOTLIGHT ON THE GAMING MARKET IN

SIKKIM, INDIA

Sikkim’s gaming market is currently underserved due to lack of proper

transport to the region to cater to the increasing out-of-state demand.1

However, the region is expected to witness a greater influx of gamers owing to

the development of a new Airport, Pakyong Airport, by 2017.2

The State is promoting gaming to increase tourism, attract investments,

increase employment of locals, and earn tax revenues.3

However, the region faces significant competition from Nepal due to their

higher number of casinos as well as better quality of gaming.4

In the near future, Goa and Sikkim may also face competition from Daman’s

new casino and its proximity to cities like Mumbai and Surat.5

Overview


Competitive Landscape

Casino Sikkim, Hotel Royal PlazaTeesta Ranjit Private

Limited (TRPL)

Online Gaming, Lotteries & Gaming ShopsCasinos

Company Casinos owned / operated Company

Casino Mahjong, Mayfair Spa Resort

Mayfair Group

Hotel Welcome Heritage Denzong Regency

Delta Corp.

Lottery Licenses (KhelPlay), Online gambling

Sugal & DamaniGroup

Services offered

Golden Gaming International

6000 Sq. ft. gambling zone recently opened in Gangtok.

Offers Keno and Virtual Horse Racing through Intranet

gambling Terminals across Sikkim.

Lotteries & gambling Shops in Gangtok.

Future Gaming Group

Essel Group (Playwin)

Lotteries & gambling Shops in Gangtok. Offers Keno and Virtual

Horse Racing through Intranet gambling Terminals across

Sikkim.


Regulatory Overview – Key Decision-Making Bodies & Acts

Key Decision-Making Bodies involved (Non-Exhaustive)

• Union Home Ministry

• Sikkim State Government

• All India Gaming Federation (AIGF)

Key Decision-Making Acts & Regulations (Non-Exhaustive)

• Lotteries (Regulation) Act, 1998

• Sikkim Casinos (Control & Tax) Act, 2002

• Sikkim Online Gaming (Regulation) Act, 2008

• Sikkim Online Gaming(Regulation) Rules, 2009


Regulatory Overview – Recent Updates

Sikkim Gaming Operators

Allowed to offer games to people

anywhere in IndiaPre - 2015

Post - 2015

Legislation passed by Central Govt., stating that Sikkim Gaming Operators are restricted to physical limits of gaming parlors located within Sikkim, using intranet

gaming terminals.

2015

Sikkim Gaming Operators

Unable to offer gaming outside of

Sikkim

Leading to Sikkim Gaming Operators turning to Nagaland (which has lax laws) to enable their All-India presence.

Although Nagaland can be considered for possible future opportunities, there is not much visibility on whether Nagaland may also implement the same law as Sikkim

Consequences


Regulatory Overview – Profit Sharing

Gaming License Holders in Sikkim

Overview: Profit Sharing Agreement signed between Sikkim Government & Gaming Operators and Taxation on Winnings

ProfitsKept by Government

5% or INR 5 Crore(Whichever is higher)

WinningsKept by Government

30% of Winnings (Taxation)


Why Invest in Sikkim?

The region is expected to witness higher tourism traffic and gaming revenue over the next few years owing to the establishment of a new airport by 2017.

Sikkim is expected to witness a gradual easing of rules & regulations governing gaming over the next few years.

The government has recently been focusing on promoting Sikkim as a popular tourist destination as well as drawing investment on development of the local gaming industry.

The government also plans to issue three additional licenses for online sports betting. Further to this, the introduction of online gaming may result in gambling friendly laws.

The region is witnessing a positive feedback and investor sentiment in response to companies setting gaming shops in Sikkim.

The All India Gaming Federation (AIGF) is lobbying for the government to focus on FDI in gaming in India which may result in favorable market conditions for foreign investors.

Current establishments are more reliant on the government which presents an opportunity for private sector investors.


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