In a decade, the real-money gaming companies and fantasy sports startups self-identified as video game companies. Now that these businesses face rising regulatory scrutiny, a coalition of more than 70 video game companies in India is asking the government to draw a bright line between their industries.

In a letter to Prime Minister Narendra Modi and the Ministry of Information and Broadcasting, the coalition has urged the government to replace the single euphoric term "online games" with specific categories: "video games" and "real money games" as part of broader appeal to promote the country's digital entertainment sector.

The push for clear definitions comes after recent tax amendments moved real money games into a 28% bracket while video games remain on 18%. This lack of clear delineation has led to many unforeseen outcomes for the video game companies, the video game firms argued.

Companies making video games were receiving multiple show cause notices and tax raids, and banks and payment gateway companies were denying services also," a letter read, which is a copy reviewed by TechCrunch. GMonks, NewGen, Lila Games, Dot9 Games, and Esports Federation of India are some of the signatories to the letter.

In some instances, local police have raided video game parlors, mistaking them for gambling shops. The confusion has also complicated dealings with international investors. Indian video game companies report having to repeatedly clarify that new regulations target real money games, not video games — a process that has slowed investment deals.

It appears this is the call for industry differentiation in light of fantasy sports startups' ever more invasive dominance of the traditional video gaming sector. The dominance by these fantasy sports startups has resulted in lawmakers largely overlooking the authentic concerns and policy proposals of legitimate video game companies, making distinction between the industries even more relevant.

The consortium calls for clear, distinct definitions in Indian policy frameworks for tackling such issues. They define video games as digital entertainment products played purely for recreation or educational purposes without any monetary staking. Real money games involve the staking of money by users to enter contests that have a potential payout and/or loss in real currency.

The association is also urging the Ministry of Information and Broadcasting to not permit media houses to use images of video games when reporting about real-money games or even betting, as a way to stop public misconceptions. "To get this sort of entertainment medium to grow, it has to become well accepted and celebrated by the public," reads the document, stressing the point of public perception.

This provides a broader regulatory context to argue that the video game industry is actually arguing for the Ministry of Information and Broadcasting to be designated as their nodal agency, aligning them with other entertainment and media verticals, different than the real money gaming sector which falls under a completely different regulatory purview.

Even as the country solidifies its position amongst the world's top startup ecosystems and quickly transforms itself into a global manufacturing hub for some of the world's leading giants in technology, all video game concepts remain unsophisticated. This is why the sector cannot afford further delay in overcoming the issues it faces.

Other landmark proposals include the setting up of a Catalyst Fund that would give seed funding to start-ups as well as to micro, small, and medium-sized businesses; steps to incentivize banks to consider digital IP as collateral for business loans; and measures to improve university education in game development. (India considers to be micro businesses any venture with less than $1 million in revenues.)

The consortium is also seeking a reduction in GST on video games from 18% to 12% and advocating for corporate tax holidays to attract investments and support the industry’s sustainability.