India Development Foundation Unveils Data-Driven Method to Distinguish Games of Skill from Games of Chance at the India Gaming Convention 2024

India Development Foundation (IDF), a private, non-profit research foundation, has published a report on ‘Modeling the Role of Skill in Online Games’ that provides a quantitative framework that can statistically determine the predominance of skill across all online gaming formats. This is the first study to provide a theoretical framework for understanding how skill is accrued through experience, ultimately determining winnability in online gaming. The report was launched at the Indian Gaming Convention 2024 by esteemed policymakers and industry stakeholders.

Professor Shubhashis Gangopadhyay, Research Director of India Development Foundation, said, “Distinction between games of skill and games of chance is critical to safeguarding legal online gaming and mitigating the risks stemming from the proliferation of betting and gambling platforms. Establishing an objective game testing framework to distinguish games of skill and games of chance is critical to protecting Indian gamers and enabling the growth of an innovative industry. In this context, we have developed a comprehensive objective framework to assist policymakers in distinguishing between these two categories through a statistical methodology”

The paper develops a generalized scoring framework and employs it to test the dominance of skills using seven statistical tests. The combination of seven statistical tests will provide a comprehensive framework for testing the predominance of skill in any online game, regardless of whether real money is involved.

The seven statistical tests as per the scoring framework:

● Test 1: A skilled contestant always beats a contestant, opting for a random strategy.

● Test 2: Contestants have an opportunity to lose a contest deliberately.

● Test 3: Higher skill reflects better winning probability in online games.

● Test 4: Relative superiority of skill remains consistent across non-overlapping time intervals.

● Test 5: Experience helps in attaining skills.

● Test 6: Similar skilled players have similar win percentages.

● Test 7: Consistent winning is not an event of chance.

According to the study, an online game that satisfies any of these tests should be classified as a game of skill. These tests take a “black-box” approach to develop a game-agnostic framework, allowing for player scores to be summarized without explicitly using a game’s structure or modifying game rules for the tests.

The report highlights the need for a theoretical framework that will help policymakers coherently distinguish skill-based games from chance-based ones in an evidence-based and data-driven manner. This will enable effective governance and consumer protection in the long run. At the same time, this framework will help regulators identify and safeguard legitimate online gaming activity and curb the proliferation of illegal gambling platforms.

The findings of this study can further ensure that policies for the online gaming industry are consistent with ground realities and established legal norms, reinforcing the case for recognizing skill-based games as a legitimate business activity.