New game in town: Opinion trading sees surge in users, funding — under the radar

Welcome to the world of opinion trading: platforms which allow users to wager on the outcome of future events. The sector is growing exponentially, raking in funding and an estimated 5 crore users, but it seems to have largely gone under the radar in India, unscrutinised.

Parochially, opinion trading platforms appear to be betting platforms – and some in government also have this view. But, investors and founders argue that there is a big element of skill that goes into making money on such platforms. Whether it’s a game of skill or of chance, stakeholders in the larger online gaming sector in India are privately calling for a clear Central law to deal with opinion trading platforms, The Indian Express has learnt.

The sector in India has companies like Gurugram-based Probo and MPL Opinio. While the former offers questions on a varied set of sectors like sports, elections and cryptocurrency, the latter only deals with questions related to cricket matches. These platforms have received more than Rs 4,200 crore in funding so far from over 35 investors which include Sequoia Capital (PeakXV), Elevation Capital, Accel Partners, Soma Capital and Y Combinator.

India currently does not have a law which can directly deal with opinion trading platforms like Probo and MPL Opinio – though in foreign markets like United States and Australia, where this industry is more mature, governments have decided to treat the wagers as securities, thereby putting the responsibility of regulation on the stock market regulator.

To give a sense of the pace of growth in India, as per industry estimates, these platforms have registered transaction volumes of over Rs 50,000 crore a year with a user base of more than 5 crore people. Collective revenues for firms in the sector are projected to be over Rs 1,000 crore for the financial year 2024-25.

Skill or chance?

In India, the fundamental legal lens through which online games are seen is whether they are a game of chance or game of skill. In games of chance, no person can have a competitive advantage over another because the result purely depends on luck. In games of skill, though, there could be some amount of preparation that could allow someone to be in a better position to make a prediction.

While many believe this underlying lens itself could be problematic, given that many games of skill could also involve an element of luck or chance, this is currently the legal understanding in India. In effect, games of chance are bad and games of skill are alright. So naturally, it is in any online gaming platform’s interest to claim that their platform involves a great degree of skill.

Sachin Gupta, co-founder of Probo, told The Indian Express: “We have created templates for questions and calculated their skill scores, to ensure they are skill based. Where the element of chance outweighs skill, we do not allow such questions to be published on the app.”

“There is an internal skill auditing team, which assesses every question over a period of events to determine a skill score, which is based on the definition of skill based games laid down by the Supreme Court – the level of adroitness, knowledge, alertness required,” he said.

But not everyone shares that view. “Wagering on the probability of an outcome is betting in our opinion, and opinion trading platforms generally follow that model,” a senior government official said. The IT Ministry, in its rules for online gaming released last year, had said that permissible online real money gaming does not include “wagering on any outcome”.

A gaming industry executive said, “opinion trading platforms allow users to gamble with real money by simply choosing ‘Yes’ or ‘No’ on arbitrary events happening in the future, with odds changing every second. These platforms are definitely betting platforms and involve no skill”.

Legal lacunae

Lawyers working with these firms have advised them to stay away from certain sectors to avoid coming under greater regulatory scrutiny. “For instance, one clear no go area is the stock market, or any questions related to the Indian stock market, since there is a fear that it could get the Securities and Exchange Board of India (SEBI) involved,” a lawyer, who has worked with opinion trading companies, said, speaking on the condition of anonymity.

Another lawyer said that while at first glance opinion trading platforms can seem like betting platforms, as it allows wagering on events, there are some fundamental differences. “For instance, there is no house on such platforms, and they do not have any control over the events they are asking questions about. When there is a house, there is of course a perverse incentive to rig the system,” the lawyer said.

Google has allowed some opinion trading apps such as MPL Opinion on its Play Store, but has prohibited apps like Probo. These games are, however, available on Apple’s App Store.

Incidentally, Google had allowed some fantasy sports and rummy apps on its Play Store as part of a pilot project in 2022. This pilot is currently the subject of a Competition Commission of India investigation for alleged market distortion. Generally, these apps, including opinion trading apps, acquire users through digital ads on platforms like Google and Meta’s Facebook and Instagram.

Global experience

The opinion trading sector is regulated across countries like the US, UK and Australia. In the US, Kalshi, the company that started the opinions trading segment – and from which Probo gets a lot of its inspiration from – is regulated by the Commodity Futures Trading Commission (CFTC), one the country’s two main stock market regulators.

Although, it is worth noting that a similar prediction app called Polymarket has come under the scrutiny of the US Department of Justice allegedly accepting trades from US-based users. The company is not registered with the CFTC and as a result, can not legally allow US-based users to wager on the platform.

In India, however, there is currently no direct regulator for the sector and it is yet to pique the interest of regulators like SEBI. So effectively, at the central level, there is no dedicated law that sets the guardrails for such platforms, and there is very little in terms of regulatory protection that is available to their users.

The IT Ministry had come up with amendments to Information Technology Rules to regulate online gaming platforms, which could have had a bearing on firms like Probo. However, there is a question mark on the status of these rules.  For now, these laws have no regulatory teeth, which furthers the problem of the legal lacunae that exists around online gaming in general, and opinion trading platforms in particular.

“We would like to get regulated. The IT Ministry has shown and continues to show interest in regulating the sector, which is a great starting point. A platform with a similar business model to ours has been regulated in the US,” Probo’s Gupta said.