Bengaluru: Rahul, an analyst with an international gaming company, spends up to eight hours every day playing poker online, often making up to Rs 10,000 within 15 minutes. Of course, he does lose money as well, but the initial wins make for a heady rush.

“I got introduced to the game almost a year ago and I have been hooked ever since,” said Rahul, 26, who aspires to be a professional poker player someday. “It’s especially interesting for those who love logic- and strategy-oriented games and are good at math.”

Rahul, who declined to be identified by his full name, is among more than 50,000 people who play on homegrown online poker start-ups such as Adda52, Poker-Baazi and Spartan Poker every month. Several of these bootstrapped platforms make profits on annual revenues of at least Rs 5 crore.

“Online poker is a profit-making model,” said Rajat Agarwal, Co-Founder of Spartan Poker. Though it is difficult to estimate the size of India’s online poker industry, according to Agarwal, reports last year pegged it at about $110-120 million. That may seem a small size for a largely profit-making industry but the potential isn’t lost to outsiders.

In September, hospitality company Delta Corp bought Adda52 for Rs 155 crore in a stockand-cash deal. The financials secured the deal.

According to Delta Corp Chief Financial Officer Hardik Dhebar, Adda52 was a debt-free and cashgenerating online poker startup that clocked revenues of Rs 47 crore in calendar year 2015 with core operational (EBITDA) margin of 30-35%.

“We received a seed investment five years ago from Indian Angel Network when we started and we saw stable, year-on-year growth,” said Anuj Gupta, Co-Founder of Adda52.

“Besides focussing spends on a strong software, we had to focus on Google adverts maximisation and using the right (search engine optimisation) techniques… Also, not hiring excessively and being one of the first to enter the market in India helped.”

According to Kolkata-based professional poker player Aditya Agarwal, who began playing over a decade ago while studying in the US, India has only about 1,000 professional poker players, 95% of them male.

“I recently heard of a group of poker players in Varanasi. The sport has definitely come a long way since I started playing. It’s becoming increasingly common to hear of online players cashing out anywhere between Rs 50,000 to over Rs 1 lakh during tournaments,” said Agarwal, who was roped in during January 2015 as the first Indian player for the world’s largest online poker site, PokerStars.

Agarwal made headlines in July last year when he won $96,445 at the World Series of Poker in Las Vegas, considered one of the biggest poker tournaments.

Delhi-based Nikita Luther is among the few women playing professional poker and was recently selected to play for and represent Adda52. “When you see universities like Harvard and MIT include poker as a course, one understands that if it has been recognised as a skill-based game on a global level, it’s a matter of time before India acknowledges it too,” said Luther.

And there’s the rub. The main challenges for poker startups lie in ridding the negative image associated with the sport and getting authorities to recognise it as a game of skill and not gambling, which is mostly disallowed in India.

“In the first year, when my brother and I set up PokerBaazi, our family wanted nothing to do with it because of the taboo associated with poker,” said Co-Founder Puneet Singh.

“Over the course of the year, we did gain their support as we focussed on increasing awareness about the game, such as viewing parameters like memory, the mathematics of the game and player psychology being important.”

He’s hopeful state governments, too, will come around. “As the number of startups increases in this space, we also see a slow but gradual improvement in the regulatory issues surrounding the sport, where it’s not being viewed as a gambling sport but a skill-based game,” said Singh.

It’s a patch start, but Karnataka, West Bengal and Nagaland are the only states to have given a clear verdict, classifying poker as a skill-based game.

In October 2013, The Indian Poker Association, in petitions filed before the Karnataka High Court, complained that the police were harassing poker players by filing cases against them and raiding poker clubs. The court

“ruled that playing skill games like poker in recreational clubs is permitted and no licence is required for the same”, said KN Suresh, Secretary of The Indian Poker Association.

West Bengal excludes card games such as rummy, bridge and poker from the definition of gambling, although permission is required from district magistrates and commissioners for conducting competitions in public. In Goa, poker is permitted in casinos. Nagaland passed a law this year legalising skill-based online games.

This “includes poker and is the first step towards improving legality hurdles online poker startups face in India”, said Jay Sayta, secretary of the All India Gaming Federation and founder of gaming laws website Glaws.in.

According to Vidushpat Singhania, partner at Krida Legal, other states operate in a grey area. “Assam and Odisha are the only two states that indicate there is no exception for games of skills within the gambling Act. Besides Karnataka, West Bengal and Nagaland, the Gujarat High Court has asked the state government to clarify its stance on poker and the Kerala government is considering if the game can be classified as a one of skill. It’s a slow process but poker is gradually getting noticed,” said Singhania.

With gradual regulatory acceptance, and post Delta’s acquisition of Adda52, more investors are eyeing the mostly bootstrapped online poker sector.

“The online poker startup space has most likely not seen investor interest yet because of the lack of understanding in terms of regulatory issues, but with increasing state-level acceptance and mostly profitable models in the space it’s a sector where investors can expect healthy returns,” said Alok Mittal, founding board member at Indian Angel Network, who led the seed investment in Adda52. “Venture capital and angel investor interest in the space will pick up soon.”

Source: Times of India