The big bet VCs love: Online Rummy portals in India are raking in millions for their investors.
Even as Indian startup unicorns in high-profile sectors like e-commerce and service-aggregation struggle to find a path to profitability, a startup in a much smaller sector with far less bling is showing the ecosystem how it is done – and by raking in massive returns for its investors. Recently, Matrix Partners India successfully exited online rummy portal Ace2Three with a whopping 20 times return after Clairvest Group picked up a major stake in the portal for about Rs 474 crore.

Ace2Three is among the same kind of portals which subject you to their omnipresent, and often frustrating, banner ads online, luring you with bright red creatives to taste the world of online poker and rummy.

It has been more than a decade since gaming shifted from physical tables to virtual ones. But the mobile gaming industry has skyrocketing growth. As per a research by Reliance games, the Indian mobile gaming industry is expected to reach $3 billion by 2019. And within the gaming industry, online card games have been standing out with growth rates of 100% every quarter.

“Gaming in India is still in very early stages of development. Especially Rummy. It is a very India-centric game, which we have all grown up playing, be it in villages or in cities like Bombay. It is widely played by both the young and the old. The industry is poised for growth. It is still in very early stages but it is growing at 50-100% year on year,” says Rajinder Balaraman, vice president at Matrix Partners India.

And not just Ace2Three, investors of online Rummy and Poker portal Adda52 also exited with a return of 22 times after Delta acquired it for Rs 155 crore in September 2016. Clearly, these online portals are attracting immense investor interest.

So, what are these online portals and what is the kind of traction they see?

On an average, these portals have anywhere between 20,000 to two lakh players and see an average of a lakh app installs every week.

And USP for most of these games is a multiplayer environment that makes the experience of playing the games real.

There are several such portals that are available as both websites and mobile apps. They either offer a single game or have a range of casino games on their portals.

Rummy Passion, for example has three variants - Points rummy, Pool rummy and Deals rummy. It has over 22,000 registered users and a user spends an average of 1.5 hours per day on the table.

Play Games 24x7, which runs Rummy Circle also has another vertical Ultimate Games, which offers freemium games like Teen Patti, Poker and Rummy. Play Games has nearly 15 million users with an average user spending an hour a day across three to four sessions through the day.

Bringing players on board

The key to any of these games doing well is ensuring maximum user engagement. For online card games, there are two ways to it. One is rewarding users and the other is ensuring great user experience.

Play Games relies on big data technologies to bring about an immersive and engaging user experience. “We gather massive amounts of data on player behavior. All this helps to understand our player's needs and wants, and enables us to build experiences that our players just fall in love with. We deploy big data technologies and sophisticated predictive analytics algorithms to anticipate our player’s needs and offer unparalleled and highly personalized gameplay experiences,” says Bhavin Pandya, co-founder, Play Games.

For Rummy Passion, while vibrant game tables keep users coming back, what works best for them is the loyalty rewards program, which gives them added free benefits. “We go all out to enhance player experience and engagement. We also have the fastest NEFT withdrawals. And of course, multiple languages customer support which is appreciated by our customers,” Bobby Garg, founder of Rummy Passion.

For Poker games, it is usually the competitiveness of a tournament and the cash prizes that come with it.

“We have a line-up of fantastic tournaments and activities from time to time through the year with massive guaranteed prizes and super value cash games. We also offer a complete user-friendly interface experience, ensuring a wholesome experience for the players,” says Amin Rozani, MD and Co-founder, The Spartan Poker.

Rummy games too offer several cash prizes. And while most of these games deal in real cash, there are also some like Ultimate Rummy where users win just points. And these apps earn through their freemium model where there are in-app purchases.

Portals like Rummy Passion, revenue is earned through ‘rake’, which is a percentage of wins collected from the winning players. The rake varies between 8% - 12%. Some like Rummy Circle earn their revenue through a service charge on games and tournaments with cash prizes. And there is advertising revenue as well.

In just the month of April, Rummy Passion saw one crore rupees in money wagered on its platform.

Legalities of the game

But there is still a stigma that runs with these games. The legality of these games, especially poker, still lies in a grey area.

According to Law Farm, Indian law prohibits gambling in an online platform and is regulated by the Information Technology Act of 2000. Additionally, the Intermediary Guidelines (Rules) 2011, published under this Act regulates gambling practices by intermediaries including telecom service providers, network service providers, internet service providers, web-hosting service providers, search engines, online payment sites, online-auction sites, online-market places and cyber cafes.

Section 3(2)(b) of the Rules prohibits any practice which is related to or which encourages laundering and gambling.

However, the Central Gambling Act and all the State Gaming Acts provide for an exemption for games of skill and Rummy has been declared a game of skill by the Supreme Court of India.

Further, a ruling in the Andhra Pradesh High Court also upheld that because Rummy is a game of skill, prize competitions in games that involve substantial skills are business activities and are protected under Article 19(1)(g) of the Constitution, which is the right to carry our any trade in India. Further, states such as Assam, Odisha and Nagaland are states that have exceptionally passed a law that provide an exception for games of skill.

However, there has been no clear judgement spelled out for Poker. While many may argue that Poker also is a game of skill, it still lies in a grey area.

Source: The News minute