Un-Gaming the System: Tackling Collusion and Tax Increases in India's Gaming Industry

Un-Gaming the System: Tackling Collusion and Tax Increases in India's Gaming Industry

Sriram Raja
Sriram Raja

April 30, 2024

Sriram Raja
Sriram Raja

April 30, 2024

Fraudsters like to “game” the system, but we, at Bureau, are on a mission to “un-game”. 

Gamers are always looking to be one step ahead when it comes to making the most of winnings in a game. This is borne out of various factors. The most obvious imperative is certainly making easy money but if we go deeper, there is a significant bragging value that a gamer gets out of “gaming” the system.

The unique flavor of gaming fraud 

Interestingly, the motivations and user psychology that are the bedrock of any game also work against the gaming company in such scenarios. 

Adding to this, in most of the games where game ‘winnings’ are available, we see a social / virality dimension that multiplies the problem of hacks/cheats that lead to amplified leakage winnings.

You will frequently find gamers sharing information or “hacks” on WhatsApp/ Telegram/Facebook groups. This broadcasting behavior of gamers who find a loophole in a game can easily be compared to hormonally charged teenagers sharing gossip with their school groups!

If we were to summarise the driving factors of non-fair play in games, the catalysts are these: 

  1. Propensity to brag something around beating the “system”/ “game” / “house”
  2. Sharply shifting user behavior towards social engagements during games
  3. The virality of information dissemination when it comes to hacks

This is why scamming the system in games has a different flavor to real-world examples of financial fraud. The real-world motivations are much more sinister, and desperate and depend upon a high degree of secrecy and deceit. 

In gaming, being able to highlight your modus operandi and then seeing people duplicate it, is like adding a feather to their crown! 

Tax on online gaming: The added complications 

All of the aforesaid factors apply to most games. If this wasn’t complicated enough, let me add GST to the mix. The gaming industry is not immune to regulatory changes and unsurprisingly it's taxes this time. 

Here is a short recap of the current GST on online gaming companies: 

1. Games that classify as “gambling” have to pay 28% in taxes.  

2. Games that classify as “skill-based” have a comparatively lower rate of 18%. 

Almost all gaming companies have reacted negatively to the additional 10% (28% from 18%) tax burden. The companies chose to bear the loss instead of the gamer so that they could retain their customers and the gamer remains unaffected.  

For instance, if a gamer got 100 units of digital goods after depositing 100 INR, they should ideally get 28 INR less to play with. But companies are absorbing this cost, and letting the gamer get their full 100 INR (and the company pays it out of their pockets).  

This has inherently also reduced their operational margins effectively. A report suggests that in a mere 6 months since this new GST rate implementation, companies are already reporting a drop of 50% in their profits. 

How is this related to our story? This makes all losses from cheating 10% more expensive. In fact, it becomes a lot more than 10% when we are talking of classic gaming frauds like collusion.

All collusion is bad collusion

What does collusion mean in online gaming?

Collusion in online gaming refers to the unethical practices that are designed to cheat the system. In multiplayer games, collusion occurs when 2 or more individual players team up without the knowledge of others to gain an added unfair advantage and ultimately win.  

Collusion is an ugly by-product of social gaming. To justify this, let's understand some of the use cases of collusion deeper to understand its damages. 

Case 1: Hunting in packs

Let's start with a good old game of Texas hold 'em poker. It is pretty straightforward to say that in a table of 6 or more if 3 players collude and share their hand information, you don’t need ‘tells’ to win in this case.

Collusion strategy in online gaming: Hunting in packs

Case 2: Blackjacking the House

This refers to teaming up to take advantage of in-game rewards. In many games, where the winner or the leaderboard finishers receive house giveaways, gamers collude with some weaker opponents or “familiar” opponents just to inflate their points or any other in-game currency to get a place on the leaderboard. Simply put, this is bowling full tosses deliberately.

Collusion strategy in online gaming: Blackjacking

Case 3: Generating Information Asymmetry

In games where the gamer is playing against the house and progressively through different levels, they need to face harder challenges, or in time-based competitions, colluding players break sensitive information in advance to mess with the gameplay and win unfairly. 

Can collusion in online gaming be stopped? 

Let’s highlight two widely used systems in the world today. 

1. Social Listening 

The most basic and easily implementable method is social listening.

Social listening is typically used by large consumer brands to track consumer sentiment, consumer grievances and so on. At Bureau, we have a large network of Fraud and Risk Product Managers across the globe. This is why we know many product managers create alternate or fake profiles on platforms such as Telegram, Discord, and forums like Game Guardian to monitor and participate in gaming discussions. 

2. Fraud rings or Network graphs 

What happens when social listening falls short? We need to rely on data and not human behavior. 

Fortunately, if there’s something all of us have learned from the movie Mindhunter, it’s that all fraudsters like to leave some trails out of fun or negligence. 

One popular method is to track and identify the rings of these players. 

How do we identify this ring?

One needs to start with two identifiers or two factors that belong to a single gamer - F1 and F2. We then map each interaction between F1 and F2 on a graph. These interactions end up becoming very dense as and when people collide

Here is a visual representation done by Bureau to show you a potential fraud ring or graph network. 

A visual representation of Network Graphs in online gaming

To put things in perspective, if an average table in a casino-like setting has 6 random players, the number of hands between colluding players will be 10 times that of regular players. 

Tracking and identifying the density of these network graphs can give insight in real-time on players that are colluding. 

How is Bureau derailing collusion in the online gaming industry? 

In the fraud prevention industry, the identifiers used to create the graph MUST be reliable. 

Our competitive advantage? 

At Bureau, we create this network graph with two simple identifiers - the user ID and the device fingerprint of the player. 

We create a unique device fingerprint or a device ID that survives reinstalls, cloning, phone resets, and many more vectors. In the industry, the usual markers are Advertising ID and Android ID. It goes without saying, these are not adequate. Our device ID is formulated using 200+ raw parameters. 

Signals used by Bureau for Device Fingerprinting

As of today, we have been able to identify up to 500 different rings or such networks.

It’s time to protect the bottom line of your company. If you are a gaming company that wants to integrate fraud ring detection systems without harming the user experience of the gamer, get in touch with us today.

See our fraud prevention solutions

Sriram Raja, the author of this article, is leading fraud products at Bureau to uncover the latest scams, hacks and jugaads in fintech, gaming, and eCommerce to keep digital spaces chill. He loves discovery, brainstorming and diving into data patterns (when not planning for sprints and roadmaps). Read more of his writings here.

You might also like

Learn More

See How Bureau Can Help Fight Fraud
Talk To Us