The Bizarre World of Fantasy Stock Gaming

Imagine making money from the stock market without ever investing in it. This might sound like a far-fetched fantasy, but for thousands of Indian consumers, it was a lucrative reality. We’re not referring to traditional financial instruments like derivatives, mutual funds, or options trading. Instead, we’re delving into a more unorthodox, and indeed peculiar, avenue: Fantasy Stock Gaming.

Several mobile applications emerged allowing users to engage in simulated stock market trading. These platforms enabled participants to profit from the fluctuations in stock prices without incurring typical costs such as broker fees, stock exchange fees, or taxes. By predicting whether a stock listed on the National Stock Exchange (NSE) or the Bombay Stock Exchange (BSE) will rise or fall within a short time frame—sometimes as brief as 60 seconds—users could earn money based on their forecasting prowess.

These apps rapidly amassed a significant user base, with some boasting over 500,000 downloads on the Google Play Store. Their popularity did not go unnoticed by investors. Venture firms such as Accel and Dream11’s investment arm Dream Sports have poured substantial investments into these platforms.

And the best part? Unlike fantasy sports apps that peak in user activity during popular sports leagues like the Indian Premier League, these apps could keep users engaged year-long, tapping into the desires of a growing number of Indian consumers seeking innovative ways to engage with the financial markets.

Or atleast, that was their hope until the Securities and Exchange Board of India (SEBI) killed the industry in one fell swoop earlier this week. But before we get there, let’s delve into how these apps came into existence and grew in popularity.

How Fantasy Stock Gaming Became a Thing

The concept of Fantasy Stock Gaming can be traced back to educational initiatives in the late 20th century. Early iterations were primarily paper-based, designed to teach high school and college students the fundamentals of stock trading without the risk of real financial loss. These simulations were simple, allowing participants to buy and sell stocks based on real market data.

With the advent of personal computers in the 1980s and 1990s, these educational tools began to migrate online. Platforms such as “The Stock Market Game,” launched in 1977, transitioned to digital formats, offering more interactive and engaging experiences. These early online simulations were primarily used in academic settings, providing students with a more dynamic way to learn about the stock market.

The dot-com boom of the late 1990s and early 2000s marked a significant turning point. With internet access becoming more widespread, fantasy stock market platforms began to proliferate. Indian websites like Moneycontrol (in 2006) also introduced virtual trading platforms, allowing users to create and manage virtual portfolios in the Indian stock market. This period marked a surge in popularity, as more people became interested in testing their trading strategies without financial risk.

The widespread adoption of smartphones and the development of mobile applications in the 2010s further propelled the growth of Fantasy Stock Gaming. Mobile apps made it easier for users to participate in virtual trading anytime and anywhere, effectively bridging the gap between paper trading and real investing.

In 2016, Samco Securities revolutionized the landscape of gamified stock trading in India with its Indian Trading League (ITL). Designed to democratize access to the stock market, the ITL attracted seasoned investors and novice traders alike, providing a competitive environment to test their skills.

The concept was straightforward: participants competed in real-time trading with virtual portfolios, aiming to achieve the highest returns. Winners could receive prizes up to INR 1 crore and manage a fund with an initial corpus of $1 million USD. This competition was significantly backed by prominent figures such as Indian cricketer Kapil Dev and Bay Capital Founder Siddharth Mehta, who invested $3 million in Series A funding in 2016.

The Indian Trading League exemplified how gamified platforms could engage a broader audience, making stock trading more accessible and enjoyable for a diverse range of participants. This led to a slew of applications aiming to replicate the success of ITL with their own unique spins on it.

Bysos, for instance, introduced a feature allowing players to select the “hero of the day” and “zero of the day” based on the biggest gainers and losers in the stock market. Accurate predictions double the points from those particular stocks. These contests were priced in multiple tiers, with some offering prize pools of up to INR 1.25 lakh.

StockTry, on the other hand, adopted a more exclusive model. Certain competitions were restricted to “Pro members,” who had exclusive access to these tournaments, thereby narrowing the playing field. Additionally, StockTry also ventured into finance schools, hosting competitions exclusively for students from these institutions.

Other apps, such as ThreeDots, had sought to integrate stock market prediction experiences into broader platforms. The ThreeDots app enabled users to earn coins by sharing binary opinions, such as predicting which stock would decrease the most or the direction of the NIFTY index on a given day. The app also featured “spin to win” contests and other prediction-based competitions, allowing users to accumulate coins. These coins could then be redeemed and converted into usable currency, providing an additional incentive for users to engage with the app’s various prediction activities.

However, the rapid growth of Fantasy Stock Gaming platforms did not go unnoticed by regulatory authorities.

SEBI’s Crackdown on Fantasy Stock Gaming

SEBI grew increasingly concerned about the speculative nature of these platforms and their potential to mislead inexperienced investors. 

In 2016, SEBI issued a warning and proposed a ban on market-based simulation games, but the ban ultimately did not materialize. Instead, SEBI directed registered brokers to dissociate from any unapproved platforms.

Stock exchanges like NSE also took action, warning entities against using data scraped from their websites or those of brokers. However, despite these measures, some of the new gaming platforms were reportedly circumventing the rules.

The continued proliferation of these speculative apps prompted SEBI to take decisive action. In May 2024, it instructed exchanges and depositories not to share real-time price data with third parties, a move designed to cripple these speculative platforms and protect investors from potential risks. Indian stockbroker and financial services company Zerodha’s co-founder and CEO Nithin Kamath described the move as “the end” of Fantasy Stock Gaming.

Fantasy Stock Gaming apps depend on real-time price data to accurately simulate the stock trading experience. Without this data, these platforms cannot operate effectively, as it is essential for creating a realistic trading environment. Users require up-to-the-minute information to make informed decisions, reflecting the immediacy, price movements, volatility, and other market dynamics of actual market conditions. Without real-time data, the core functionality of these apps are significantly compromised.

As a result many of these apps including StockTry, ThreeDots, and Bysos have folded their operations. Other platforms like StockPe, TradingLeagues, and Bullspree continue to operate their services pivoting to offering contests based on the crypto market and in some cases, the U.S. stock market as well.

Ultimately, the biggest losers in this whole ordeal are the educational fantasy stock gaming platforms, which now face the significant hurdle of adhering to a 24-hour delay in market data. This delay undermines the very essence of these platforms, which aim to provide real-time trading experiences for educational purposes. Without access to live market data, these platforms cannot simulate the fast-paced, dynamic nature of the stock market, severely limiting their effectiveness as educational tools.

The 24-hour delay disrupts the learning experience, as users are unable to make timely decisions based on current market conditions. Instead, they are forced to trade on outdated information, which can result in misleading outcomes that do not accurately reflect the realities of the stock market. This delay also compromises the platforms’ ability to teach crucial trading skills, such as reacting to sudden market movements and understanding the implications of real-time events on stock prices.

To circumvent these limitations to receive an effective educational experience, one option for those seeking a risk-free way to learn about stock trading is to enter fictional purchase data in a portfolio tracker, such as the one offered by Moneycontrol. This method allows users to simulate trades without investing real money, effectively serving the educational purpose without exposing users to the risks associated with speculative platforms.