Castler Escrow

Escrow for Gaming Companies

Ever wondered how gaming companies that host cash reward competitions work? Or why do lotteries exist? On the offset, it appears to be a fun, low-risk opportunity to earn mega cash. But little do people understand how exactly the hosts of these competitions and lotteries earn money themselves – it’s good business.

The Indian Gaming Industry - An Update

According to a report jointly published by Boston Consulting Group (BCG) and Sequoia Capital, the Indian online gaming industry is set to become worth $5 billion by 2030. The same report also states that in India, the industry has grown by 40% in FY 2019-20.
As with the turbulence experienced by most industries and sectors globally, COVID-19 has helped surge the growth of Indian gaming companies phenomenally. As people were locked indoors, they started looking for alternatives to fun outdoor activities more intently. Quite naturally, gaming and entertainment sites caught people’s attention.
According to the Managing Director of Sequoia India, “monetization of Indian games… is already at $1.8 billion.” He also mentioned that 80% of all funding has been going to platforms – an indication of investor optimism towards online gaming. Needless to say, online gaming in India is a massively underserved market just stepping into the light – and hosting money rewards help.

How Do Cash Prize Games Work?

Gaming rewards work on promises. The promised amount is the lure and the ticket size for entry is like bait – attractive low-cost risk, promise of a massive win. The trajectory of an online cash prize game looks something like this-

Step 1

A prize game is announced, and advertised with the prize money and the entry fee. The entry fee would normally be quite nominal, like 50 bucks, and people would be expected to participate in multitudes.

Step 2

If 100 people are expected to participate, and the entry fee is 50 bucks, the total money that will be pooled is 5000. The prize amount is always fixed at a lower amount than the estimated poolable amount in order to earn a profit on the game. This amount is very carefully estimated so that it can be ensured that the amount of funds needed can be collected.

Step 3

The money is collected online through payment gateways, and things often go wrong at this point. Many people end up participating in the cash games and never come to know of the outcome of the cash winner. Many scams are also run in the name of the online cash prize games. We’ll further explore what goes wrong during the collection phase in the upcoming section.

Step 4

Out of the collected amount, a lucky draw winner is chosen and the amount is transferred to this person. If there are any surplus collections (which usually does end up happening), it becomes the gaming company’s profit.
Again, things often do not go as outlined here due to litigation errors.

Gaming Companies Need Escrow Accounts

If you didn’t read the last section fully, now is the time to do that. Else the rest of this section wouldn’t make much sense.
As mentioned in Step 3, many things go wrong during the collection phase, and this normally occurs due to a lack of awareness. This is what gaming companies end up doing – while collecting entry fee from participants through a payment gateway, companies end up connecting their Current A/c. This is incorrect and invites litigation and compliance problems.
Only revenues are supposed to hit a company’s Current A/c, and collecting entry fees for a prize game or lottery is not revenue. Entry fees should therefore be collected in a third-party account specially created for that purpose. Escrow accounts help with this.

Digital Escrow Process for Gaming Companies*

A digital escrow account can be used for handling cash prize game collections and disbursals securely and in a compliant manner. Following is a trajectory of how these accounts work:

Step 1

The gaming company gets eKYC’d by the digital escrow company, and a quick eAgreement is formed. This agreement would highlight the ways in which money will be collected, the ways in which it will be disturbed, and other terms of use of the escrow account.

Step 2

The gaming company’s digital escrow account is opened, and representatives of the company are given custom access to the digital escrow portal.

Step 3

The digital escrow account is linked with the gaming company’s payment gateway, through which they collect entry fees for the game.

Step 4

Money paid by participants to enter the cash prize game is directly collected in the digital escrow account, where it is held till a winner is declared.

Step 5

Once the winner is announced, the prize amount is transferred to the winner’s account.

Step 6

After the prize amount has been transferred, the amount remaining in the digital escrow account is considered the gaming company’s revenue. This amount is then transferred to the gaming company’s current a/c.

Benefits of Using Digital Escrow*

Instant Account Creation

Traditionally, creating an escrow account has always been a tedious, time-consuming task. Digital escrow has overturned this by taking the entire account setup process online, and accessible from anywhere in the world.

Complete Safety

Being a third-party account, only those people have access to the escrow account who are nominated by the user. In addition to that, all payouts from the escrow account are authorised and approved by a certified trustee.


A Smart Dashboard lets you take your fund-flows in real-time, and gives insights for better financial management and decision-making.

Real-Time Updates

Updated through SMS and E-mail help make sure that you are always in the know about your escrow activity.

Escrow API Stacks

Of much special interest to gaming companies, escrow API stacks help you integrate digital escrow services easily on your own platform.
*All descriptions in this section pertains to Castler and its digital escrow offering only. Ther escrow product and escrow services of another company may be radically different.

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