Explained | How is India moving to regulate online gaming?

What are the new draft amendments with respect to online gaming? How has the industry responded? How will the new rules protect users? What are the obligations of the gaming platforms?

January 04, 2023 10:30 am | Updated 12:13 pm IST

For representative purposes only

For representative purposes only | Photo Credit: Getty Images

The story so far: The Ministry of Electronics and Information Technology (MeitY) has released draft amendments in relation to online gaming. The idea is to ensure that online games are in conformity with Indian laws and to safeguard users against potential harm. The Minister of State at MeitY Rajeev Chandrasekhar stated that the draft proposes a self-regulatory mechanism which, in future, may also regulate the content of online gaming. Feedback is invited until January 17.

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What changes are being proposed?

The proposals are aimed at safeguarding the interests of users by introducing set procedures and norms for verification and user engagement. More importantly, the draft proposal defines what constitutes an ‘online game’. It is “a game that is offered on the internet and is accessible by a user through a computer resource if he makes a deposit with the expectation of earning winnings”. ‘Winning’ constitutes any prize, in cash or kind, intended to be given to the participant “on the performance of the user and in accordance with the rules of such online game”. This addresses the discourse in the sector about the definitions of a ‘game of skill’ and ‘game of chance’. The term ‘game of skill’ had been used in the Public Gambling Act (1867) but had not been defined.

The proposal endeavours to provide for greater transparency. The game operators would have to verify users on the platform and provide them with the terms of services. For the monetary aspect of it, operators would have to inform the user about the policy related to withdrawal or refund of their deposit, measures taken for its protection, the manner and distribution of winnings and the fees and other charges to be paid by the user. They would also have to be informed about the risk of potential financial loss and addiction associated with the game. The self-regulating bodies’ framework must also include safeguards to protect children. Addiction is to be combated using repeated warning messages should the user exceed a reasonable duration while playing a certain game.

At the time of onboarding a user, the operator would be expected to verify the identity of the user. The procedure for the same must be informed in advance to the user being onboarded. It also puts forth measures for users who register their devices from India or use their services from India, to voluntarily verify their accounts. They would be provided with a “demonstrable and visible” mark of identification.

The information gathered for verification cannot be used for any other purpose without the user’s content.

What about the platforms?

Before hosting or publishing a game, the platform would have to verify it from the self-regulatory body it is associated with. It would then be required to carry a registration mark on all its recognised online games. The platform is expected to appoint a key management personnel or senior employee as its Chief Compliance Officer who would be entrusted with coordinating with law enforcement agencies to ensure compliance with their orders or requisitions. In addition to this, the platforms are also expected to additionally appoint a ‘Nodal Contact Person’ to facilitate the necessary coordination at any point of the day. Further, it must have in place an appropriate mechanism for receipt and resolution of grievances. The complainant must be able to track the status of the same using a unique ticket number.The gaming intermediaries must have a physical address in the country which must be published on its website and app.

What about the self-regulating bodies?

MeitY is entrusted with the responsibility of recognising and if required, unrecognising all self-regulated bodies under the proposed framework. The applications of the desirous candidates would be examined on criterions including the number of companies who are its members, its track record in promoting responsible online gaming, the absence of conflict of interest and suitability of its board of directors. The latter must be independent and eminent people in the space with relevant expertise in public policy, public administration, psychology, medicine or consumer education, online gaming or any other relevant field.

The self-regulatory bodies would also be assessed for their capacity in terms of deployment of technology, expertise and other relevant resources to ensure compliance from members.

They are required to examine a game in light of the member’s adherence to due diligence norms and relevant laws.

How is the industry reacting?

Experts have welcomed the government’s initiative to formulate these rules and bring online gaming under a comprehensive central regulation. “The Government has maintained a very open and transparent approach,” Roland Landers, CEO, All India Gaming Federation (AIGF), industry body for online gaming told The Hindu. He added that these rules will help curb the menace of anti-national and illegal offshore gambling platforms.

“A uniform framework such as this will immensely increase investor confidence. While there has already been a steady inflow of investments within the gaming sector, we expect this to grow manifold in the years to come,” Sai Srinivas, co-founder and CEO of mobile esports and digital gaming platform, Mobile Premier League (MPL), stated.

Do companies need to do anything differently to comply with the new rules?

AIGF already requires its members to follow many of the obligations that have been set out in the new regulations. It would only be those gaming companies that do not already follow a self-regulatory framework that will have more compliance obligations as a result of these rules.

“As part of our self-regulatory bodies we already follow multiple due-diligence measures,” Dibyojyoti Mainak, Senior Vice President, Policy and Legal, Mobile Premier League (MPL), told The Hindu. Most of the measures set out in the draft rules are already mandated by the major gaming SROs, and we will abide by the additional measures that need to be taken, once the rules are effective, he added.

What are some of the concerns?

Despite appreciating the government’s move to introduce these new rules, some experts are concerned about certain discrepancies in the new initiative.

The rules still bucket all gaming intermediaries into a broad category irrespective of size or risk. They all require similar compliances, including the need to have India based officers. This can disproportionately burden young start-ups, and make it difficult for global players to start their services in India, Rohit Kumar, founding partner at The Quantum Hub Consulting, a Delhi-based public policy research firm, told The Hindu.

How does the new move ensure security of gamers?

Experts also expect the new rules to ensure safety of users in online gaming.

“The rules, built on principles of fairness, transparency and independence, will help protect players and promote safety in gaming,” Mr. Srinivas said. Industry leaders also said that this initiative will increase user’s trust.

“This will help create a more responsive and agile framework to prevent harm and address user grievances,” Mr. Kumar said.

What are some other countries doing to regulate online gaming?

China has placed strict limits on the time young people may spend playing online games. Online gaming in the country is now only available to people younger than 18 from 8 p.m. to 9 p.m. on Fridays, Saturdays, Sundays and public holidays.

Before an online game can be distributed in China, it must obtain approval and an International Standard Book Number (ISBN) from China’s National Press and Publication Administration (NPPA).

In the U.S., Internet casino gaming remains illegal in every state that doesn’t explicitly legalise the games.

Germany’s “Youth Protection” laws aimed at violent games pushed developers to replace realistic red blood with a green version, for example, and Australia has sought to ban games for including depictions of everything from assault to marijuana use.

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