February , 2023
Playing by the rules
13:27 pm

Shivanand Pandit

With the idea of guaranteeing that online games comply with Indian laws and to protect users against probable harm, the Ministry of Electronics and Information Technology (MeitY) issued draft amendments concerning online gaming on January 2, 2023. The Minister of State at MeitY Rajeev Chandrasekhar mentioned that the draft recommends a self-regulatory system that, in the future, may also govern the content of online gaming.

India is home to a booming gaming market. It is a very significant slice of the start-up ecosystem. According to the gaming and interactive media fund, Lumikai, with around 900 gaming establishments and 500 million gamers, the market is estimated to be worth $8.6 billion by 2027, up from $2.6 billion in 2022. The rising fame of online gaming, particularly during the Covid-19 years, produced three unicorns in 2022 namely - Dream11, MPL and Games24x7.

Rules of the Game

MeitY has suggested a modification to bring online gaming under the domain of the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules of 2021. The suggestion, which is part of the draft online gaming policy that will be subject to public consultation till January 17, tries to consider online gaming establishments as intermediaries. The guidelines recommend a supervisory outline for online gaming intermediaries, which accept consumer deposits and create anticipations of winnings. Intermediaries are how the IT Rules define units that enable the flow of data on the internet. For example, search engines like Google, social media platforms like Facebook, broadcasters, and OTT platforms are all intermediaries. In the gaming context, any platform that offers at least one online game is a gaming intermediary.

Aside from grouping online gaming podiums as intermediaries, the draft suggests a guide for self-regulation that may set the tone for supervision over other digital industries. The modifications are more comprehensive than other self-regulation outlines for a digital India and lay down several granular features of the composition and function of self-regulatory associations. The draft guidelines suggest the formation of a self-regulatory body covering five members from various fields, comprising online gaming, public policy, IT, medicine, and psychology. There can be more than one self-regulatory body (SRO). Online gaming platforms will have to register with these SROs, who, in turn, will attest to what is allowed as an online game. Platforms will have to confirm that the registered games do not comprise anything that could compromise the autonomy or safety of the country. Age confirmation of players, adherence to KYC norms, a complaint redressal mechanism along with the necessity for the gaming entity to have a physical address in India have been stressed.

The suggestions are targeted at protecting the interests of users by introducing set practices and standards for verification and user engagement. In addition, the proposal attempts to offer superior transparency and clarity. The game operators would have to validate users on the platform and offer them the terms of services. For the financial part of it, operators would have to notify the user about the policy linked to the withdrawal or refund of their deposit, actions taken for its safety, the way and distribution of winnings, and the fees and other charges to be paid by the user. They would also have to be updated about the danger of probable financial loss and addiction related to the game. The self-regulating bodies’ agenda must also contain safety measures to protect children. Addiction is to be fought using frequent warning communications should the user exceed a sensible duration while playing a certain game.

Before presenting or publishing a game, the platform would have to authenticate it from the self-regulatory body it is associated with. It would then be obliged to carry a registration mark on all its recognised online games. The platform is supposed to employ key management personnel or senior employees as its Chief Compliance Officer who would be delegated with coordinating with law implementation organisations to confirm compliance with their orders or requisitions. Additionally, the platforms are also supposed to appoint a ‘Nodal Contact Person’ to enable essential coordination at any point of the day. Further, it must have in place a suitable system for the receipt and resolution of grievances. The complainant must be able to trace the position of the same using a unique ticket number. The gaming intermediaries must have a physical address in India which must be published on their website and app.

Guidelines peppered with vagueness

The recommendations are praiseworthy because they permit the government to address public interest apprehensions without narrow rules, which would otherwise suppress innovation in new markets. However, since they offer the most detailed scheme for self-regulation yet, they have also introduced fresh technical intricacies that will need to be ironed out.

Firstly, SROs must register themselves with the MeitY. The ministry will watch the structure of the board of directors before registering an SRO. Furthermore, one of the five governing body members must be a government candidate. It is improper to have a self-control system where the government preserves its influence to interfere directly. A report by the Organisation for Economic Co-operation and Development (OECD) on the merits of industry self-regulation enumerates easing government load and passing it on to the industry as a benefit. The existence of a government nominee in the SRO defuses part of this benefit.

Secondly, the suggestions open doors for online gaming intermediaries to contact or take membership in manifold SROs. It could lead to a circumstance where massive variances in norms split the gaming market. For example, SROs must guarantee that a game does not bias national safety and public order. These are comprehensive opinions that each SRO can decode differently. It leaves room for online gaming intermediaries to forum-shop for an SRO that explains these conditions in a manner that suits its interest or shapes a separate SRO in a race to the bottom.

Thirdly, the recommendations do not tackle uncertainty around the functioning of state regulations within a central government outline for online games. They order that an SRO must confirm an online game’s conformity with Indian laws, including state laws on betting and gambling. Tamil Nadu, for example, forbids games like rummy and poker, and it is unsure whether an SRO can register such games there. Likewise, there is no transparency on what occurs when a game registered by an SRO is banned by a state law later.

Fourthly, the suggestions embrace an indirect way to limit illegal advertisements and burden social and digital media platforms. Numerous offshore entities publicize illegal betting and gambling services in India, and the guidelines address this valid concern. They mention that social and digital media platforms must confirm an online game’s registration status with the concerned SRO before they carry an advertisement. Over 5 lakhs gaming apps are available on Google Play Store and more than 2 lakhs on Apple’s App Store. Authenticating the registration status of each game before presenting an advertisement is impossible.

To conclude, setting the pattern for profound self-regulation is vital for industry, citizens, and the government. For industry, it is crucial to bargain for an equilibrium between government interference and self-regulation, and concurrently win consumers’ faith. For the government, it is essential to live up to Modi’s adage of “Minimum Government—Maximum Governance” in letter and spirit.



The writer is a tax specialist, financial adviser, guest faculty and public speaker based in Goa.


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