The Ministry of Electronics & Information Technology (MeitY) released the draft rules for online gaming in India on 2nd January 2023 to amend the InformationTechnology (IntermediaryGuidelines and Digital Media Ethics Code) Rules, 2021. These rules point towards having a five members self regulatory body to handle grievance redressal and approve KYC (know-your-customer) rules for online gaming intermediaries and gamers.
Rajeev Chandrasekhar, Minister of State in the Ministry of Skill Development and Entrepreneurship, and MeitY, released the ‘Draft Amendments to the IT (Intermediary Guidelines and Digital Media Ethics Code) Rules 2021’, suggesting a ban on wagering and betting on online games.
Important Online Gaming Definitions
- According to this draft, the definition of an ‘online game’ is one 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.”
- ‘Internet’ means “the combination of computer facilities and electromagnetic transmission media, and related equipment and software, comprising the interconnected worldwide network of computer networks that transmit information based on a protocol for controlling such transmission.”
- An ‘online gaming intermediary’ means “an intermediary that offers one or more than one online game (on the internet).”
- A ‘deposit’ means “a deposit made or committed to in cash or kind, by the user for participating in an online game.”
- ‘Winnings’ mean “any prize, in cash or kind, that is distributed or intended to be distributed to a user of an online game based on the performance of the user and in accordance with the rules of such online game.”
Main Rules Mentioned in the Draft by MeitY
The draft rules for online gaming in India by MeitY mainly highlight additional due diligence to be observed by online gaming intermediaries apart from operating in accordance with the above definitions. The online gaming intermediary is required to:
- display a demonstrable and visible mark of registration on all online games registered by a self-regulatory body.
- inform its users of the following:
i) all online games offered by them along with their policy related to withdrawal or refund of the deposit that was made to earn winnings, the game fees and the determination and distribution of winnings.
ii) financial loss risk and addiction related to these online games.
iii) the KYC procedure for a user to register their account.
iv) steps taken to protect deposits made by a user.
v) the framework of self-regulatory body that the online gaming intermediary may be a member of.
- publish on its web and mobile sites, if any, a RNG and a no bot certificate along with its details.
- identify and verify the user.
- publish their physical contact address in India on all their sites for receiving communications.
- hire compliance and grievance officers who will be residents in India. And have nodal officers to coordinate with law enforcement agencies.
How has the Draft been Accepted?
Some stakeholders are in favour of these laws that revolve around user protection, while some want a separate legislation.
The draft was appreciated by the All India Gaming Federation which is the highest online skill- based gaming body in India.
But the 22nd Law Commission requested to keep this draft on hold till it studies the matter and prepares a detailed report. Justice Ritu Raj Awasthi who chairs the Law Commission, stated “we have decided to conduct an in-depth study and analysis of the draft rules, as to bring out a comprehensive report on the matter.”
According to the Commission, the different laws followed by different states may complicate things. As of now, each Indian state is allowed ro have its gambling laws based on The Public Gambling Act 1867. And it is not certain if the state or the central government will regulate online gambling.
Tamil Nadu and Karnataka are two Indian states who want to ban online gaming in their states. Their appeal may get heard on 3rd March 2023. The verdict may affect the draft if the court allows the banning of online games in these two states.
The draft rules for online gaming in India is a great step towards regulating online gaming and protecting the user. The online gaming industry in India is booming and is expected to achieve great heights by 2024. Regulating online and offline gaming is needed.
However, the draft doesn’t discuss key jurisdictional matters. The Public Gambling Act 1867 favours skill based games only with an exception made for Rummy, and every State has its gambling rules based on this act. The draft plans to place a ban on any type of online game where money is wagered on the game’s outcome.
It doesn’t differentiate between a skill based and chance based game. There is no clarity if the online games can be played outside one’s jurisdiction. There are many questions yet to answered.
The draft was open for public consultation till 17th January 2023. Let’s wait for the detailed report from the Law Commission to see if this draft gets their approval.