Online gaming: IT ministry proposes due diligence, self-regulation

The Ministry of Electronics and Information Technology (MEITY) on Monday published draft online gaming rules under which it has proposed a host of measures to regulate what is estimated to be worth $2.6 billion industry. These proposed rules are covered under the IT rules announced in 2021.

The draft rules propose that an online gaming intermediary (an intermediary that offers one or more than one online game) shall observe due diligence while ensuring its users don’t “host, display, upload, publish, transmit or share an online game not in conformity with Indian law, including any law on gambling or betting.”

The ministry is also seeking additional due diligence by displaying a registration mark on all online games registered by a self-regulatory body and informing users about the policies relating to withdrawal or refund of the deposit, fees and charges, manner of determination and distribution of winnings, and KYC process, among others. 

On self-regulation, the draft rules propose a mechanism under which there can be one or more self-regulatory bodies, registered with the ministry and “may register online games of such online gaming intermediaries who are its members and which meet certain criteria.” These bodies will also address complaints through a grievance redressal mechanism. 

Other important highlights of the proposed rules include online gaming intermediaries having a physical contact address in India and measures to safeguard users from the risk of addiction and financial loss. You can read the ministry's notification here. The ministry is seeking feedback from the public on these draft rules until January 17, 2023. 

Separately, Minister of State (MoS) for Electronics and IT Rajeev Chandrasekhar said that online gaming companies would not be allowed to bet on the outcome of the games. He expressed optimism that online gaming rules will be ready early next month. 

"As per the principles laid under the rule, wagering on the outcome of game will not be allowed. All online gaming companies will have to register with the self-regulatory body that will decide on the action required to be taken as per the rules," Chandrasekhar is quoted as saying.

The new draft rules come shortly after the Union Cabinet made the MEITY the nodal authority for the ‘online gaming’ industry. The move came as a response to the long demand to regulate the space, which also involves several online gaming platforms dealing with real money transactions. In the past, a few Indian states have made efforts to curb these real money gaming platforms amid increasing cases of addiction and financial risks. 

Some gaming platforms, however, may have secured some legal shield after the Supreme Court of India ruled in favor of Dream11 saying the latter’s fantasy sports are skill-based and not gambling. 

That said, the new proposed rules seem like an important step toward regulating the online gaming industry. 

“The creation of a self-regulatory body for the industry is a step in the right direction towards creating a larger framework for a responsible gaming environment in the country. We look forward to engaging in a consultative discussion with the government as we work towards making India a global gaming innovation hub,” Games 24x7 cofounder Trivikraman Thampy said in a statement.