Latest Developments in the Online Gaming Industry in India

Introduction

The Online Gaming Law in India has recently found its place in the Indian Legal System. The gaming rules in India are governed state wise, with every state in India having its own jurisdiction to decide and regulate the gaming rules. A Central Law on Online Gaming has been much sought after especially in order to regulate the online gaming system on a country-wide level.

The online gaming system has drastically changed in recent years, due to the advancement of technology. More and more young people have been actively engaging in online gaming and therefore it has become imperative to draw upon a law in order to lay down rules and restrictions on this specific industry.

In India, online gaming is permitted, however certain states in India have restricted the activity altogether or laid down certain specific legislation to regulate online games in their particular state.

The Change

Online gaming with real stakes or money is allowed in most of the states of India except states such as Assam, Odisha and Telangana that specifically prohibit online games with such stakes involved.

In January 2023, in order to regulate the online gaming system, the Central Government through the Ministry of Electronics and Information Technology (“MEITY”) proposed the change known as the Draft Rules wherein a new co-regulated regime for online gaming intermediaries (“OGI”) was suggested.

After a series of discussions and deliberations with various government bodies, including suggestions from gaming operators, intermediaries, investors, parents, non-governmental organisations, etc., MEITY officially made the Gaming Amendments public on 6th April, 2023.

The amendments were made to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (“Intermediary Rules”) (amendments are referred to as “Gaming Amendments”) with some of the notable changes made as follows:

The Gaming Rules cover within its ambit all games which are offered on the internet especially those that are offered by the Online Gaming Intermediaries (“OGI”). Specific regulations are provided for Permissible Online Real Money Games (“PORMG”) which the users can play after making certain deposits. For other online games there are no specific regulations but MEITY has the power to apply certain obligations under the IT Rules to other online games as well if necessary.

Another change has been brought wherein the OGI are required to identify users and verify their identities before accepting any deposit in cash or kind from any user for a PORMG.

The Gaming Amendment has simplified certain compliance for self-regulatory bodies (SRBs). SRBs are required to publish a report on their website detailing the list of verified online real money games, period of validity, bases for approval and details of suspension or revocation.

Further clear obligations have been notified for the OGIs. The Central Government has the power to notify OGIs who do not offer Online Real Money Games to be classified as a Real Money OGI, based on certain parameters such as national security, public order and a very broadly defined concept of ‘harm’. Such OGI will need to comply with certain obligations of Real Money OGIs including the appointment of a chief compliance officer, having a physical contact address in India, implementing grievance redressal mechanisms, registration with the SRB and displaying visible mark of such registration and putting out detailed terms and conditions.

OGIs are prohibited from financing through creditor enabling financing offered by a third parties, for playing online games. This is a welcome move in order to curb users from taking loans and financially overextending themselves while playing online games. Further, OGIs are required to inform users not to publish, etc., certain information via their rules and regulations, privacy policy, and user agreements (“User Terms”), and make ‘reasonable efforts, by itself, and to cause the user’ not to publish such information.

Furthermore, by virtue of the Amendments it has become mandatory for the Online Real Money Games to be verified by SRBs.

The SRBs are required to ensure that all verified games do not involve “wagering on any outcome” and are in compliance with the law relating to minors, competency to contract and the framework of SRBs.

The Amendment also provides for a Grievance Redressal Mechanism, whereby the OGIs are required to appoint a grievance officer who must be resident in India.

The OGI is required to prominently publish the name of the grievance officer (“GO”) and their contact details, as well as the mechanism to make a complaint in relation to certain specified obligations, in a clearly visible manner on their home page, home screen, or web page or app screen directly accessible from the home page/home screen.

Conclusion:

In conclusion, the latest amendment to the Intermediary rules, has been much needed and much welcomed as a positive step in Gaming Amendments, however with the progress of time, certain refinements through guidance and clarification is needed to avoid ambiguity for intermediaries.