The Ministry of Electronics and Information Technology proposed an amendment to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, to include online gaming.
Regulating Online Gaming
The following draft amendments to the IT Act are being placed in the public for comments, feedback till January 17:
- Due diligence: Online gaming intermediaries must exercise due diligence to ensure that gambling and betting are not permitted in online games.
- Withdrawals or refunds: Online gaming intermediaries must inform users of their policy for deposit withdrawal or refund, distribution of winnings, and applicable fees.
- Self-Regulatory Organization: The SRO will decide what constitutes prohibited gambling.
- Self-regulatory organizations will be registered with the MeitY. Online games: Self-regulatory organizations may register online games of members who meet prescribed criteria.
- Resolving complaints: Self-regulatory bodies will resolve complaints using a grievance redressal mechanism.
What is online gaming?
- Online gaming can refer to any type of game that can be accessed via the Internet or a computer network.
- Most of the time, it refers to video games played over the Internet, where multiple players are in different locations across the world.
- Online gaming can also refer to the act of gambling over the Internet, such as at an online casino or poker room.
Types of gaming
- Online gaming categories include:
- E-sports (well-organized electronic sports which include professional players) (well-organized electronic sports which include professional players) Consider chess.
- Fantasy sports (picking real-life athletes and earning points based on their performance) MPL cricket, for example.
- Skill-based (mental skill) (mental skill) as in Archery Gamble (based on random activity) Playing Cards, for example, Rummy
Why is the online gaming industry booming in India?
- Digital India boom in the gaming industry
- Narrowing of the digital divide
- IT boom
- Other factors promoting the boom
- Growing younger population
- Higher disposable income
- Inexpensive internet data
- Introduction of new gaming genres, and
- Increasing number of smartphone and tablet users
The Future of Online Gaming
- State List Subject: Under Entry No. 34 of List II (State List) of the Seventh Schedule, state legislators have the sole authority to enact laws governing betting and gambling.
- Legal distinction: Most Indian states regulate gaming on the basis of a distinction in law between ‘games of skill’ and ‘games of chance’.
- As such, a ‘dominant element’ test is used to determine whether chance or skill is the more important factor in determining the outcome of the game.
- Economic activity that is linked: Staking money or property on the outcome of a “game of chance” is illegal and punishable by criminal prosecution.
- ‘Game of Skill’ controversy: Placing any bets on the outcome of a “game of skill” is not necessarily illegal and may be permitted. It is worth noting that the Supreme Court acknowledged that no game is purely a “game of skill,” and that almost all games contain an element of chance.
Need for regulation
- There is currently no comprehensive legislation in India regarding the legality of online gaming or boundaries that specify applicable tax rates within the betting and gambling industry.
- Ambiguity in the industry: The gaming industry is still in its infancy and evolving, and many states are enacting legislation to bring some order to the online gaming industry.
- Subject of the state list: Online gaming in India is allowed in most parts of the country. However, different states have different laws regarding whether or not online gaming is permitted.
- Economic benefit: Well-regulated online gaming has its own set of benefits, such as economic growth and job creation.
Issues with online gaming
- Gaming addiction: Many people are becoming addicted to online gaming. This is destroying lives and wreaking havoc on families.
- Compulsive gaming: Children’s gaming is affecting their academic performance as well as their social lives and relationships with family members. Consider PUBG.
- Impact on psychological health: Following incidents of violence and suicide, online games such as PUBG and the Blue Whale Challenge were banned.
- Data privacy risk: Inadvertently sharing personal information can result in cases of cheating, privacy violations, abuse, and bullying.
- Betting and gambling: Online games based on the traditional ludo, arguably India’s most popular online game, have sparked debate and accusations of betting and gambling.
Why hasn’t a comprehensive law been enacted yet?
- Previously, states such as Tamil Nadu, Telangana, Andhra Pradesh, and Karnataka passed laws prohibiting the use of online games.
- They were, however, overturned by state High Courts on the grounds that an outright ban was unjust to skill-based games:
- Violation of fundamental rights to trade and commerce, liberty and privacy, speech and expression; law that was manifestly arbitrary and irrational insofar as it did not differentiate between two types of games, namely games of skill and games of chance;
- State legislatures lack the legislative authority to enact laws governing online skill-based games.
Way ahead
- Censorship: Minors should be allowed to proceed only with their parents’ permission — OTP verification on Aadhaar could help with this.
- Awareness: Gaming companies should educate users about potential risks and how to spot potential situations of cheating and abuse.
- A central government Gaming Authority should be established as a regulatory mechanism.
- Accountability of the gaming company: It could be held accountable for the online gaming industry, monitoring its operations, preventing societal issues, classifying games of skill or chance appropriately, overseeing consumer protection, and combating illegality and crime.
- Comprehensive legislation: The Centre should develop an overarching regulatory framework for online skill games. To compete in the global gaming industry, India must move beyond debates about skill versus chance.
Source: https://www.livemint.com/news/india/govt-proposes-amendment-to-it-rules-to-regulate-online-gaming-11672684752831.html