IT Ministry regulates ‘real money gaming’ platforms

The Information and Technology (IT) Ministry has made amendment which may allow platforms that involve depositing money for winnings in games to avoid the ‘betting and gambling’ tag, if they are deemed permissible by a self-regulatory body.

• An inter-ministerial task force was set up in 2022, by the Ministry of Electronics and Information Technology (MeitY) to propose contours of a national-level legislation to regulate online gaming.
• The task force has proposed the creation of a central regulatory body for the sector, clearly defining what games of skill and chance are, and bringing online gaming under the purview of the Prevention of Money Laundering Act, 2002, among other things.

About the development:

• The Ministry of Electronics and Information Technology (MeitY) has released an amendment to the IT Rules, 2021, to regulate “online real money games” where users have to risk money to play.
• The ministry has also issued a fresh advisory warning media entities, platforms and online intermediaries against airing advertisements of betting and gambling platforms.
• In the new advisory, the ministry took strong exception to the recent instances of mainstream English and Hindi newspapers carrying advertisements and promotional content of betting websites.
• For Real money gaming:
  • MeitY’s Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2023 require real money gaming platforms to register with a self-regulatory body (SRB) that will determine whether or not the game is “permissible”.
  • Under this provision, three SRBs will be recognized soon.
• The government would be constrained to take appropriate legal action against any non-compliance.
• The advisory has been issued to all media formats, including newspapers, television channels, and online news publishers.

What if the games were not getting permission by regulatory bodies?

• If these games are not deemed ‘permissible’, they will not get the protection of the amendment, and States may be able to take action against them for being betting or gambling platforms.
• As such, games that are deemed permissible will be allowed to operate legally, even if they involve deposits against an expectation of winnings.
• Video games where money is not involved need not to approach an SRB, putting to rest a concern the traditional gaming industry had around the draft version of the Rules.

Online Gaming Market in India:

• The online gaming industry in India grew at a compounded annual growth rate (CAGR) of 38% between 2017-2020, as opposed to 8% in China and 10% in the US.
• India’s percentage of new paying users (NPUs) in gaming has been the fastest growing in the world for two consecutive years, at 40% in 2020 and 50% in 2021.
• The revenue of the Indian mobile gaming industry is expected to reach $5 billion in 2025.

Why it is difficult to regulate online gaming?

• Lack of clarity between ‘Game of Skill’ vs. ‘Game of Chance’: As Gaming and Gambling are interchangeably used against each other; it becomes difficult to differentiate both the terms without any scrutiny.
• The pay-to-play model makes online gaming a chance rather than a skill based gaming platform.
• Lack of self-regulation: Restrictions based on time-limits and checks for choices are self-regulatory and difficult to control by an external source.
• No streamlined process of licensing and regulations: As online gaming is in digital form rather a physical one and has no boundaries (i.e. Accessible worldwide).

Way forward:

• Robust Policy Framework:
  • India’s e-gaming industry needs robust policy frameworks and digital infrastructure to fulfill its potential, maximize revenue and foray toward being a global leader.
  • A government body that oversees operations, drafts progressive policies preventing societal issues, suitably classifies games of skill or chance, ensures consumer protection and combats illegality and crime is required.
• Cooperation between Government and Gaming Companies:
  • Gaming companies should also continue to work with the government to promote responsible gaming by educating gamers and establishing best practices like conducting KYC checks, user authentication, etc. to prevent illegal activities and financial dealings on their platforms.