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GIST OF SANSAD TV : Perspective: Regulating Online Gaming

Published: 31st Dec, 2022


A task force has been set up by the Ministry of Electronics and Information Technology (MeitY) to prepare a final report of its recommendations to regulate the online gaming industry in India. Since, then this topic got pace regarding the societal, economic, behavioural and political impacts of online gaming. Thus, legislations and regulations are necessary but with a clarity of thought in the field in which the rules are required taking stakeholders’ into consideration.

Points of Discussion:

About India’s gaming Industry:

  • India has the largest gaming app downloads across world.
  • Serious concerns have been identified in the behavioural aspects of children as an after effect of sort of Online games they play.
  • Central government has taken steps to include Online gaming into legislative framework.
  • Telangana was the first state to regulate online gaming in 2017; however, the law was repealed by the State High Courts.
  • After which states like Tamil Nadu, Karnataka and few others also invoked legislations, but failed.

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).

Positives of Gaming:

  • High Revenue generation
  • Boost in start-ups since pandemic
  • Help people to build a professional career and build skills
  • Can provide employment
  • Engage into increasing peer-to peer bonds

Way forward:

  • Indian companies should seriously engage in issuing legal guidelines before launching games.
  • There should be an appellate body to ensure a three-tier system for administration.
  • Societal issues like gambling, addictive nature of games, adult gaming and betting can be eradicated via educating stakeholders’, involvement of parental support and scrutiny and peer suggestions.
  • State government must involve in the process of implementing laws against illegal aspects of online gaming (as gambling comes under concurrent list).
  • Involving technical support like KYCs for gaming owners and players, impose time-limits for children of certain age-groups etc.

Value addition:

Recommendations of Task Force:

  • A Central-Level Law: A central-level law should apply to real money and free games of skill, including e-sports, online fantasy sports contests, and card games among others.
    • Casual games with no real money element in the form of stakes may be kept outside the scope of such rules. Unless they have a high number of users in India, or permit the publication or transmission of information in the nature of any inappropriate content like violence, nudity, addictive content or misleading content.
  • Dispute Resolution: three-tier dispute resolution mechanism, similar to that prescribed under the Information Technology Rules, 2021 for online streaming services, consisting of:
    • A grievance redressal system at the gaming platform level,
    • Self-regulatory body of the industry, and
    • An oversight committee led by the government.
  • Formation of a Regulatory Body: This body will determine what qualifies as a game of skill or chance, and accordingly certify different gaming formats, seek compliance and enforcement.
  • Online Gaming platform Mechanism as a legal entity: Any online gaming platform – domestic or foreign– offering real money online games to Indian users will need to be a legal entity incorporated under Indian law.
    • These platforms will also be treated as ‘reporting entities’ under the Prevention of Money Laundering Act, 2002.
  • They will be required to report suspicious transactions to the Financial Intelligence Unit-India.
  • Nodal Ministries: MeitY may act as the nodal ministryto regulate online gaming, except for the e-sports category on which the Department of Sports can take the lead.
    • Certain other aspects of online gaming such as advertisements, code of ethics relating to content classifications etc. could be regulated by the Information and Broadcasting Ministry.
    • The Consumer Affairs Ministrycan regulate the sector for unfair trade practices.

Online Gaming Market in India:

  • Market growth: 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.
  • New user base: 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.
  • Revenue generation: The revenue of the Indian mobile gaming industry is expected to reach $5 billion in 2025.

Banning of Online Gaming:

  • Many social activists, government officials and those in law enforcement believe that online games like rummy and poker are addictive in nature, and when played with monetary stakesleads to depression, mounting debts and suicides.
  • Earlier, the World Health Organisation (WHO) had announced a plan to include “gaming disorder”as a mental health condition.

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