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India’s central government has established a cross-ministry committee to explore the national regulation of online gaming, a potentially seismic development that could augur a shift to liberalisation across much of the country.
The committee will study “global best practices”, consult stakeholders and recommend a “uniform regulatory mechanism” and national legal apparatus for online gaming within three months, the Hindustan Times reported on Wednesday (May 25), citing government documents.
As part of this process, the committee will consider factors such as addiction, compliance, market competitiveness and “ease of doing business”, the report said.
High-powered membership of the committee will include the CEO of the government’s peak think tank, the National Institution for Transforming India (NITI Aayog), as well as secretaries from ministries for home affairs, sports, telecommunications, information technology and other portfolios.
Calling the development “welcome”, Mumbai-based Ranjana Adhikari, a partner in the IndusLaw firm’s Media, Entertainment and Gaming practice, said the government has “very rightly decided to take a lead and explore legal and legislative options to regulate online gaming in India”.
“It is the need of the hour for the central government to step in and step up to give the sunrise sector of online skill gaming the regulatory certainty that it urgently needs and deserves,” she told VIXIO GamblingCompliance on Thursday.
The move comes amid accelerating judicial and legislative contention over skill gaming with stakes in several large Indian states, with multiple state governments now appealing pro-online gaming High Court decisions to the Supreme Court.
Adhikari said an aggressively expanding, pandemic-fuelled online gaming industry cannot be best served or regulated by piecemeal state regulation and prohibition.
“State-wise regulation may become onerous for the industry and stunt its growth potential,” she said. “The central government is the appropriate authority to bring in an overarching framework for online gaming in India.”
Central government authority on gambling-related activity remains limited by constitutional delegations of powers to state governments, with gambling, and any “gaming” content perceived to constitute gambling, explicitly under state jurisdiction.
Legal experts have told VIXIO that the feasibility of a centralised regulator could therefore depend on the cooperation of individual state governments.
However, New Delhi-based Krida Legal managing partner Vidushpat Singhania warned that the remit of the committee remains unclear.
“It will be critical to evaluate … the scope of reference of this committee: Is it limited to esports or does it cover a wider ambit to include skill gaming like fantasy sports, poker and rummy, among others?” he told VIXIO on Thursday.
Ahead of formal confirmation of the committee’s mandate, Adhikari was confident that the committee “will be looking at real money skill gaming”.
“The narrative for this industry needs to change,” she said.
“It has long been compared with gambling, which is the wrong parameter. It needs to be compared with legitimate content-intensive business over the internet, pretty much like OTT [over-the-top services].”
Clues to the central government toying with an online gaming regulatory umbrella have emerged in recent years, with NITI Aayog research on fantasy sports regulation being called in by the government for review in 2021.
In February this year, the central government’s minister for information, broadcasting and sports told the lower house of parliament that the Cabinet was studying NITI Aayog’s research and recommendations for a national regulator.
The central government has also established an “animation, visual effects, gaming and comics” (AVGC) task force in collaboration with key state governments to “build domestic capacity for serving our markets and the global demand”, according to finance minister Nirmala Sitharaman.
Amid pressure from the industry for a national framework, a private bill supporting regulation has also emerged in parliament.
Since then, the UK India Business Council has strongly supported a national regulator, with state governments voluntarily ceding day-to-day oversight to the authority.
Adding to central government momentum is the work of the GST Council in determining tax rates for the gaming segment overall.
A council-delegated group of state ministers has determined that the industry should pay the maximum rate of 28 percent, but it has yet to submit its report to the council or indicate if the tax applies to turnover or gross gaming revenue.
