India Mulls Shelving Self-Regulation For Online Gaming

January 4, 2024
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The Indian government is considering an about-face on online gaming regulation, potentially dispensing with industry self-regulation altogether and placing operators under direct government scrutiny.
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The Indian government is considering an about-face on online gaming regulation, potentially dispensing with industry self-regulation altogether and placing operators under direct government scrutiny.

Rajeev Chandrasekhar, minister of state for electronics and information technology, told Mint newspaper on Monday (January 1) that industry inertia in forming self-regulatory bodies (SRBs) has forced the government to backtrack from a more industry-friendly model.

“There has been no progress on the appointment of self-regulatory bodies,” he told the business daily. “We received only one application so far, and we didn’t like it.”

Chandrasekhar said that discussions on a Ministry of Electronics and Information Technology (MeitY) takeover of online gaming regulation are continuing amid a suspension of wider talks on a cross-ministerial framework for regulating skill games with stakes and fantasy sports.

He said a decision on MeitY taking the regulatory reins could be made within weeks.

The move to suspend government-wide talks on online gaming regulation came in December and followed communications with the office of Prime Minister Narendra Modi, Mint quoted unnamed senior officials as saying.

Chandrasekhar did not comment on why only one industry peak body had taken up the government’s offer.

Self-regulation was an essential component of amendments to information technology rules gazetted last April that brought online gaming in from the regulatory cold.

Approved SRBs are authorised to police customer complaints, promote and defend responsible gaming practices, impose know your customer (KYC) protocols on members, and monitor the integrity of payments transactions and legality of game products, among other duties.

Industry peak bodies for online skill gaming and fantasy sports welcomed the amended rules, predicting that illegal online gambling would be reduced with the industry in charge.

However, just months later the GST Council of national and state finance ministers shocked online operators by “confirming” a 28 percent tax on volume, later amended to a still-damaging tax on initial deposits, while turning its back on companies facing billions of dollars in de facto retroactive tax claims.

The GST shock may have undermined industry solidarity and the ability of companies to rally around the SRB model, but in any case the government was set to spring a new surprise.

In October, MeitY announced the SRB initiative had been suspended after government departments dissented from the regulatory structure legalised in April, partly out of concerns that SRBs would be dominated by leading gaming companies.

Efforts to resolve the impasse were in turn suspended in December with the intervention of the Office of the Prime Minister.

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