India has taken a major step towards constructing a national regulatory space for online gaming by focusing regulation into two ministries and releasing draft rules enshrining industry self-regulation and consumer protections.
The government announced in the gazette on December 26 that the Ministry of Electronics and Information Technology (MeitY) will be responsible for regulation of online gaming, with the exception of esports, which will be regulated by the Ministry of Youth Affairs and Sports.
MeitY quickly followed the announcement with the release on Monday (January 1) of extensive draft rules for online gaming companies, including self-regulation, customer care and know your customer (KYC) protocols.
“With the user base of online games growing in India, [the] need has been felt to ensure that such games be offered in conformity with Indian laws and that the users of such games be safeguarded against potential harm,” MeitY said in a statement on the draft amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules 2021.
Online gaming companies should “observe the due diligence required under the rules while discharging its duties, including reasonable efforts to cause its users not to host, display, upload, publish, transmit or share an online game not in conformity with Indian law, including any law on gambling or betting”, it said.
Under the new rules, companies should display registration by a “self-regulatory body” endorsed by the ministry and lay out user rights in regard to “withdrawal or refund of deposit, manner of determination and distribution of winnings, fees and other charges payable, and KYC procedure for user account registration”.
The fine print of the draft rules extends operator obligations to warning customers of the “risk of financial loss and addiction”, as well as certifying that its services contain approved random number generation and no-bot protections, and privacy protections for customers.
Companies must also employ grievance officers and chief compliance officers, with the latter to be in “coordination at all times with law enforcement agencies and their officers”, while prominently featuring physical contact addresses on their websites.
Industry self-regulatory bodies will also be authorised to hear and act on complaints by customers within prescribed periods.
Registration of a self-regulatory body will be contingent on several factors, including the number of its members, its record in responsible gaming, the repute and professional experience of its directors and the presence on the board of eminent individuals and a representative for players themselves.
Ministry regulation of the online gaming sector follows a recommendation by a cross-ministry task force in September.
Consistent with the intervention of the Prime Minister’s Office, which opposed the task force’s support for a distinction between games of skill and chance, the rules make no reference to the types of games to be covered.
But they also do not explicitly canvass the gambling content of individual games, potentially leaving the door open to a more restrictive application of the rules.
Even so, industry peak groups expressed satisfaction with the development, with Federation of Indian Fantasy Sports director general Joy Bhattacharjya telling the Indian Express that the rules “provide clarity and certainty to investors, industry and consumers”.
All India Gaming Federation CEO Roland Landers called the rules a “great first step for comprehensive regulation for online gaming” that could address current problems with state-by-state regulatory “fragmentation”.
“These rules will also be a start in curbing the menace of anti-national and illegal offshore gambling platforms,” he said.
The draft rules do not appear to encroach on the issue of state government powers to legalise or ban gaming or the potential actions of the central government and state and central courts to modify those decisions.
Following a consultation and feedback period, the final version of the rules is expected in early February, MeitY minister Rajeev Chandrasekhar told reporters on Monday.