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After the draft rules for online gaming were released this week by the Ministry of Electronics and IT (MeitY) that include a self-regulatory body, a grievance redressal mechanism, and mandatory know-your-customer (KYC) norms for verification, the industry insiders and legal experts throw light on whether the move will yield positive results.

The ministry has proposed an amendment to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, to include online gaming. It was said the changes, which have been made available for public comment, would require all online games to register with any self-regulatory body approved by the Ministry.

According to the rules, only games approved by the body will be permitted to operate legally in India. These rules aim to protect users from potential harm from skill-based games and regulate, as well as impose due diligence requirements on online gaming platforms as intermediaries.

Minister of State for Electronics and IT, Rajeev Chandrasekhar said: “The rules are simple — we would like the online gaming ecosystem to expand and grow; and be an important catalyst to India’s $1 trillion digital economy goal by 2025-26. We also envision a bigger role for start-ups in the online gaming industry”.

Additionally, the minister said the ministry moved quickly in framing the policy, which was made possible by MeiTY holding a series of consultations with stakeholders prior to drafting the policy. He also said the ministry would hold another round of public consultations soon to finalise the policy.

The Inside Views

One of the industry insiders, Sai Srinivas, Co-Founder and CEO, MPL told News18: “We welcome the release of the draft rules, which brings online gaming under the uniform central regulation. We are truly grateful to MeitY, and especially the ministers for bringing such thoughtful and balanced rules, in a quick time which balances the speed of innovation with gamer welfare.”

He also believes these rules are “a testament to our industry”, where everyone worked together tirelessly in engaging with the government, implementing user safeguards and requesting uniform regulation.

Additionally, the MPL Co-founder said the rules will help fulfil PM Narendra Modi’s vision for India to be a global leader in online gaming and expand “Create in India and Brand India”.

Another industry expert, Tanu Banerjee, Partner, Khaitan & Co. believes that with the proposed amendments to the IT Rules, online gaming has also been put under the purview of Meity and industry stakeholders felt the need for a centralised regime and authority to regulate online gaming since long.

However, she said: “The regime proposed to be introduced for online gaming appears to be quite nuanced and will require numerous compliance actions to be undertaken by online gaming platforms. A lead time of three months is proposed for online gaming platforms to implement compliance with the new regime.”

She also said while several compliance requirements proposed for online gaming intermediaries appear to be similar to those applicable to social media intermediaries (general due diligence, appointment of a grievance officer, a compliance officer and a nodal contact officer); several additional due diligence and other compliance measures are proposed for online gaming platforms.

For example, the proposed rules will require each online game offered by an online gaming platform to registered with a self-regulatory body; the registration mark to be displayed on the relevant online game; KYC procedure to be followed for user accounts; a no-bot certificate for each game etc.

“While ‘online game’ within the purview of the proposed rules has been defined to refer to online games where users make a deposit to participate; the Ministry is empowered to declare any other internet-based game (even if no deposit is required from users) to be categorised as an ‘online game’ and brought within the ambit of the amended IT Rules. However, the overall proposed regime for online gaming appears to be significantly more nuanced compared to other intermediaries,” she added.

Rajat Prakash, Managing Partner, Athena Legal, said the proposed self-regulation code proposed by MEITY for online gaming in India is a step in the right direction and will encourage orderly growth of the already booming sector.

“Overall rules for online games under IT Act will increase the cost of compliance for the sector but these will bring much-needed regulatory certainty and will help in weeding out unscrupulous players,” he noted.

Satyam Rastogi, Founder & CEO, of Khiladi Adda & GamerPe, also said the rules will allow online gaming companies to self-regulate.

“The onus of self-regulating our companies is an important task which we aim to adhere to responsibly. The principles of responsible gaming will now be even deeper embedded within the industry, thus also segregating the good apples from the bad ones. The recognition by the government is also a testament to the authority’s support to the industry and its efforts to boost the sector,” he added.

Meanwhile, Adarsh Somani, Partner at Economic Laws Practice, told News18 that the proposal of a self-regulatory mechanism for online gaming is much appreciated since games cannot be in nature of betting a clearance from a self-regulatory body could also automatically resolve the trending GST issue. But according to him, “full KYC of customer may prove to be a bane”.

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