CIOInsider India Magazine

On April 6, the Indian IT Ministry published new laws to regulate the online games industry, including real money gaming.

The industry is primarily left to self-regulate through self-regulatory groups that the IT Ministry will approve under these rules, which are an addition to the IT Rules, 2021. Internet gaming sites are likewise limited to hosting real money games that have been approved by a self-regulatory organization and are not permitted to host any game, whether or not it involves real money.

Before the numerous complications that India's gambling regulations have created themselves, there is still a long way to go.

What are these Latest Rules?
An online game is one that is provided through the internet and can be accessed by a user through a computer resource or an intermediary, according to the Indian government. Online games that entail wagering and betting, however, will be in defiance of the new regulations. Online games that do not feature gambling, user harm in their content, or have addictive effects on youngsters are considered to be acceptable, according to the Ministry. These games can be played for free or for real money. With that said, here is what the new rules regulate.

A number of SROs with members from different sectors will be established by the government. These SROs will determine whether or not a game is permitted.

Online games with dangerous or illegal content cannot be offered, published, or shared by gaming companies or platforms. The identities of online players must be confirmed.

All forms of online gambling, including advertisements, are illegal.

SROs will also use age-rating systems, parental controls, and regular warning signs to ensure that games adhere to rules that prevent addiction and mental harm.

Once they have spent their allotted amount of time or money, the players will have the opportunity to opt-out.

Objectives behind the New Rules
The Ministry of Electronics and IT (MeitY) has asked SROs to clearly mention a framework for validating an online real money game on their websites and/or mobile apps. The following will be ensured by the implementation of this framework:

Prevent user harm from online gaming, including psychological and self-harm.

Employ parental controls, access restrictions, and age-rating mechanisms to protect kids from improper or harmful online games.

By providing users with many warnings and the option to exclude themselves when user-defined spending caps are reached for time or money, you can lower the risk of gaming addiction, financial loss, and financial fraud.

Ensure that playing real money online games does not conflict with India's sovereignty and territorial integrity.

In addition to establishing a grievance redressal process and suggesting a self-regulatory framework to regulate the business, the guidelines also specify what constitutes an online game.

The need to ensure that these games are provided in compliance with Indian regulations and that users of such games are protected from potential harm has been realized as the user base of online games increases in India. In short, for the internet gaming industry, a self-regulation approach has been implemented, where SROs will certify the games that can run legally in the nation.

Based on whether an online game contains gambling or betting, self-regulatory organizations will decide if it is allowed or not. The government will first notify three SROs, but it may add more later.

Additionally, the new regulations mandate that SROs must also be educators, psychologists, or mental health professionals, as well as those who are currently or have previously served as members or officers of organizations dedicated to the defense of children's rights.

Mixed Reactions from the Stakeholders
The new regulations have been well-received by online gambling companies and trade groups. Some have described it as a breakthrough event, while others have praised it as a way to further gaming advances in India.

Some contended that gaming companies are publishers of material, and can’t be regulated as intermediaries, which operate as simply conduits of internet exchanges. This distinction has not been made plain; rather, additional forms of online games, other than those involving deposits and prizes, have been added to the list of those that intermediaries may host.

But Previously the Concerns Were
No wagering on the results of any games will be permitted, but users may still play real money online games, which are defined for the purposes of the notification as "an online game where a user makes a deposit in cash or kind with the expectation of earning winnings on that deposit." The earlier rules covering social media intermediaries are still in effect and shall now cover online gaming intermediaries, with a few additional clauses thrown in.

With a few notable exceptions, most Indian states have banned gambling. States have attempted to ban internet gambling, or online games of chance, to protect their citizens due to the rise of suicides connected to the activity (due to addiction and financial losses, among other evils). The issue is that they have inadvertently led to the outlawing of so-called skill games, which courts had previously deemed to be legitimate as well.

Such prohibitions might harm the nascent internet gaming sector that offers legal games by isolating them from potential players across the nation. As a result, the sector has been requesting from the Indian government a uniform framework that outlines the differences between games of skill and chance. The hope is that a pan-Indian gaming framework will secure the survival of businesses that cater to Indian audiences with games of skill.