India, April 12th, 2023: The Ministry of Electronics and Information Technology (MeitY) aims to regulate online gaming in India through an amendment to the IT Rules 2021. To this end, MeitY released draft amendments to the IT Rules 2021 in January 2023 and engaged in stakeholder consultations to refine the draft.
Further to this, the government has recently issued a new set of rules by appointing multiple self-regulatory organizations. As per the new regulations, Online gaming companies must act as digital intermediaries, verify games and customers in real-money games, weed out fake information, and follow the rules set by self-regulatory bodies.
Commenting on the amendments by MeitY, Mr. Ankur Singh, Founder and CEO, Witzeal Technologies, said, “India’s online gaming sector is flourishing with the technological advancements and growing userbase. With the support of the government with the new amendments to IT Rules 2021, the potential of the industry is magnified leading to structured growth in multiple dimensions. Enactment of the rules further boosts the confidence of users as the rules emphasize concrete digital security along with fair play rules eliminating the possible risks. The same will further boost investor interest and employment across the nation thereby amping up the government’s vision of ‘Digital India’ and ‘Make in India’.
“Moreover, MeitY’s rules are in sync with the Income Tax Act with respect to the newly introduced TDS section 194BA particularly for the Online Gaming industry, differentiating it from online gambling. We hope for a progressive amendment under the GST Act as well, allowing the regulatory structure to work in unison helping this sunrise sector grow at its full potential.” Mr. Singh Concluded.
Welcoming the move, Mr. Asish Philip Abraham, Partner, Lakshmikumaran & Sridharan Attorneys said, “Trust shown by the government in the self-regulatory mechanism will boost innovation and competition in the sector. With the introduction of the IT Intermediary Amendment Rules 2023, the onus will be on SROs to determine whether a gaming company’s games entail wagering on any outcome. SROs will have to ensure that the assessment of the same is based on existing jurisprudence as laid down by the Supreme Court of India on the determination of games of skill from games involving wagering and betting. It will also be interesting to see the enforcement approach for gaming companies operating outside the SRO framework.
New definitions of online real money gaming have been introduced based on the stakeholder consultation and this has brought about much-needed clarity in the IT Amendment Rules and will help in ongoing GST litigations. The introduction of diligence requirement of content not causing “user harm” will require further clarification on the ministry level to bring parity in the understanding amongst SROs and Gaming Companies. Mr. Abraham added.
Lauding this move, Mr. Roland Landers, CEO, All India Gaming Federation, said: “As the oldest, largest, and most diverse industry association for online gaming in the country, we are grateful to MeitY for notifying the amendments to regulate online gaming under the Indian Information Technology Act, and acknowledging the long-standing demand of the gamers and the online gaming industry. We believe this is a decisive first step for comprehensive regulation for online gaming and, will propel the industry to compete globally, as envisioned by the Hon’ble Prime Minister. We are especially grateful that the Government recognised the industry demands and provided light touch, but comprehensive regulations, which will support innovation, boost Create in India and Brand India, and propel India’s Techade.
These rules will go a long way in promoting consumer interest while helping the industry grow responsibly and transparently and will also help in curbing the menace of anti-national and illegal offshore gambling sites, which have been proliferating in the last few years.
We look forward to assisting the industry transition to the self-regulatory model envisioned under the rules and use learnings from the years of work that has been undertaken at the All India Skill Games Council (AIGSC), the oldest and largest voluntary self-regulatory body for online gaming.
The Government has maintained a very open and transparent approach throughout this process and heard various stakeholders across the online gaming eco-system, since May 2022. At AIGF are committed to continue our engagement and provide complete support to the government in making online gaming a cornerstone of $1 trillion digital Indian economy.”
Following the appointment of three self-regulatory bodies for the gaming sector, the new regulations will take effect. Online gaming intermediaries are required to abide by particular procedures under the new rules, making them more accountable and promoting responsible gaming. For instance, to show that a game has been validated, gaming intermediaries are required to display a mark of verification from an online gaming self-regulatory agency.
Users must also be made aware of the intermediary’s rules and policies, privacy statement, terms of service, and user agreements. The procedures for withdrawing or refunding deposits, the know-your-customer (KYC) process for confirming user identity, the steps taken to protect user deposits, and the framework mentioned in Rule 4A should all be included in this material.
