Government has proposed a self-regulatory mechanism, mandatory verification of players and physical Indian address for online gaming companies, according to the draft online gaming rules published.
Verification of players mandatory under new draft rules for online gaming
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Online gaming companies will be covered under the new IT rules that were issued in 2021 for social media platforms.
The online gaming platforms are expected to comply with the laws of the land, including any such law that relates to gambling or betting or the age at which an individual is competent to enter into a contract.
The draft amendments are aimed at addressing the said need while enabling the growth of the online gaming industry in a responsible manner.
The draft amendments envisage that an online gaming intermediary will observe the due diligence required under the rules, 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.
The draft rules prescribe additional due diligence for companies by displaying a registration mark on all online games registered by a self-regulatory body and informing its users regarding its policy related to withdrawal or refund of the deposit, manner of determination and distribution of winnings, fees and other charges payable and KYC procedure for user account registration.
Centre recently appointed the Ministry of Electronics and Information Technology (MeitY) as the nodal ministry for matters relating to online gaming with monetary risks. Now, as per a notice by the ministry, online companies may be required to practice self regulation.
According to the notice, it may soon become mandatory for gaming companies to verify players on their platforms. They will also be required to practice due diligence.
Earlier, it was reported that the government may soon impose a 28% Goods and Services Tax (GST) on the total amount rather than the current practice of 18% on GGR on online gaming industry.
GGR is the fee charged by an online skill gaming platform as service charges to facilitate the participation of players in a game on their platform while Contest Entry Amount (CEA) is the entire amount deposited by the player to enter a contest on the platform.
A panel of state ministers – set up by the GST Council to look into taxation of online gaming and casinos recently submitted its report to Finance Minister Nirmala Sitharaman. The council looks after issues related to Casino, Race Course and Online Gaming industry.