Government of India has issued new rules for online gaming which prohibit any game that involves betting and wagering and entail a framework of multiple self-regulatory organizations.
All this come at a time when India’s gaming sector has seen unprecedented growth in terms of app downloads and revenue as a result of pandemic-induced home confinement in recent years. This has worryingly led to growing comfort spending money on mobile.
Revenue in the country’s gaming sector increased from $2 billion in FY21 to $2.6 billion in FY22 and is expected to expand at a compound annual growth rate of 27 percent to $8.6 billion in FY27, according to a report by gaming and interactive media venture fund Lumikai.
Role of Self-regulatory Organizations (SRO)
These SROs will determine whether a real-money game is permitted to operate in India or not.
Minister of State for IT Rajeev Chandrasekhar said, “We will let SRO decide what is addictive, what constitutes user harm. We are not going to prescribe any of it as it will evolve.”
These rules, which are expected to shape the future of the nascent but growing sector in the country, come after MeitY held a public consultation in January 2023, as well as discussions with stakeholders, including gaming companies, industry bodies, players, and lawyers, among others, in recent months.
There will be multiple SROs, and these SROs will have participation from all the stakeholders including but not limited to the industry.
Chandrasekhar said, “We are dealing with a framework which allows for all online gaming to be determined as permissible or not, by an SRO and there will be multiple SROs.”
He further said, “These rules don’t deal with all the sophistication into what is game of chance or game of skill.
We are bypassing that and laying out a basic principle that the moment an online game trespasses into involving betting and wagering, regardless of its core content, then it falls afoul of these rules.
You don’t have to go to SRO if you are only a gaming company, but only when there is money involved in the game,” he said.
The union minister said that over the last few months many startups have been defying state laws, state rules and state regulations, having to deal with ambiguous and often confusing legal framework.
“We hope that these rules will create a much more stable, consistent and predictable framework for all those startups that are interested in the online gaming ecosystem” he said. We consider this a multi-billion dollar opportunity for our digital economy. The government will initially start by notifying three SROs with more to be notified later.
Rules to safeguard users against harm
On January 2, 2023, MeitY proposed a self-regulatory mechanism, mandatory verification of players through KYC norms and grievance redressal methods.
The Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 was formulated with the aim of safeguarding users from skill-based games and also ensuring these games conform with Indian laws.
These rules are likely the first step towards forming a central law to regulate India’s online gaming sector.
Industry executives opined that a singular regulation is crucial to fight the menace of illegal offshore gaming operators since a state law cannot be enforced against a foreign operator.
“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” said All India Gaming Federation (AIGF) CEO Roland Landers in a statement.
Harsh Jain, co-founder and CEO of Dream Sports that owns India’s largest fantasy sports platform Dream11, also welcomed the regulations stating that they will unlock the potential for our $20 billion Indian online gaming industry to significantly contribute to our Hon. Prime Minister’s vision of a trillion dollar digital economy.