The Government of India established a central agency, the Ministry of Electronics and Information Technology, in 2023 to safeguard the interests of citizens and promote responsible growth, ushering in a new era for the online gaming sector.
This might mark a turning point for an industry that has been struggling with regulatory challenges. The action puts the online gaming industry on the right track towards certainty and clarity.
According to industry research estimates, the sector has an enterprise value of Rs. 150,000 crore and is anticipated to quadruple by 2025, a development that is consistent with PM Modi’s goal of making India a centre for international gaming.
In order to move closer to realising this vision, the industry was placed under the jurisdiction of the Ministry of Electronics and Information Technology (MeitY), and IT Minister Rajeev Chandrasekhar unveiled the proposed regulations for the business.
Industry participants have been discussing the several regulatory frameworks at the federal and state levels and how they are impeding the development of the sector for the past few months.
The establishment of a national regulatory framework is made possible by MeitY’s nomination as the nodal ministry.
MeitY has introduced the Draft Rules as an update to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, with responsible gaming and accountability as its two main foundations.
Companies that provide online gaming have been classified as intermediates, explicitly designating the Centre as the industry’s regulatory body. But what effects will the Draft Rules have?
The proposed regulations call for the formation of a self-regulatory body that will be in charge of approving games.
It is recommended that online gaming enterprises must register with this self-regulatory authority and that they are prohibited from engaging in any form of gambling, betting, or wagering on the results of the games.
It is suggested that this self-regulatory authority have a board of directors from a variety of disciplines, including public policy, IT, psychology, and medicine, to ensure that consumer interest is put first when issuing operating rights to online gaming.
The fact that between 40 and 45 percent of the nation’s active gamers are female makes safety a top priority in this regulation of content.
Due diligence guidelines have been established in the effort to create a systematic procedure to protect consumers from potential harm.
A KYC process based on RBI-specified standards will be required of all users by online gaming companies. Another requirement of the Draft Rules for the withdrawal and reimbursement of money, as well as the disbursal and distribution of winners, is the transparency of transactions.
To protect consumers from financial loss and addiction, the laws also mandate appropriate gaming practises. As part of a comprehensive approach, the rules also include a strong grievance redressal mechanism, which includes the obligatory appointment of a grievance officer, a nodal officer who serves as a liaison between the government and enforcement agencies, and a compliance officer.
An effort must be made to promote responsible advertising for online gaming companies in the regulated space, with domestic and offshore illegal betting and gambling sites luring customers through surrogate advertising.
ASCI made recommendations based on a previous advisory from the Ministry of Information and Broadcasting. To reduce the risk of users turning to offshore sites, the SRBs can make sure that the advertisements adhere to these rules regarding age restrictions, disclaimers on the financial risks and other risks of addiction, and restrictions on the depiction of playing games as a source of income.
Given the concerns expressed by a variety of stakeholders, including parents, students, investors, and gaming companies, the Government of India’s prompt action on the regulation of the online gaming sector is commendable.
This will go a long way towards ensuring that new age industries like online gaming grow responsibly and responsibly. It is the first step in bringing this sector under a regulatory framework.
