MeitY Draft Rules: Turning Point For Online Gaming Sector And Gamers?

The year 2023 brought about a new dawn for the online gaming industry as the Government of India has appointed a nodal ministry i.e Ministry of Electronics and Information Technology, in order to protect the interests of the citizens and ensure responsible growth. 

For an industry that has been grappling with regulatory issues, this may be a turning point. The move puts the online gaming sector on the path to clarity and certainty.

Industry research estimates state that the sector’s enterprise valuation stands at Rs.150,000 crore and is expected to double by 2025 - a prospect that is in line with PM Modi’s vision of making India a global gaming hub. 

To take a step towards achieving this vision, the industry was taken under MeitY’s (Ministry of Electronics and Information Technology) and the IT Minister Mr Rajeev Chandrasekhar announced the draft rules for the regulation of the sector.

For the last few months, industry players had been speaking about multiple regulatory frameworks at centre and states and how it was hampering the progress of the industry.

MeitY’s appointment as the nodal ministry paves the way for a national level regulatory framework.

Responsible gaming and accountability are the two key pillars around which MeitY has introduced the Draft Rules, as an amendment to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021. 

Online gaming companies have been defined as intermediaries, clearly demarcating the Centre as the governing authority for online gaming. But what are the implications of the Draft Rules?

The proposed rules provide for the constitution of a self-regulatory body, which will be responsible for giving clearance to games.

Registration with this self-regulatory body is proposed to be mandatory for online gaming companies, with an added mandate that companies will not be allowed to indulge in any gambling, betting or wagering on the outcome of the games.

With the objective of promoting innovation and the growth of the industry, it is proposed that this self-regulatory body have a board of directors from diverse fields such as public policy, IT, psychology and medicine to ensure that consumer interest is foremost in granting operating permissions to online gaming. 

This regulation of content is also keeping in mind that 40-45% of active gamers in the country are women, which makes safety a paramount issue.

In the endeavour to establish a systematic mechanism to safeguard users against potential harm, due diligence parameters have been proposed. 

Online gaming companies will have to mandatorily carry out a KYC exercise for all users based on RBI-specified norms. Transparency of transactions is another parameter that the Draft Rules have mandated concerning withdrawal and refund of money, also including the disbursal and distribution of winnings. 

The rules also provide for mandatory responsible gaming measures to safeguard users against addiction and financial loss. With a holistic approach, the rules also provide for a robust grievance redressal mechanism, with the mandatory appointment of a compliance officer, a nodal officer in the capacity of a liaison for the government and enforcement agencies, and a grievance officer for the resolution of complaints from users.

With illegal offshore and domestic betting, gambling sites luring customers through surrogate advertising, an attempt must also be made to promote responsible advertising for online gaming companies in the regulated space. 

Guidelines were proposed by ASCI on an earlier advisory by the Ministry of Information and Broadcasting. The SRBs can ensure that the advertisements are compliant with these guidelines regarding age restrictions, disclaimers on the financial risks and other risks of addiction, and the restriction on the depiction of participation in the games as an income opportunity, to curb the menace of users gravitating to offshore sites.

The Government of India’s swift action on regulation of the online gaming sector is commendable given the concerns raised by various stakeholders including parents, students, investors, gaming companies. 

This is the first step towards bringing this sector under a regulatory framework and will go a long way in ensuring a responsible and accountable growth of new age industries such as online gaming.