Game Over For Betting Games: Govt Passes New IT Rules 2023
The New IT Rules, 2023 have finally been released by the Ministry of Electronics and Information Technology (MeitY) putting a ban on games that involve betting and wagering.
As per the rules released by the centre, an online game is defined as a game that is available on the internet and is accessible by users through a computer device or an intermediary, another name for a gaming service provider. The New IT Rules 2023 also define real money games as games that involve users making deposits in cash or kind with an expectation of earning winnings on said deposits.
The rules mandate the establishment of a self-regulatory body or an SRO for the registration and regulation of online gaming platforms also referred to as ‘intermediaries’. Intermediaries are essentially platforms that ‘offer one or more than one online games’. The new rules for online gaming from the centre ban any online game that involves betting and wagering. These rules also prescribe a framework of multiple self-regulatory organisations or SROs.
Multiple SROs will be set up and these SROs will have participation from all the stakeholders including but not limited to the industry, Minister of State for IT Rajeev Chandrasekhar stated. Chandrasekhar further added that this framework will allow for all online gaming to be determined as permissible or not with the help of SROs. “The Self-Regulatory Bodies certification process will also ensure that games are free of bots, building consumer confidence in the industry’s fairness and transparency,” said Trivikraman Thampy, Co-founder and Co-CEO, Games24x7.
“The overall recognition of Online Games of skill by way of inclusion as the third form of intermediary after social media and content-related publishers/OTT players is beneficial for GST differentiation from gambling, providing the required stability of regulation, and facilitating a level playing field for all games of skill,” said Paavan Nanda, Co-founder, WinZO.
The criteria for an online game being permissible or not will depend on whether there is any form of wagering involved or not. If there is wagering involved, the SRO will be well within its rights to deem an online game impermissible.
“Open and safe, trusted and accountable” are the terms that Chandrashekar used in his statement to reporters. He added that the rules aimed to make India’s internet a safer place and that the new IT Rules, 2023 address the issue of what is permissible and what is not.
The online gaming sector seems to welcome the new rules with open arms too. For many, regulation also translated into more investment opportunities. “This is a very significant development for the online gaming industry at large, enabling gaming companies to be more responsible and innovative at the same time,” said Dilsher Malhi, Founder and CEO, Zupee.
"We anticipate that this will also help reduce regulatory fragmentation at the state level, create a more stable business environment and weed out gambling platforms," commented Sai Srinivas, CEO and Co-founder, MPL.
“The rules notified today are landmark steps that will immensely help the gaming industry and provide a lot of clarity on the sector,” stated Nitish Mittersain, Founder and CEO, Nazara Technologies.
Roland Landers, CEO, All India Gaming Federation praised the government and said in a statement that this is a decisive first step for comprehensive regulation of online gaming.
“By setting up a framework of multiple self-regulatory organisations, comprising of diverse stakeholders, a strong foundation has been laid to give clarity to developers, investors and gamers on how this fast-growing industry can create opportunities,” said Rajan Navani, CEO and Founder, JetSynthesys.
These SROs will comprise industry representatives, educationists, and other experts such as child experts, psychology experts, etc.
Additionally, the new rules are not limited to just online gaming as they also tackle the issue of misinformation. A fact-checking agency would be established to check content related to the government. Intermediaries that will host red-flagged content would not get Section 79 protection anymore.
Concerns that the rules go beyond the scope of the parent legislation, i.e., the Information Technology Act, 2000 and the legislative powers of the state to govern such online games still remain. “It is also not clear whether the rules framed under the powers to prescribe due diligence requirements for intermediaries, i.e., those providers not responsible for providing content can be applied to online gaming platforms that actively decide and offer their own gaming content, in the manner that the central government is seeking to apply to them,” said Jay Sayta, Technology & Gaming Lawyer.
Another major concern is that the rules do not clearly define online real money games to be games involving a substantial degree of skill. “The rules also do not clearly demarcate games involving substantial degree of skill, which are legal and constitutional activities as separate from games of chance or gambling/betting activities,” added Satya.
To add to this confusion, the central government has also not made any provision in the rules that give any clarity on whether staking money on games classified as skill-based games would be permitted or not.
Most of these compliances for online gaming intermediaries will not come into force immediately (according to Rule 4B of the new IT rules). They will kick in three months after three self-regulatory bodies have been approved by the Ministry of Electronics and Information Technology (MeitY) or as and when the centre notifies.
