A self-regulatory body, grievance redressal mechanism and mandatory know-your-customer norms for verification are among the key proposals in the draft rules for online gaming, released by the Ministry of Electronics and IT (MeitY) on Monday.
Online games will have to register with a self-regulatory body, and only games that are cleared by the body will be allowed to legally operate in India. Online gaming companies will not be allowed to engage in betting on the outcome of games, as per the proposed rules.
The proposed rules, aimed at safeguarding users against potential harm from skill-based games, have been introduced as an amendment to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021. The attempt is to regulate online gaming platforms as intermediaries and place due diligence requirements on them.
Minister of State for Electronics and IT Rajeev Chandrasekhar said that “around 40 to 45 per cent of the gamers in India are women, and therefore it was all the more important to keep the gaming ecosystem safe”.
The objective of the proposed rules is to grow the online gaming sector and encourage innovation, Chandrasekhar said. “As per the principles laid under the rule, wagering on the outcome of a game will not be allowed. All online gaming companies will have to register with the self-regulatory body that will decide on the action required to be taken as per the rules,” he said.
The self-regulatory body will have a board of directors with five members from diverse fields including online gaming, public policy, IT, psychology and medicine. It must ensure that the registered games don’t have anything “which is not in the interest of sovereignty and integrity of India, defence of India, security of the state, friendly relations with foreign states or public order, or incites the commission of any cognizable offence relating to the aforesaid”.
There could be more than one self-regulatory body and all of them will have to inform the Centre about the online games they have registered, along with a report detailing the criteria for registering a certain game. Chandrasekhar said that going forward, the government may also regulate the content of online gaming, and “ensure that the games do not have violent, addictive or sexual content”.
The revenue of the Indian mobile gaming industry is expected to exceed $1.5 billion in 2022 and is estimated to reach $5 billion in 2025. The industry grew at a CAGR (compound annual growth rate) of 38 per cent in India between 2017-2020, as opposed to 8 per cent in China and 10 per cent in the US. It is expected to grow at a CAGR of 15 per cent to reach Rs 153 billion in revenue by 2024, as per a report by VC firm Sequoia and management consulting company BCG.
Describing online gaming as “a very important piece of the start-up ecosystem and a part of the goal of the 1-trillion dollar economy”, Chandrasekhar said the government will work hard to ensure all opportunities are provided to Indian start-ups.
Like an intermediary, online gaming firms will be required to undertake additional due diligence, including KYC of users, transparent withdrawal and refund of money, and a fair distribution of winnings. For KYC, they will have to follow norms that are laid down for entities regulated by the Reserve Bank of India (RBI).
Gaming companies will also have to secure a random number generation certificate, which is typically used by platforms that offer card games to ensure that game outputs are statistically random and unpredictable. They will also have to get a “no bot certificate” from a reputed certifying body.
Similar to social media and e-commerce companies, online gaming platforms will also have to appoint a compliance officer who will ensure that the platform is following the norms, a nodal officer who will act as a liaison official with the government and assist law enforcement agencies, and a grievance officer who will resolve user complaints.
An online gaming intermediary “shall observe the due diligence required under the rules while discharging its duties, 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,” said a MeitY notice.
MeitY has invited comments on the draft rules by January 17, and the final rules may be ready next month.
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Soumyarendra BarikSoumyarendra Barik is a Principal Correspondent with The Indian Expres… read more