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Draft Rules for Online Gaming

Context:

Recently, the Ministry of Electronics and IT (MeitY) has released the Draft Rules for Online Gaming.

  • The proposed rules have been introduced as an amendment to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021.

Relevance:

GS II: Polity and Governance

Dimensions of the Article:

  1. About Draft Rules for Online Gaming:
  2. Online gaming sector in India
  3. What is the Need for the Rules?
  4. What are some of the concerns?

About Draft Rules for Online Gaming:

Self Regulatory Body:

  • Only games that have been approved by the self-regulatory organisation will be permitted to legally function in India. Online games will need to register with the body.
  • There may be more than one self-regulatory body, and all of them must inform the Centre about the games they have registered along with a report outlining the requirements for registration.
  • 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.

Additional due diligence

  • Online gaming companies will need to conduct more due diligence, such as user KYC, transparent money withdrawal and refund processes, and a fair distribution of wins.
  • They must adhere to the KYC guidelines established for firms under Reserve Bank of India regulation (RBI).

Random Number Generation Certificate:

  • A Random Number Generation Certificate, which is often utilised by platforms that offer card games to ensure that game outputs are statistically random and unpredictable, will also be required of gaming companies.
  • Additionally, they must obtain a “no bot certificate” from a reputable certification organisation.

Betting:

  • Online gaming companies will not be allowed to engage in betting on the outcome of games.

Appoint a compliance officer

  • 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 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.

Online gaming sector in India

  • The revenue of the Indian mobile gaming industry is expected to reach $5 billion in 2025.
  • The industry grew at a compound annual growth rate (CAGR) 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.

What is the Need for the Rules?

  • The fact that between 40 and 45 percent of gamers in India are female makes maintaining the security of the gaming industry even more crucial.
  • It is thought to be a fantastic first step toward complete regulation of online gaming and will lessen the state-by-state regulatory fragmentation that has been a major obstacle for the sector.

What are some of the concerns?

  • The rules still bucket all gaming intermediaries into a broad category irrespective of size or risk.
  • They all require similar compliances, including the need to have India based officers.
  • This can make it difficult for global players to start their services in India.

-Source: The Hindu, Indian Express


February 2023
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