An inter-ministerial task force, set up by the Ministry of Electronics and Information Technology (MeitY) to propose contours of a national-level legislation to regulate online gaming, has proposed the creation of a central regulatory body for the sector, clearly defining what games of skill and chance are, and bringing online gaming under the purview of the Prevention of Money Laundering Act, 2002, among other things.
GS II: Governance
Dimensions of the Article:
- Why a central-level law?
- How big is the online gaming market in India?
- Why are States resorting to banning online gaming?
- Recommendations of the task force
Why a central-level law?
Online gaming so far has been a state subject:
- State governments have said they find it extremely difficult to enforce certain rules like geo-blocking certain apps or websites within the territory of their state.
- Also, there is a concern that rules passed in one state are not applicable in another, which has caused inconsistency in how the online gaming industry is regulated in the country.
- State governments also do not have enough blocking powers like the Centre to issue blocking orders for offshore betting sites.
- Stakeholders have highlighted a number of societal concerns that can arise from the proliferation of online games in the country.
- There have been a number of reported incidents of people losing large sums of money on online games, leading to suicides in various parts of the country.
No regulatory framework
- There is currently no regulatory framework to govern various aspects of online gaming companies such as having a grievance redressal mechanism, implementing player protection measures, protection of data and intellectual property rights, and prohibiting misleading advertisements.
- For online gaming businesses, the inconsistency has led to uncertainty.
- The thinking within the government is to have a nodal agency that will address all issues related to online gaming, including introducing a uniform law to determine what forms of online gaming are legally allowed.
Which ministry will be in charge of the regulation?
- The task force has suggested that MeitY may act as the nodal ministry to regulate online gaming, except for the e-sports category on which the Department of Sports can take the lead.
- The scope of the regulation by MeitY should only cover online gaming, that is, games of skill, and the issues of online betting and gambling being games of chance in nature should be excluded from its scope, the task force is learnt to have recommended.
- Certain other aspects of online gaming such as advertisements, code of ethics relating to content classifications etc. could be regulated by the Information and Broadcasting Ministry, while the Consumer Affairs Ministry can regulate the sector for unfair trade practices.
How big is the online gaming market in India?
- 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 in the country grew at a CAGR of 38% between 2017-2020, as opposed to 8% in China and 10% in the US.
- It is expected to grow at a CAGR of 15% to reach Rs 153 billion in revenue by 2024.
- India’s percentage of new paying users (NPUs) in gaming has been the fastest growing in the world for two consecutive years, at 40% in 2020 and reaching 50% in 2021.
Why are States resorting to banning online gaming?
- Online games like rummy and poker are addictive in nature;
- When played with monetary stakes leads to depression, mounting debts and suicides.
- Reportedly, there have been a few instances where youngsters, faced with mounting debts due to losses in online games have committed other crimes like theft and murder.
- Some experts also believe that online games are susceptible to manipulation by the websites operating such games and that there is a possibility that users are not playing such games against other players, but against automatic machines or ‘bots’, wherein there is no fair opportunity for an ordinary user to win the game.
Recommendations of the task force:
- A central-level law for online gaming should apply to real money and free games of skill, including e-sports, online fantasy sports contests, and card games among others.
- Casual games with no real money element in the form of stakes may be kept outside the scope of such rules, unless they have a high number of users in India, or permit the publication or transmission of information in the nature of any inappropriate content like violence, nudity, addictive content or misleading content.
- It has also recommended creating a regulatory body for the online gaming industry, which will determine what qualifies as a game of skill or chance, and accordingly certify different gaming formats, seek compliance and enforcement.
- A three-tier dispute resolution mechanism, similar to that prescribed under the Information Technology Rules, 2021 for online streaming services, consisting of a grievance redressal system at the gaming platform level, self regulatory body of the industry, and an oversight committee led by the government should be put in place for online gaming.
- Any online gaming platform – domestic or foreign– offering real money online games to Indian users will need to be a legal entity incorporated under Indian law.
- These platforms will also be treated as ‘reporting entities’ under the Prevention of Money Laundering Act, 2002, and will be required to report suspicious transactions to the Financial Intelligence Unit-India.
-Source: Indian Express