What is Online Gaming?
- Definition: Any game played on an electronic/digital device, operated via internet-based software.
- Three Segments (as per the Act):
- E-sports → Competitive skill-based games, recognised under National Sports Governance Act, 2025 (e.g., Call of Duty, Grand Theft Auto).
- Social Gaming → Recreational/educational games with no financial stakes. Govt can promote these under Section 4.
- Real Money Games (RMGs) → Games played with payment/fee, with expectation of monetary reward or convertible stakes (tokens, coins, credits).
- Examples: Rummy, Poker, Fantasy Cricket, Ludo variants.
Relevance : GS 1(Society) , GS 2(Social Issues ,Governance)
Why was the Bill introduced?
- User protection: Govt data → Indians losing ~₹15,000 crore annually on RMGs.
- WHO findings: RMGs linked to compulsive behaviour, psychological distress, financial hardship, family disruption.
- Social harms: 32 suicide cases (Karnataka, 31 months) linked to gaming addiction.
- Financial crimes & frauds:
- ₹2,000 crore tax evasion (Financial Intelligence Report, 2022).
- ₹30,000 crore GST evasion (Govt reports).
- ED case → Chinese app FIEWIN defrauded Indians of ₹400 crore.
- Parliamentary Panel (2023) → Gaming portals linked to terror funding.
- Opaque business models: Manipulative algorithms, use of bots, offshore operations bypassing domestic laws.
Key Provisions of the Act
- Ban on RMGs & their advertisements.
- Penalties:
- Offering RMGs / fund transactions → Up to 3 years’ imprisonment, fine up to ₹1 crore, or both.
- Unlawful advertisements → Up to 2 years’ imprisonment, fine up to ₹50 lakh, or both.
- Offences under BNSS, 2023 → Cognisable & non-bailable.
- CERT-IN role: Empowered to block/disable apps; Interpol may be roped in for offshore violators.
- No penal action against players (only operators targeted).
- Budget allocation: From Consolidated Fund of India for promoting social gaming.
- Regulatory Authority: Central Govt to set up a body for recognition, categorisation, and registration of online games.
Regulation vs Federal Structure
- Constitutional context:
- Entry 34 & 62, State List (Seventh Schedule) → States have jurisdiction over betting and gambling regulation/taxation.
- Past state-level actions:
- Telangana (2017) → Ban on all online gaming.
- Andhra Pradesh (2020) → Ban on online gambling.
- Tamil Nadu (2022) → Ban on Poker, Rummy.
- Centre’s intervention: Uniform regulation across India, citing financial fraud, money laundering, and digital security.
Economic & Industry Concerns
- Industry estimate: Ban may affect 2 lakh jobs across 400+ companies.
- GST issues:
- 2023 → 28% GST imposed on full deposit/entry fee (not just platform commission).
- Gaming firms → Claim retrospective taxation unfair, as their platforms are “skill-based”.
- Supreme Court stay (2024–25) → On notices issued for GST dues; verdict pending.
Judicial Standpoints
- Skill vs chance debate:
- SC earlier → Games like Rummy and Fantasy Sports involve substantial skill, not gambling.
- Current Act → Treats all RMGs alike (no distinction skill/chance).
- Possible constitutional challenge:
- Critics argue blanket ban may violate Article 19(1)(g) (Right to Trade & Occupation).
- SC may examine proportionality, state vs centre jurisdiction, and whether “games of skill” deserve exemption.
Broader Implications
- Social:
- May reduce gambling addiction, debt traps, and associated suicides.
- But risks pushing users to illegal or offshore apps via VPNs.
- Economic:
- Potential job losses, slowdown in India’s gaming/start-up ecosystem.
- Reduced tax revenues if companies relocate abroad.
- Federalism:
- Could trigger state-centre tussles over jurisdiction.
- Governance & Digital Regulation:
- Strengthens role of CERT-IN.
- Adds to India’s growing digital regulatory framework (IT Rules, DPDP Act, etc.).
Way Forward
- Balanced regulation: Instead of blanket bans, consider age limits, spending caps, parental controls.
- Clear distinction: Between skill-based games (Fantasy Sports, Rummy) vs chance-based gambling.
- Consumer awareness: Education campaigns on risks of addiction & fraud.
- Transparency mandates: Algorithms, fairness audits, disclosure of odds.
- Tax clarity: Rational GST framework to avoid litigation.
- International cooperation: Tackle offshore firms via treaties and cyber-security collaboration.
