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An Analysis Of Online Gaming Regulations In India

Background

The Indian online gaming market has exponentially grown with increasing user engagement and booming investments. Direction regulation of the online game sector from the government has therefore, been long due, especially where such games involve real money and pose high risk of cyberbullying, security lapses, inappropriate content, ethical concerns, cheating & hacking, social isolation, and other physical and health issues to users.

Given the recent unprecedented surge in the number of people participating in online gaming, especially during the pandemic, the Central Government finally notified the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2023 issued vide Gazette notification dated April 6, 2023 by the Ministry of Electronics and Information Technology to amend the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021. The rules have been amended with an aim to ensure that the online games are appropriately regulated, and the users of the online games are safeguarded against potential harm. These rules also ensure to regulate the contents of online games to check that the games do not have sexual, violent, or addictive content. The present article attempts to discuss the amendment and analyse the steps taken by the Government to ensure proper regulation of online games which so far remained unregulated.

Gaming Regulations

The Social Media Intermediaries under the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 were issued in February 2021 with an objective to combat harmful content on social media. Now, taking into view the expanding horizon of online gaming, the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2023 were notified. By way of the amendment, the Government has put in place an online gaming self-regulatory body to regulate online games and provided clear definitions to the terms “online game”, “online gaming intermediary”, “online real money game”, “permissible online game” and “permissible online real money game”.

The amendment defines the ‘online game’1 as a game offered on the Internet which can be accessed by the users through a computer resource or an intermediary. An ‘online gaming intermediary’2 are those who enable the users of its computer resources to allow them to access online games. In terms of amended rule 2(1)(qc) read with rule 4A, the online gaming self-regulatory body is an entity designated to verify online gaming real money games as a permissible real money games. The Government can notify as many online gaming self-regulatory bodies as it may consider necessary.

Online games where a user deposits cash or kind with an expectation of earning winnings on that deposit are termed as ‘online real money games’3. ‘Permissible online game’4 includes a permissible real money game or any other online game that is not an online real money game whereas ‘permissible online real money games’ are those online real money games which are verified by an online gaming self–regulatory body under rule 4A.

What is the Online Gaming Self-Regulatory Body?

Online Gaming Self-Regulatory Body is an entity possessing the power to verify an online real money game as a permissible online real money game. As per rule 4A, the Central Government can designate as many online gaming self-regulatory bodies as it may consider necessary. An entity that fulfils the following criteria mentioned in rule 4A(2) can apply to the Ministry for designation as an online gaming self-regulatory body:

  • The entity must be a company registered under section 8 of the Companies Act, 2013;
  • Its membership is representative of the gaming industry;
  • Its members have been offering and promoting online games responsibly;
  • Its Board of Directors is comprised of individuals of repute, who do not have any conflict of interest and possess special knowledge or practical experience suitable for the performance of the functions of such a self-regulatory body;
  • The entity must have sufficient capacity, including financial capacity, to perform its functions as an online gaming self-regulatory body under the rules, etc.

Role, Functions and Powers of the Self-Regulatory Bodies

As per rule 4A(3), the online gaming self-regulatory body, upon an application made to it, is empowered to declare an online real money game as a permissible online real money game. Before making such declaration, the body may make necessary enquiries to ascertain that:

  • The online real money game does not involve wagering on any outcome and;
  • The online gaming intermediary and the online game is in due compliance with the provisions of rules 3 and 4 as well as the provisions of any law relating to the age at which an individual is competent to enter into a contract and;
  • The online gaming intermediary and the online game is in due compliance with the framework made by the online gaming self-regulatory body under sub-rule (8).

Under sub-rule 8, such a self-regulatory body is mandated to prominently publish a framework for verifying an online real money game. However, as an interim measure, the regulatory body has been allowed to initially rely upon the information furnished by the applicant for verification of the online real money game and declare such game as permissible for a period not exceeding three months and during said three months. The regulatory bodies are obligated to complete an inquiry and thereafter declare the online real money game as a permissible or inform the applicant that such online game does not fulfil the requirements of the rules.5

Though the self-regulatory body has been given a free hand to design a framework to verify an online real money game, the rules mandate that the following must be mandatorily included in the framework:

  1. The measures to ensure that such online real money game is not against the interests of sovereignty and integrity of India.
  2. The safeguards against user harm, including self-harm and psychological harm.
  3. Measures to safeguard children and classifying online games through age-rating mechanism based on nature and type of content.
  4. Measures to safeguard users against the risk of gaming addiction, financial loss and fraud, including repeated warning messages at a higher frequency beyond a reasonable duration for a gaming session and provision to enable a user to exclude himself from the game at any user-defined limits for time or money spent.6

Other Roles of the Self-Regulatory Body

The online gaming self-regulating body is also mandated and obligated to:

  1. To publish and maintain an updated list of all permissible online real money games which is duly verified, including the details of the applicant, the dates and period of validity of the verification;7
  2. To publish and maintain an updated list of all its members whether present or former along with dates of their acceptance as a member, their corporate or business-related identity number and other details including suspension or revocation.8
  3. To suspend and revoke the verification, after giving an opportunity of being heard and for reasons to be communicated in writing to the applicant member, if it is satisfied that the online real money game verified by it is not in compliance with the provisions of the rules.9
  4. To publish a framework for redressal of grievances and the contact details of the Grievance Officer to which an applicant aggrieved by a decision of such body with respect to verification may make a complaint in respect of any matter related to such online real money game or verification. The Grievance Officer is obliged to acknowledge the complaint within 24 hours and resolve it within 15 days.10

Due Diligence by Online Gaming Intermediaries

The rules provide strict due diligence requirements that must be followed by the online gaming intermediaries (i.e., an entity which enables the users of its computer resources to access one or more online games). The online gaming intermediaries are obligated to prominently publish on their website and mobile application, their rules and regulations, privacy policy and user agreement for access or usage of its computer resource by any person and to ensure compliance of the same.

Gaming intermediaries must also make reasonable efforts and ensure that the users of its computer resource do not host, display, upload, modify, publish, transmit, store, update or share any information that belongs to another person. It must also ensure that such information is not obscene, invasive of privacy, causes user harm,11 is harmful to a child12, infringes any kind of proprietary rights13, is in the nature of the online game that is not verified as a permissible online game14, is in the nature of advertisement or promotion of an online game which is not a permissible online game or of any online gaming intermediary that is offering such an online game.15

The rules also define ‘user harm’ as any effect which is detrimental to a user or child. Further, any information displayed, published etc. in respect of the Central Government should not be identified as fake, false or misleading by the fact-checking unit of the Central Government.16 The rules and regulations of a gaming intermediary enabling user access to any permissible online real money game shall include the information related to withdrawal or refund of the deposit made with the expectation of earning winning, the manner and distribution of the winnings, the manner of determination and distribution of such winnings, the fees and other charges payable by the users, the KYC procedure followed for verifying the identity of its users, the measures taken for the protection of deposit made by users.17

The intermediary shall periodically and at least once every year inform its users that it has a right to either terminate their access or usage rights in case of non – compliance with rules and regulations or remove non-compliant information18, it is also prohibited to host, store or publish any unlawful information19. Also, if any information has been removed or whose access has been disabled by the intermediary under the provisions of the rules, it will preserve such information and associated records for 180 days for investigating purposes20.

The gaming intermediary, which enables the user access to any permissible online real money game, is also obligated to provide access to information under its control or possession for investigation within 24 hours in the event of receipt of an order from the Government agency21 and are also obliged to inform its users about changes in its regulations or privacy policy within 24 hours of such change.22

In addition to the above, the Government has provided the following supplementary due diligence requirements for online gaming intermediaries that enable the users to access any permissible online real money game:

  • Appointment of a Chief Compliance Officer responsible for ensuring compliance with the Information Technology Act and the rules made thereunder. In case of any failure of the intermediary to observe the due diligence while discharging its duties under the Act and rules, the Officer can be held liable.23
  • Appointment of a Nodal Contact Person, who is resident in India, for 24×7 coordination and compliance with orders of law enforcement agencies and officers.24
  • Appointment of a Resident Grievance Officer, who shall be responsible to acknowledge the complaints against violation of the provisions of the rules within 24 hours and resolve such complaints within a period of 15 days from the date of its receipt.25
  • Publication of a monthly compliance report with the details of the complaints received and action taken thereon.26
  • Operations from a physical contact address in India and publication of such information on its website.27
  • Voluntarily verification option for users through appropriate mechanism and allocation of a visible mark of verification28
  • Display of a demonstrable and visible mark of verification by an online gaming self-regulatory body on such permissible online real money games.29
  • Enforcement of adequate measures to verify the identity of the users before accepting any deposit from them to access permissible online real money games. The procedure for identification and verification of users by an intermediary shall apply mutatis mutandis which an entity regulated by RBI follows in the identification and verification of the customer at the commencement of an account-based relationship30.
  • Prevention of self-finance by way of credit or enable financing to be offered by a third party to play such online games.31

Grievance Redressal Mechanism

In terms of clause (c) of sub–rule (1) of rule 4, the online gaming intermediary shall appoint a Grievance Officer who is resident in India to resolve the complaint made by the victim or the user against violation of the provisions of this rule. The officer shall upon receipt of such complaint, acknowledge it within 24 hours and dispose of the complaint within 15 days of its receipt. The intermediary shall prominently publish the name of the Grievance officer, his contact details, and the mechanism by which the victim can make the complaint on its website as well as the mobile application. In the event of an individual making a complaint about any content which is prima facie of such a nature which is invasive of the privacy of that individual, the intermediary shall take reasonable measures to disable its access to others or remove that content. It is also obligated to implement an appropriate mechanism for the receipt of such complaints, which shall enable the Complainant to track the status of such complaints by providing a unique ticket number for every complaint32.

Conclusion

The Central Government has taken a positive step to regulate unregulated online gaming entities. Though the rules are still to be tested on the ground level, the regulatory guidelines will enable a safer environment for the users of online gaming especially due to the mandate to conduct a proper verification of online games involving real money, cash or kind deposits. The Government has come up with strict regulations which will ensure the safety and protection of the users and shall also enable it to achieve its objective and purpose to regulate the online gaming entities which were unregulated hitherto. The recognition of online gaming by the Central Government will give scope to this sector to grow further and be at par with the global level while simultaneously helping India to become one of the leading countries in the gaming industry.

Footnotes

1. Rule 2 Sub-rule (qa), Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2023

2. Rule 2(1)(qb)

3. Rule 2(1 (qd)

4. Rule 2(1)(qe)

5. Rule 4A (3)(b)

6. Rule 4A (8)

7. Rule 4A (4)

8. Rule 4A (5)

9. Rule 4A (6)

10. Rule 4A(11)

11. Rule 3 (1)(b)(i)&(ii)

12. Rule 3 (1)(b)(iii)

13. Rule 3 (1)(b)(iv)

14. Rule 3 (1)(b)(ix)

15. Rule 3 (1)(b)(x)

16. Rule 3 (1)(b)(vi)

17. Rule 4 (11)

18. Rule 3(1)(c)

19. Rule3(1)(d)

20. Rule 3 (1)(g)

21. Rule 3(1)(j)

22. Rule 3 (1)(f)

23. Rule 4 (1)(a)

24. Rule 4 (1)(b)

25. Rule 4(1)(c)

26. Rule 4(1)(d)

27. Rule 4 (5)

28. Rule 4(7)

29. Rule 4 (10)

30. Rule 4(12)

31. Rule 4(13)

32. Rule 4(6)

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