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Online gaming platforms ask IT Ministry to allow self-certification of games and relaxation of KYC norms

A graded approach to Know Your Customer norms and self-certification of games were the top asks of online gaming platforms at a stakeholder consultation.

A graded approach to Know Your Customer (KYC) norms and self-certification of games were the top requests from online gaming platforms at a stakeholder consultation held by the IT Ministry on January 17 on the proposed online gaming rules.

Why does this matter: As we’ve covered here and here, the proposed online gaming rules have multiple shortcomings and need to be improved before they are finalised. While not all of the concerns were brought up in yesterday’s meeting, some concerns that were most important to online gaming platforms were discussed with the IT Ministry and we can expect clarifications from the Ministry on the same, participants at the consultation told MediaNama.

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What  are some of the issues raised by gaming platforms?

1. Relaxation of KYC norms: The proposed rules require online gaming platforms to carry out KYC of players at the point of registration based on norms prescribed by RBI for financial entities. The industry criticised this requirement as confusing and excessive as RBI’s KYC norms vary for different entities and range from the simple requirement of OTP to the requirement of Aadhaar and even video-based or physical verification. At the consultation, certain platforms suggested that KYC could be done in a graded manner similar to how it’s done by mobile wallet operators, Games 24×7 told The Hindu. “We supported our industry peers and echo the same sentiments on KYC as a potential funnel drop and hence be kindly linked to a significant threshold of Rs 10,000,” Paavan Nanda, Co-Founder of WinZO Games, told MediaNama.

2. Pre-registration of games with Self-Regulatory Bodies can infringe on IP or lead to delays: The proposed rules require gaming platforms to only host games that have been verified and registered by a self-regulatory body (SRB). “We shared our concerns with the Honorable Minister, Rajeev Chandrashekharan Sir on the extent of authority conferred upon the SRO [self-regulatory organization] for registration of an online game, including, the determination that the online game is a game of skill. In our experience, such a pre-registration is highly likely to compromise the confidentiality of information required to be submitted for evaluation/certification and lead to IP [Intellectual Property] leaks which is the single most important asset a game developer has that cannot be protected by a patent. Potential delays may also compromise the first-mover advantage. Most importantly, just as Google is currently blocking market access of all games outside DFS and Rummy on the internet, this would become another layer that can completely block the world of the internet for new entrants,” Paavan Nanda explained.

3. Gaming platforms should be allowed to self-certify like the OTT industry: To tackle this issue pointed out above, WinZo batted for self-certification of online games. “We suggested a simple process of registration that relies on self-declaration and collecting basic information about a company, similar to what is already proposed in the Intermediary Guidelines for the OTT. This self-certification process does not require an engagement with the SRO to wait for confirmation before the launch of the game. In case of any compromise, this would, in any event, be supplemented by the powers conferred on the SRO to deal with grievance redressal, prevention of harm to children, etc,” Nanda said.

“There could be a first pre-registration step that maybe has a slightly less stringent criterion and then within three months of pre-registration the operator has to get the final registration for the game,” Trivikraman Thampy, co-founder and chief executive of Games24x7,” told Economic Times.

“Pre-registration [of games] for companies like WinZO is going to be extremely onerous and compromise the speed to market, innovation as well as first mover advantage if the details of every game that’s launched on our platform have to be exhaustively revealed and have to undergo a methodical process by an external industry body,” WinZo’s Paavan Nanda pointed out.

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4. Independence of SRBs: Participants also discussed the independence of SRBs with some platforms bringing up the issue of cartelization and conflict of interest when few gaming platforms have too much influence on an SRB. The IT Ministry explained that it will take into account the members of a body, its track record, and conflict of interest issues before giving it the approval to function as an SRB. “It is wrong to assume that an industry body will automatically become an SRO (self-regulatory organisation). Any industry body will not be SRO. It will be a body representing all the stakeholders,” the IT Minister said, according to Economic Times.

5. Clarity on what constitutes as skill games: The IT Ministry informed stakeholders that it will create a consolidated view of what constitutes as skill games and share this with states and other ministries so as to provide more clarity to gaming platforms, Economic Times reported. Gaming lawyer Jay Sayta, who raised this issue at the consultation meeting, had earlier pointed out the rules fail to distinguish between skill-based and chance-based games played for stakes, which is at the heart of many issues.

“This statement is significant in the backdrop of the Directorate General of Goods and Services Tax (GST) Intelligence slamming a 28% GST notice on Bengaluru headquartered Gameskraft. GST at rate of 28 % is applicable on games of chance, and the skill gaming industry pays 18 % GST on the commission. The Finance Ministry has refused to recognise this distinction while giving a notice to Gameskraft,” the ET report stated. The clarification might also help with the confusion at the state level. Some states like Karnataka and Tamil Nadu have tried to ban games that have been deemed as games of skills by courts. But it’s not clear if states will be deprived of the power to regulate games of skill, as this could then become a constitutional challenge since gaming still remains a state subject.

“We welcome MeitY’s willingness to take the time today and consult with industry stakeholders on the draft rules. The meeting was fruitful, and we believe that both the government and industry have benefited from a clearer understanding of the future outlook for the gaming industry in light of the proposed rules.” — Roland Landers, CEO, All India Gaming Federation.

This post is released under a CC-BY-SA 4.0 license. Please feel free to republish on your site, with attribution and a link. Adaptation and rewriting, though allowed, should be true to the original.

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