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Do the online gaming rules proposed by India’s IT Ministry Eat Up States’ Powers? #NAMA

By framing these online gaming rules, is the Indian government overstepping into states’ domain? Here’s what we discussed

Heads butted over whether India’s proposed online gaming rules will eat up state powers at MediaNama’s discussion event on about them last week. Some think they’re an example of the Indian government siphoning off state powers to regulate online gaming.

“It’s clear that states have the power to regulate gambling and betting, which cover all sorts of games,” said gaming and technology lawyer Jay Sayta. “Whether the Indian government couches the games as “intermediaries” [or platforms] or not, they’ve put down a certain regulatory framework for online games. They’ve listed dos and don’ts. How is it within the Indian government’s competence to do so?”

Why are we talking about federalism or gambling in an online gaming law?: Gambling (whether offline or online) is a state subject in India. In practice, this means that different states ban different online games for being “gambling games” based on their own legislative wisdom. So, what might be a legal online game in one state could be illegal in another. This regulatory maze makes it difficult for the online gaming industry to figure out what’s legal and what’s not—which is why they’ve asked the Indian government for years now to take charge and create uniform rules and definitions for the sector. Enter: these online gaming rules. But, by framing rules that attempt to decide which games are legal and legitimate, is the Indian government eating up state powers to do so? Remember, the Indian government has held in court that only states are competent to regulate online gambling. Cases are pending at the Supreme Court on who has the right to regulate the sector too.

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Should the Internet be regulated from state to state?: NKR Law Offices’ Aditya Kumar differed with Sayta. “I think that [idea of federal skew] is slightly unfair to the Indian government,” he said. “I agree that it might have gone into areas possibly under state jurisdiction. But, the Indian government does have jurisdiction here too purely because it is the Internet. From a purely administrative perspective, you shouldn’t really regulate the Internet on a state-to-state basis. I do think the government has a role in terms of blocking websites or signalling that these are the kinds of norms that states should follow.”

“So, liquor or alcohol are purely state subjects. Now, the online sale of liquor, just because it is online, should that be regulated by the Indian government [too]?” asked Sayta drily. “If alcohol websites were deemed to be intermediaries under the rules, and asked to do a hundred different things to comply with this framework, then wouldn’t that impinge on state powers to create these rules?”

To jog your memory: the rules mandate that every platform should be a member of an industry-led self-regulatory organisation. That organisation should evaluate the games they offer—among other criteria, if the games sufficiently protect consumers from harm, and are clearly not gambling games, they get a “verified” badge. Only games with these badges can be hosted by other platforms. These are some of the “different things” platforms have to do that Sayta is referring to.

States don’t want everyone to give up online rummy: But, the bottom line is that the rules may not even be trying to gobble state powers—although they could certainly be clearer about it. “You may still have to conform with state law,” argued MediaNama’s Editor, Nikhil Pahwa. “So you [a platform] can register with a self-regulatory organisation [and get a game verified by it as a game of skill, or not a gambling game]. But if a state bans that game, you can’t offer it there. The ball is in the state’s court. You’re not overriding state legislation, you’re actually telling platforms to comply with it.”

“Also, I think we can agree that the certification of games [by self-regulatory bodies under the rules] is not law,” added Vivan Sharan of Koan Advisory. “It’s also [about the relationship].between the self-regulatory organisation and consumers, who also have a right beyond states and the government to operate in an environment of trust.”

So, games banned by states would probably be geo-blocked in them alone. States are not saying that the nation should not operate a Rummy app, added Sharan. “But by the way, this is not trivial. We should all aspire for a future of the Indian Internet where a citizen in Delhi, Haryana, Tamil Nadu or wherever should have equal access to [online] services.”

But, do local gambling laws pose a problem?: But, some state governments—like Tamil Nadu—have proposed setting up their own regulators to determine which games are legal or not. Can states ask platforms to only verify their games with these authorities, and not the self-regulatory organisations set up under the proposed gaming rules? Simply put: can states override a national law?

“There are more niceties involved, even when states are operating within a national framework,” noted Kumar. “What’s likely is that self-regulatory bodies may be fine if gaming platforms are registered with state authorities, as they may also follow a number of compliances. They might trust that authority up to a certain level. The government could also create exceptions that if a platform is registered with state regulators, then they’re deemed to have [larger] registration. That’s practically how it might play out, rather than states and the government tiffing it out.”

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I'm interested in stories that explore how countries use the law to govern technology—and what this tells us about how they perceive tech and its impacts on society. To chat, for feedback, or to leave a tip: aarathi@medianama.com

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