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Talk of the Town: What’s the Buzz on India’s New Online Gaming Rules?

MediaNama rounds up what India’s top ministers have said on the rules, why the online gaming industry is praising them, and why some advocacy groups are concerned.

Unlike previous public feedback on India’s platform regulation policies, the initial industry response to India’s newly-released online gaming rules seems largely positive.

Blowing away the smokescreen: MediaNama rounds up what India’s top ministers have said on the rules, why the online gaming industry seems to be all praise for them right now, and why some digital advocacy groups are unhappy with how they’ve been designed.

What are these rules again? After months of deliberation, India’s newly-released draft amendments to the IT Rules, 2021, will permit platforms to offer games where you pay a deposit to play them. But online games that allow people to bet on games outcomes’, or gamble, are off the cards. Released by the IT Ministry yesterday, the draft amendments also classify online gaming platforms as “intermediaries” and introduce an elaborate self-regulatory system for the sector.

Why it matters: These rules are a tiny step towards clear laws regulating India’s gaming and gambling sectors. Paying attention to their strengths and weaknesses is important—because India’s gaming and gambling laws are already a mess. Back in August, it took us no less than 2,000 words to explain why: for starters, they’re often based on really old colonial laws—that, unsurprisingly, don’t adapt well to the intricacies of playing online. Gambling is also a state subject, with different states banning different games based on their own legislative wisdom. Simply put, what might be a legal online game in one state could be illegal in another, creating a regulatory maze for platforms offering these games across the country (and lots of court cases). As governments try to figure out rules for the sector, people play on sites without much legal protection, often losing lots of money, and in some cases, their lives. The real question here is: do the rules adequately address all of these concerns, or just some?

What to expect next: The rules are open for public consultation until January 17th. Submit your feedback here. Read our crisp summary of what they propose here.

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From the horse’s mouth—what the IT Ministry has to say

What exactly are the rules regulating? “Online gaming intermediaries will be permitted but if they tend to transgress into betting, they will not be permitted,” reportedly said Minister of State for Information and Technology Rajeev Chandrasekhar. “Our intent is to restrict intermediaries from advertising without permission. Our job is to regulate the Internet.” Translation: you can pay to play a game, but you can’t pay to bet on its outcome.

Do the rules eat up state powers to regulate gambling? Gambling is regulated by states in India—but the junior IT Minister is clear that the Indian government’s rule won’t infringe on their powers. “States can do whatever they want vis-a-vis gambling and betting,” Chandrasekhar said at a press conference yesterday, reported Hindustan Times. “What happens with states, which states legalise gambling and betting, we have nothing to do with that. We are interested in growing the online gambling system in a way that does not contravene any state laws.”

Content moderation for games may be on the cards: Gaming content may also be regulated to ensure that they don’t have “violent, addictive or sexual content” said Chandrasekhar yesterday, reported the Indian Express.

When will the consultation start? From next week, said Chandrasekhar at yesterday’s press conference. Around three types of stakeholders will be consulted:

  • Gamers: “Around 40 to 45% of gamers in India are women and the feedback we’ve received from women gamers is that there’s still a considerable amount of work to be done to ensure that the gaming ecosystem is safe and trusted for women,” said Chandrasekhar. “That’s a policy objective that’ll not only be met by the rules but will be certainly addressed by the impending Digital India Act.”
  • Gaming start-ups, larger gaming companies, and investors
  • Think tanks and “other thinkers”

What next? Expect a finalised version of the rules by early February.

Tamil Nadu’s Law Minister steps in*: The Tamil Nadu government is clear that it’s not okay with any laws that legitimise types of online gambling.

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“It is the intention of the TN [sic] government that there should be no law to protect those who run online gambling or any law to collect tax from them,” said Tamil Nadu Law Minister S. Regupathy on the rules, as reported by Gateway to Gaming. “Online rummy should be banned completely. We will emphasize the same. After reading the report issued by the central government on online rummy, a complete comment will be given.”

“The law brought by the TN government is common to all. All are acceptable. It will be welcome if the Union Government brings its legislation based on it. Instead, if it is an indirect act to protect the online gambling operators, it will certainly be reprehensible,” said Reghupathy.

Don’t forget: Tamil Nadu passed a controversial law last year banning online gambling and games of chance—specifically only online rummy and poker for now. That’s despite the fact that both these games have been held to be games of skill, or basically not gambling games, by various High Courts and even the Supreme Court. Some people also believe that as these games aren’t gambling games, Tamil Nadu’s government shouldn’t be able to ban them in the first place. For now, the law has lapsed, or temporarily expired, because the state’s governor didn’t approve it on time.

All smiles over in the industry corner

The All India Gaming Federation welcomes this “light-touch regulation”: India’s apex online skill-based gaming coalition is happy with the “light-touch” policy—which it believes will help streamline the muddled laws on gaming and gambling in India.

“We believe this is a great first step for comprehensive regulation for online gaming and will hopefully reduce the state-wise regulatory fragmentation that was a big challenge for the industry,” said AIGF CEO Roland Landers. “These rules will go a long way in ensuring consumer interest while helping the industry grow responsibly and transparently.

Will impact foreign gambling websites too: Landers also believes the rules will “also be a start in curbing the menace of anti-national and illegal offshore gambling platforms.” For context, AIGF has held for a while now that the real menace in India is offshore gambling websites used by Indians—these are often registered in places like Curacao, Malta, and the British Virgin Islands.

Thumbs up from Mobile Premier League CEO: MPL co-founder and CEO Sai Kiran thanked the IT Ministry for “such a thoughtful framework, underpinned by gamer welfare and an open & accountable growth of the industry.” Kiran particularly highlighted the concerted industry efforts to bring wider reforms to gaming regulation in India. As we’ve reported over the years, these range from requesting parties to include reforms in their manifestos, to writing letters, to ministerial meetings.

Also tweeting the green light: the E-Gaming Federation of India and the Federation of Indian Fantasy Sports.

One pending request from WinZo games: WinZo co-founder Saumya Singh Rathore also reminded Business Line of the ongoing debates on how much GST to impose on online gaming companies. “The sector has over 1,000 companies that are less than 24 months old and in the early revenue stages,” said Rathore. “We are hoping the government will continue to encourage companies to invest in technology and IP creation and consider the survival of the sector by retaining 18 per cent GST on the commission”.

Industry experts seem happy with the rules for now: Speaking to Hindustan Times, Vivan Sharan, Founder of Koan Advisory, welcomed using Section 69A of the Information and Technology Act, 2000 (IT Act), to nip offshore betting websites in the bud. Remember: Section 69A allows the government to block public access to information online on specified grounds, like national security and public order.

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Section 69A is the only practical enforcement mechanism available under the current Information Technology Act, and is therefore employed to maintain industry hygiene,” said Sharan. “It enables government to take punitive action against errant actors. This is particularly important in the context of the wide availability of several offshore betting and gambling applications that are patently illegal.”

Also speaking to Hindustan Times, The Dialogue Founder Kazim Rizvi added that consumer welfare measures in the rules will help build trust in the industry and strengthen privacy. These include publishing privacy policies, setting up KYC procedures, and greater transparency on the rules and risks of playing online. These steps will “facilitate the creation of a level playing field for legitimate companies by weeding out the spurious gaming platforms,” said Rizvi.

Sifting through the fine print*: Although optimistic about the rules, Ranjana Adhikari, Partner, Technology Media & Telecommunications, at IndusLaw added that there’s much to be clarified. “There are certain aspects of the draft rules which may need to be analysed closely to assess their practical impact on the industry and their feasibility for implementation, such as the requirement of KYC to be at par with RBI standards and the KYC being required to be carried out at the time of user account opening itself even where the player may not, in many instances, be depositing money,” Adhikari noted in a press statement.

“Even though the draft rules partially solve the issue of multiplicity of regulators for online gaming, they may not fully resolve the centre-state tussle on which games are permitted and which aren’t.” — Ranjana Adhikari

Not feeling the party spirit: the Internet Freedom Foundation, as it recollects the ghosts of criticism past

New amendments add insult to injury: The 2021 IT Rules were always controversial—and challenged for harming privacy, free speech, and businesses in multiple courts across the country. Amendments were then passed by the government last year without addressing the Rules’ deficiencies, IFF argues in an early Twitter thread on the matter. The current draft amendment allegedly makes things worse—it causes “more overbreadth beyond the parent [IT] Act”.

Looming executive powers: IFF is also concerned with the “vast powers” the Indian government has under the amendments to classify online gaming platforms as intermediaries. Also a point of concern—its ability to “exercise regulatory power for KYC (proposed Rule 4A(d)) without any clear legal basis”.

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Longstanding concerns with amendments unaddressed: As we’ve reported, the same concerns were raised across the board when last year’s amendments to the IT Rules were proposed—a grievance redressal committee was introduced through the rules, instead of through the IT Act. The government-appointed committee also has wide powers to review and potentially reverse content moderation decisions by social media platforms. That can potentially impact independent grievance redressal—while also harming the free speech rights of India’s netizens.

*Note: This article was updated on 04/01/2023 at 1:04 pm to reflect new comments on the rules. An asterisk indicates a comment added post publishing on 03/01/2023. 

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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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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