“Statutory regulation is required to protect consumers as well as the operators,” in India’s online skill-based gaming industry, says a new report by the Pahle India Foundation. The report recommends a risk-mitigating regulatory framework to govern the sector.
What issues is the sector facing right now?: “The sector is still young and suffers from several challenges including perception issues, lack of proper definition, and the constant problem of clubbing games of skill with games of chance/gambling,” says Pahle. “These uncertainties often impede growth and stymy any kind of potential innovation in the sector… It became imperative to develop a more robust and holistic framework of regulation”.
Why does this matter? Doesn’t India have a gaming policy already?: Yes, but it’s stuck in the government’s drafts folder. The proposal was released on January 2nd and recommends a self-regulatory approach for online skill-based games. While broad risks and harms are outlined in the policy, addressing them is the job of self-regulatory bodies governing the industry. Some criticised this approach, arguing that the government had “abdicated” its responsibility to regulate to the private sector. Pahle’s idea is a little different—it wants a law that identifies specific harms, sets up government institutions to oversee the sector, and then devolves regulatory responsibilities to self-regulatory bodies. “In this day and age of digital development, any regulation that is formulated has to be forward thinking and must take into account future innovations,” says Pahle. The question is: does its model allow for that flexibility for innovation?
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How should the overall online gaming regulation be designed?
Light touch: The policy should comprise a “combination of principles, rules, and self-regulation”, says Pahle. In short: it shouldn’t be too prescriptive, not should it be too hands-off.
Should incorporate different institutions: Two types of institutions should exist:
- Gaming Commission: Or a statutory regulator responsible for setting standards, granting licenses, issuing rules and guidelines, and conducting compliance audits. Note: this is similar to how the erstwhile Data Protection Authority was envisaged in past data protection laws.
- Self-regulatory organisations (SRO): These should set standards for member organisations and ensure they’re followed. “SROs will ensure that the principles of regulation are met,” the report adds.
What should an online gaming policy regulate?
Pahle’s suggestions revolve almost entirely around risk mitigation for consumers and operators of skill-based online games.
1. Marketing and advertising
Minor matters: Ads shouldn’t be targeted at minors or those “exhibiting addiction behaviour”. Safeguards mentioned include:
- The legal age for playing should be specified on all marketing materials as well as the operator’s main website.
- Advertisements shouldn’t be allowed on media “predominantly meant for minors”—like radio programs, websites, or television channels, or newspapers and publications specifically meant for minors.
- Minors shouldn’t be targeted during advertising campaigns, particularly online advertising campaigns.
- Company memorabilia with the company’s name, logo, or game details shouldn’t be available to children.
- Sponsorships and advertisements at events “extensively” viewed by children should be evaluated carefully.
- Minors shouldn’t be allowed to appear in advertisements or endorsements for these platforms.
- These measures should extend to any player “identified as risky”—which presumably means people exhibiting addictive tendencies.
Managing misleading ads: Advertisements for these platforms “cannot be misleading about the likelihood of winning” a game. Also:
- Advertising material shouldn’t imply that playing games of skill can solve financial troubles or help make quick profits.
- “Operators can only claim a gift or prize or freebie to be free if it is indeed so and can be fulfilled completely to that extent,” the report added.
Keeping you informed: The industry should add “disclaimers, warning, and information” on all advertising material and on their website. For example:
- Minimum playing age for games of skill should always be displayed.
- Information on what responsible play means, how to ask for help if a player feels they’re at risk of addiction, and that the games are for entertainment purposes only should be included.
- Warnings on the likelihood of users losing money.
2. Looking Out for Minors
Following the money trail: Money used to play shouldn’t come from the bank accounts or wallets of minors. Operators can check for this by “ensuring that KYC and age verification takes places before any money can be deposited”.
Who’s who: New gamers should provide operators with “unique identifying details” before they’re allowed to play with real money. That can include: name, address, phone number, or bank details.
The fine print: Gamers should agree to the operator’s terms and conditions, particularly the provisions on the legal age of play. “These details must be confirmed and validated by the operator,” the report adds.
3. Ensuring Responsible Play
Bring in the operators: Consumers can’t be entirely expected to play responsibly. Operators need to play a “significant role in encouraging and guiding” consumers on responsible play.
Preventing addiction: Operators should use behavioural monitoring and big data techniques to prevent addiction.
Teaching time: New players must sit through a tutorial on responsible play before they participate in games of skill. Other consumers should go through it every now and then.
Setting limits: Operators should provide deposit and playtime limits on their platform. Players must set these self-determined limits, which can be reviewed and changed at their own discretion. They should be able to set daily, weekly, monthly, or yearly limits.
Limiting credit card usage: “India could also consider restricted/limited use of credit cards for making deposits for the purpose of playing games of skill,” Pahle adds.
4. Addressing Financial Fraud
The money laundering laws: Online gaming operators should be brought under the Prevention of Money Laundering Act (PMLA). This helps ensure that reporting and audit requirements are met.
Sounding the alarm: Gaming operators should be able to “effectively” report suspicious transactions to the authorities. High-value fund deposits or withdrawals should be reported to the concerned authorities.
No to crypto: Deposits should not be made through cryptocurrency or cash. Registered financial entities—like banks, credit and debit cards, and some mobile wallets—are acceptable. Duplication of accounts on a single platform shouldn’t be allowed. Also, Pahle adds that “Banking accounts, wallets details, and cards from which consumers deposit money must be linked to get a holistic idea of spending patterns”. Know-Your-Customer (KYC) details should be regularly updated too.
Creating a closed loop: Money withdrawn should return to the same source it was deposited from. In the case of debit and credit card transactions, it should be transferred back to the bank account. Ideally, platforms should limit the channels through which deposits can be made to five.
5. Addressing Consumer Grievances
Robust frameworks necessary: Operators should have strong consumer redressal mechanisms in place. For example:
- Publishing across platforms the contact details for grievance redressal points of contact (like phone and number), and procedures and timelines on complaint redressal.
- Setting up a 24/7 helpline to assist consumers with complaints and enquiries. “They must also be equipped to provide information to consumers who have queries on responsible gaming tools,” Pahle adds.
6. Saying Goodbye to Social Taboos
Reducing stigma: Operators are responsible for marketing responsible play so that the stigma surrounding gaming-related addiction reduces. They should also keep an eye out for consumers at risk of addiction and “ensure that suitable messages about where to seek help and whom they can talk to are prominently displayed for reasonable periods of time”.
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