Regulating Online Gaming

1. Key Takeaways

The Ministry of Electronics and Information Technology (“MeiTY”), vide notification dated April 6, 2023 released the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2023 (“Amended Rules”), whereby the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2021 were amended in order to provide for certain regulations with respect to online gaming industry. View complete Amended Rules

• The following new terms have been defined:

a) online game (Rule 2(1)(qa))

b) online gaming intermediary(Rule 2(1)(qb))

c) online gaming self-regulatory body(Rule 2(1)(qc))

d) online real money game (Rule 2(1)(qd))

e) permissible online game (Rule 2(1)(qe))

f) permissible online real money game (Rule 2(1)(qf))

• Online self-regulatory body (SRO) shall verify an online real money game as a permissible online real money game. Main criteria would be to satisfy that (Rule 4A (3)):

(a) the online game doesn’t involve wagering on any outcome

(b) the users are at least 18 years of age

• Obligations on online gaming intermediaries to ensure compliance under IT act and also to not show, distribute or host any data that can cause harm to the users.

• Obligations on permissible online real money game providers:

(a) displaying a visible mark verification by such online self-regulatory body on such games

(b) informing users about withdrawal or refund of deposit policies

(c) the manner in which the determination of distribution of winnings, fees and other charges is done

2. New Concepts Introduced

Online games (Rule 2(1)(qa)) – A game that is offered on the Internet and is accessible by a user through a computer resource or an intermediary.

Online real money game (Rule 2(1)(qb)) – Online games where users make deposits in cash or kind with the expectation of earning winnings on that deposit. Examples of online real money games shall be: Dream 11, My Premier League and My11Circle.

Permissible online real money game (Rule 2(1)(qc)) – Online real money game verified by an online gaming self-regulatory body.

Permissible online games (Rule 2(1)(qd)) – (a) Permissible online real money game; or (b) any other online game that is not an online real money game.

Online self governing Body (Rule 2(1)(qe)) – MeitY may designate as many online gaming self-regulatory bodies as it may consider necessary for the purposes of verifying an online real money game as a permissible online real money game.

Online gaming intermediary (Rule 2(1)(qf)) – Any intermediary that enables the users of its computer resource to access one or more online games.

3. Changes in the Gaming Ecosystem

Business of the gaming entity	Law before the Amendment	Effect of the amendment
Online Gaming Intermediaries	Not regulated earlier.	Will be covered under the IT Act, 2000 and shall have a plethora of obligations. List of obligations found in further slides
Online Fantasy Sports	Online fantasy sports, though not heavily regulated, is permitted all over India except few states namely • Assam, Sikkim, Nagaland, Andhra Pradesh, Odisha, Telangana and Tamil Nadu.	Online games covered here shall be taken up for consideration by the online self-regulatory body to be classified as a permissible online real money game, provided that the same (Rule 4A (3)): (a) does not involve wagering on any outcome (b) the user is at least 18 years of age.
eSports	Not regulated. However, recognised as a part of multi-sports events in India and recognised by the Ministry of Youth Affairs and Sports.	With respect to eSports, the online self-regulatory body shall ensure that its rules and regulations, privacy policy or user agreement inform the users not to host, display, upload, modify, publish, transmit, store, update or share any information that is in relation to an online game which causes harm (Rule 4 and Rule 5 (11)).
Online Casino Games including Poker	• Sikkim allows casino games, such as Casino and Blackjack • Nagaland and West Bengal allow Poker • Gujarat bans Poker.	Online games covered here shall be taken up for consideration by the online self-regulatory body to be classified as a permissible online real money game, provided that the same (Rule 4A (3)) : (a) is permitted by the applicable state enactment within a particular state’s territory (b) does not involve wagering on any outcome (c) the user is at least 18 years of age.

Changes in the gaming ecosystem

4. Obligations of Online Gaming Intermediary

• Reasonable security practices and procedures as prescribed in the Information Technology (SPDI) Rules, 2011 (Rule 3(1)(i)).
• To retain information for a period of 180 days from cancellation or withdrawal of his registration in case information is collected from user for registration (Rule 3(1)(g)).
• To not deploy / install / modify technical configuration of computer resource or become party to any act that may change operations such computer resource thereby, circumventing any law (Rule 3(1)(g)).
• To publish the rules and regulations, privacy policy and user agreement on its website or mobile based application (Rule 3(1)(a)) :

a) To inform its users of its rules and regulations, privacy policy or user agreement (or any changes) at least once in a year (Rule 3(1)(f))

(Online real money game intermediary shall inform its users of such changes as soon as possible, not later than 24 hours after such change is effected)*

(b) To not display, upload, publish or share any information that (Rule 3 (1) (b) of Amended Rules)–

• related to online games that causes a user harm

• is not verified as a permissible online game

• is in the nature of advertisement of an online game that is not permissible

• violates any law

(c) To include provisions to inform the user not to host, display, upload or share any information that belongs to another person, is defamatory, obscene, pornographic, pedophiliac, invasive of another‘s privacy, including bodily privacy, racially or ethnically objectionable, relating or encouraging money laundering or gambling, is harmful to child, infringes any patent, trademark, copyright or other proprietary rights, violates any law for the time being in force; any deceiving or misleading information, impersonates another person; threatens the unity, integrity, defense, security or sovereignty of India, contains software virus or any other computer code (Rule 3(1)(b)).

5.Online Self Regulatory Body

Criteria to apply (Rule 4(A)) –

• Should be a company
• Membership is representative of gaming industry
• Members are offering & promoting online games in a responsible manner
• Board of directors –individuals with special knowledge or practical experience suitable for the performance of functions of self-regulatory body
• the MOA and AOA of such entity includes provisions regarding grievance redressals, framework for disclosure and accountability of the members of such body, etc.

Responsibilities (Rule 4(A)) –

• to designate an online real money game (ORMG) as permissible
• to prominently publish a framework for verifying an ORMG on its portal
• to publish and maintain an updated list of all permissible ORMG verified by it
• to ensure that ORMG so verified by it shall display a demonstrable and visible mark of such verification stating that ORMG is verified by the body as permissible
• publish framework for redressal of grievances and the contact details of the Grievance Officer on its portal. An applicant aggrieved by decision of such body with respect to verification may make a complaint which is acknowledged by the Grievance Officer within 24 hours and resolved within 15 days from the date of its receipt.

6. Conclusion

The new rules create an umbrella framework for the online gaming industry. While the distinction of game skill/ game of chance has not been dealt with in these rules, it lays down the basic stepping stone to crystallize the online gaming industry’s challenges and provides clarity on various concepts that were hitherto only industry parlance.