Media and Gaming Legal Milestones, Trilegal Quarterly Roundup Oct-Dec 2022
INDIA (February 3, 2023)
Key Developments:
1. Online gaming and e-sports (as part of multi-sports events) to be additionally regulated by the central government
On 23 December 2022, the Government of India (Allocation of Business) Rules, 1961, (AOB Rules), which allocates the business of the government to be transacted by various ministries and departments, were amended. Through this amendment, matters relating to online gaming were allocated to the Ministry of Electronics and Information Technology (MeitY), and e-sports, as part of multi-sports events, were allocated to the Department of Sports under the Ministry of Youth Affairs and Sports.
Following the amendment to the AOB Rules, the MeitY has proposed, on 2 January 2023, an amendment to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code), Rules, 2021 (Intermediary Rules). The draft amendment proposes to regulate any intermediary offering one or more online games as an ‘online gaming intermediary’ under the Intermediary Rules. This is likely to have a significant regulatory impact on such intermediaries, as it would mean certain additional due diligence requirements and compliances (such as displaying a registration mark on all online games registered by a self-regulatory body, undertaking user identity verification, appointing a resident grievance officer, chief compliance officer and nodal contact person, and undertaking Know Your Customer procedures) are to be undertaken by online gaming intermediary.
Presently, betting and gambling are state subjects under the Indian Constitution, and this consequently gives States the power to legislate on these activities. With the amendment to AOB Rules, online gaming intermediaries may have to comply with both central and state regulations applicable to their businesses. This is likely to increase the cost of doing business for intermediaries and may require them to revisit their existing product and/or service offerings.
2. Regulatory uncertainty on online games and gambling in Tamil Nadu
On 19 October 2022, the Tamil Nadu state assembly passed the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Bill, 2022 (TN Online Gambling Bill), seeking a ban on online gambling and regulation of online gaming, which is still pending approval from the Governor of Tamil Nadu. The introduction of the TN Online Gambling Bill followed the promulgation of the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Ordinance, 2022 (TN Online Gambling Ordinance) which expressly laid down a prohibition on ‘online gambling’ and offering online games of chance as specified in the schedule (such as rummy and poker) for money or other stakes. This ordinance was issued by the government since the Madras High Court had struck down the Tamil Nadu Gaming and Police Laws (Amendment) Act of 2021, which sought to ban games like rummy and poker in cyberspace with stakes, as being unconstitutional.
Given that the TN Online Gambling Ordinance lapsed on 27 November 2022 and the TN Online Gambling Bill is yet to receive the governor’s assent, regulatory uncertainty on online games and gambling persists in Tamil Nadu, which may in turn impact the ability of gaming platforms to offer such games in Tamil Nadu.
3. Revised guidelines for broadcasting activities to reduce compliance burden and attract foreign investment
With an objective to reduce the compliance burden on companies (by extending uplinking permission to five years) and attract further foreign investment (by granting permission to entities to uplink foreign channels from Indian teleports), the Ministry of Information and Broadcasting (MIB) has released the Guidelines for Uplinking and Downlinking of Satellite Television Channels in India, 2022 (2022 Guidelines) on 9 November 2022, replacing the erstwhile 2011 guidelines on these aspects.
While the 2022 Guidelines are largely aimed at easing business operations, it is likely that obligations, such as the requirement for companies/LLPs (that have been granted permission under these guidelines) to seek MIB approval prior to appointing a new Chief Executive Officer, Director or Designated Partner, as applicable, could impact timelines associated with the restructuring of businesses and create possible entry barriers. Other onerous obligations include requiring companies/LLPs to undertake public service broadcasting for a minimum period of thirty minutes a day on themes of national importance and social relevance.
In the upcoming months, it will be interesting to see how the classification of online gaming entities as ‘intermediaries’ will impact business structures, and the manner in which entities will deal with the additional compliance requirements. The government has also recently unveiled new policy reforms for the broadcasting sector, and it remains to be seen how stakeholders view and implement these reforms across the industry.
The original version of this article was first published in the Trilegal Quarterly Roundup.
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Article By: Jyotsna Jayaram, Rachana Rautray, and Padmavathi Prasad
SOURCE: Trilegal / Lexology.
