Gaming Industry’s Take on New Online Gaming Rules and Ban on Betting

April 12, 2023 | Online Gaming
Mumbai, India (April 8, 2023) —  Recently the Ministry of Electronics and IT (MeitY), Government of India (GOI) announced a crucial decision of banning betting in India. Apart from that the government has introduced new rules regarding online gaming in India.

This announcement comes in the wake of GOI’s attempt to streamline and enforce strong rules on online gaming as well as betting sites. The declaration has created a furore in the industry but it has also given clarity to a lot of people regarding real money gaming/games.

Here’s what the industry has to say about MeitY’s decision:

Asian Esports Federation (AESF) Esports Federation of India and vice president director  Lokesh Suji said, “We express our utmost gratitude to Rajeev Chandrasekhar and MeitY team for the clear distinction between online gaming and real money gaming/iGaming under the new amendments made under the Information and Technology Act.

This monumental decision will at last liberate esports from the conflation with iGaming/RMG. For years, ESFI has been diligently advocating for the separation of online gaming and real money gaming/iGaming, and we are elated to finally see the government take this bold step that showcases their unwavering commitment to fostering a safe and responsible video gaming environment in the country.

These amendments will act as a catalyst in propelling India towards becoming a powerhouse in the world of video gaming and accelerating its overall development. It’s a great start, but still many miles to go.”

Games24x7 co-founder and co-CEO Trivikraman Thampy said, “The amendments in the IT rules for the online gaming industry, which has been formulated and finalised after extensive public consultations by MeitY, is a significant positive development for the online gaming industry. We welcome these regulations wholeheartedly and thank the ministry for extensive dialogue with and consideration of the viewpoints of consumers as well as industry representatives. The clarity provided by the rules will bolster investor confidence in the sector furthering opportunities for growth and innovation for legitimate domestic gaming platforms. With consumer protection and responsible gaming at the forefront, the regulatory framework will aid in arresting the proliferation of offshore and illegal gambling and betting platforms in India, which operate with little regard for consumer interest.

We are extremely grateful to the ministry for having considered and adopted the recommendations that were made on the draft rules during the consultation period. The clarity in the definition of online gaming, including specific permissible online real money games, will ensure there is a clear distinction between online gaming platforms from betting and gambling, which will not be permitted. The allowance for multiple self-regulatory bodies will enable the industry to be adequately represented according to the varying nature and operational models of online games. Additionally, the amended rules will help clear up state-level ambiguity, promoting uniformity and standardisation across the country. The ‘Self-Regulatory Bodies’ certification process will also ensure that games are free of bots, building consumer confidence in the industry’s fairness and transparency.

Many of the rules that will come into effect with this amendment including age verification, responsible gaming practices, etc are already being followed by us as part of the code of conduct of the E-Gaming Federation (EGF) of which we are members. These rules will support this sunrise sector to become a significant contributor to India’s techade.”

Technology and Gaming lawyer Jay Sayta said“The amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules pertaining to online gaming were notified and published in the official gazette today (April 6, 2023).

Concerns raised by me in January 2023, when the draft rules were released, that the rules go beyond the scope of the parent legislation, i.e., the Information Technology Act, 2000 and the legislative powers of the state to govern such online games remain. It is also not clear whether the rules framed under the powers to prescribe due diligence requirements for intermediaries, i.e., those providers not responsible for providing content can be applied to online gaming platforms that actively decide and offer their own gaming content, in the manner that the central government is seeking to apply to them.

Further, the rules do not clearly define online real money games to be games involving a predominant or substantial degree of skill and the rules do not clearly demarcate games involving a substantial degree of skill, which are legal and constitutional activities as separate from games of chance or gambling/betting activities.

The problem is compounded further by the fact that the rules leave the decision as to the permissibility of a game to be legitimate game to the vagaries of ‘Self-Regulatory Bodies’ who are further required to not permit any online real money game that involves ‘wagering on any outcome’. Compounding the confusion, the central government has not clarified or made any provision in the rules that clarify or state that staking money on games classified as skill-based games would be permitted.

On the positive side, according to the new rules, intermediaries such as hosting providers, news websites, social media websites, search engines etc. cannot host any game that is not recognised as a permissible online game by a self-regulatory body (primarily targeted at offshore betting portals) and cannot publish any advertisement or surrogate advertisement or promotion of an online game that is not a permissible online game (i.e. gambling/betting games or platforms).

The new rules are therefore expected to curb the menace of illegal offshore betting and gambling websites and their surrogates that are openly flouting the law and advertising through various means. The new rules would help in stopping the promotional content of offshore betting websites and pave the way for the swift blocking of domains and websites/apps engaged in illegal gambling or betting.

As per Rule 4B of the new rules, most of the obligations and compliance requirements for online gaming companies do not come into force immediately, and would kick in only three months after three self-regulatory bodies are approved by the Ministry of Electronics and Information Technology or as and when the central government notifies.”

Alpha Zegus founder and director Rohit Agarwal said, “Finally – video games and real money gaming have been given two separate identities! It was a debate that has gone on for quite a while now, and it’s a relief that it’s finally seen the light of day. The two industries can now have their own policies, guidelines, and laws that regulate them, and the reported numbers can also stay distinct. Great move by the government!”

TFG founder and CEO Jaya Chahar said, “The appointment of SRO’s is a welcoming and firm step by MeiTY towards regulating the online gaming space. The appointment will eliminate the confusion between legitimate online gaming players and offshore betting websites. This will bring further clarity to the Indian gaming industry which is at the cusp of exponential growth.” co-founder Rahul Singh said, “I think the new rules are a welcome step from the GOI. The online gaming industry, especially the real money gaming industry, has been shrouded in much ambiguity. We’ll now have a much clearer picture on what’s permissible and what’s not.

This definitely impacts the P2E industry in a big way. Traditional Web3 P2E games involve buying into a game via NFTs and earning rewards from them, later selling these NFTs off for a profit as well. It’s not clear yet how these will be treated by the self-regulatory body. Betting is clearly outlawed, rest is up to their discretion.”

We’ll have to wait and watch to see how these new rules and regulations will play out in the long run for the gaming industry.

Coda Payments APAC managing director Yash Srivastava, “The highly-anticipated regulations for online gaming have lived up to the industry expectations. The responsiveness on the government’s part to consider feedback from stakeholders is much appreciated, and we welcome the clarity that the regulations offer on ‘outcome-based’ gaming. The regulatory framework, with multiple SROs, updated ‘KYC’ norms, grievance redressal systems, and the onus on self-regulation, will provide the gaming sector with a much-needed impetus to become a USD 5 billion industry.”

SOURCE: Animation Xpress.
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