Online gaming

Online gambling industry calls on government for soft regulation

Many stakeholders in the online gaming industry have argued for co-regulation, modeled on the model in place for the OTT (over-the-top) industry under the rules on information technology (directives for Intermediaries and Code of Ethics for Digital Media), 2021, at a recent meeting with Union Minister of State for Electronics and Information Technology Rajeev Chandrasekhar, according to sources who attended the the meeting. The sources spoke to MediaNama anonymously as they were not authorized to speak to the media.

The meeting brought together nearly 40 people including MeitY officials. Major game companies like Dream11, MPL, Games24x7, Nazara among others were present at the meeting. There were also representatives from gaming associations and Web3 start-ups. Stakeholders said they were looking for a flexible regulatory framework, as online gambling was a nascent industry and regulations needed to “foster innovation”, according to the source.

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What is the model according to IT rules, 2021: There is a three-step grievance system under the IT Rules 2021, where an aggrieved person can first lodge a complaint with the content publisher. They should resolve it within 15 days. The complainant can then appeal to a self-regulatory body formed by the publishers to review the complaint if they are not satisfied with the resolution or if their complaint is not addressed within the time allowed. The final step involves an interdepartmental committee formed by the Ministry of Electronics and Information Technology (MeitY).

Why is this important: The online gambling industry is reeling from regulatory uncertainty as several states come up with different regulations. The meeting was important as it gave the industry the opportunity to formally voice its concerns before the MeitY for the first time.

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What topics were discussed during the meeting?

Discover a self-regulated organization: There was a consensus in the gaming industry that there should be no statutory oversight body, sources told MediaNama. The consensus was in reaction to a private member’s bill from the Lok Sabha which proposed an Online Gambling Commission (OGC). Instead, the industry suggested that the government approve a self-regulatory organization (SRO). The minister has asked stakeholders to come back with suggestions on what such a model will look like in reality, the sources said.

Drafting a uniform policy: The industry has been told by Rajeev Chandrasekhar that the government is seeking to regulate the sector with a uniform policy, the source said. This has been one of the industry’s top demands due to state bans across the country. At the time of writing, states such as Karnataka, Tamil Nadu, Andhra Pradesh and Kerala have moved to ban online gambling in their jurisdictions. However, most of these bans were struck down by the respective high courts later.

  • The center is responsible for: The gambling industry has been emboldened by court rulings which state that a game of skill and it does not involve betting and gambling is not within the jurisdiction of the state government , a source told MediaNama. That’s why the companies think the Union government can set its own policy, the source added.

Distinguish between a game of skill and a game of chance: Many industry stakeholders want the government to publish clear definitions of what constitutes a game of skill and a game of chance, the sources say. The government has asked the industry to submit suggestions on what the parameters should be to define a game of skill. The minister was briefed on the weak spots in the industry, the source added. For their part, there was no confusion among industry stakeholders about what a game of skill is and how to categorize the two.

Acting against offshore betting: The industry also expressed concern about the proliferation of offshore betting companies and called on the government to take action against them as they were illegal. The presence of these companies blurred the line between what is legal and what is illegal and it was incumbent on the government to act quickly against these companies, according to the source. Chandrasekhar pointed out that MeitY can regulate anything on the internet through the Information Technology Act 2000 but not betting companies as gambling/betting is a state subject .

There have also been discussions around the problem of game addiction resulting from in-app purchases and Battlegrounds Mobile India (formerly PUBG). The problem of drug addiction has become acute as evidenced by several news reports from across the country. A policy will have to put in place checks and balances to address the problem of substance abuse in a comprehensive way.

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What will be the role of the panel set up by the Union government?

The work of drafting a uniform policy, promised by the Union government, began last month when the Union government set up a committee, the Hindustan Times reported. The committee was asked to find a way to regulate online gambling and identify a ministry to oversee it, the report adds.

The committee will be made up of the following people:

  • Chairman and CEO of NITI Aayog,
  • Secretaries of the following ministries-
    • House,
    • Sports and Youth Affairs,
    • Information and dissemination,
    • Electronics and IT

The committee will study regulatory regimes around the world and pick up on best practices in its recommendations, HT said. It will develop a structure of the necessary proposed laws and consult with experts. It is expected to submit a report in three months, HT said.

The committee should address the following parameters, according to HT:

  • The ease of doing business,
  • Compliance,
  • Fair rules of the game,
  • Protection against user harm such as addiction.

What does the private member’s gambling regulation bill propose?

A private member’s bill by Lok Sabha MP Dean Kuriakose proposed an Online Gambling Commission (OGC) to regulate the online gambling industry earlier this year.

The Online Gambling (Regulation) Bill 2022 was necessary to prevent fraud and abuse as India has around 420 million active online gamers and the industry is expected to reach $5 billion by 2025, according to the project. He added that these games have addictive properties and children are likely to succumb to peer pressure and spend on “in-app purchases” available in these games.

“..more people will be exposed to online gaming in the years to come. The effect of long hours of play, especially among teenagers, is well known. It can interfere with normal socialization, cause physical and mental harm, and even financial loss,” the bill reads.

The OGC would deliberate on the limits of how much time one can play everyday and how much money one can spend on such games etc.

He was also responsible for performing the following functions:

  • Ensure the monitoring of the operation of online gaming websites,
  • Prepare online gambling periodicals or reports for the Union Government,
  • Propose measures to control or curb illegal online gambling,
  • Granting, suspending and revoking the license of online gaming websites.
  • Determine fees for license applications and renewals for these websites.

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