• The government has proposed self-regulatory bodies for online gaming companies operating in India in a draft amendment to IT rules, but will not allow betting.

• The draft online gaming rules issued on January 2 proposed verification of users and measures to safeguard users against the risk of gaming addiction and financial loss.

• The Information Technology Act (IT Act), 2000, was enacted with a view to give a fillip to electronic transactions, to provide legal recognition for e-commerce and e-transactions, to facilitate e-governance, to prevent computer-based crimes and ensure security practices and procedures. The Act came into force on October 17, 2000.

• The Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 has been framed in exercise of powers under section 87(2) of the IT Act, 2000 and in supersession of the earlier Information Technology (Intermediary Guidelines) Rules, 2011.

What is the need for new amendments?

• Online game means a game that is offered on the Internet and is accessible by a user through a computer resource if he makes a deposit with the expectation of earning winnings. The deposit is made or committed to, in cash or in kind, by the user for participating in an online game.

• With the user base of online games growing in India, the need has been felt to ensure that such games be offered in conformity with Indian laws and that the users of such games be safeguarded against potential harm. 

• Further, with a view to enable consideration of issues related to online gaming in their totality, government of India has allocated matters related to online gaming to the ministry of electronics and information technology.

• Minister of State for Electronics and IT Rajeev Chandrasekhar said online gaming companies will not be allowed to engage in betting on the outcome of games under the principle laid in draft rules.

• “Online gaming is a $200 billion industry. India has a tremendous amount of potential in terms of startups and investments. Our goal is that more and more investment comes in, and startups in the gaming segment to grow,” the minister said.

• The minister said that about 40-45 per cent of gamers are women and the feedback that the government has received shows that there is a considerable amount of work that needs to be done to make online gaming safe for women.

• Against this backdrop, after taking into account inputs received from various ministries/departments concerned as well as other stakeholders, the ministry has prepared draft amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021. 

• The draft amendments are aimed at addressing the said need, while enabling the growth of the online gaming industry in a responsible manner.

Key points of the draft amendments:

• The draft amendments envisage that an online gaming intermediary shall observe the due diligence required under the rules while discharging its duties, including reasonable efforts to cause its users not to host, display, upload, publish, transmit or share an online game not in conformity with Indian law, including any law on gambling or betting. 

• Moreover, it shall observe additional due diligence by displaying a registration mark on all online games registered by a self-regulatory body and informing its users regarding its policy related to withdrawal or refund of deposit, manner of determination and distribution of winnings, fees and other charges payable and KYC procedure for user account registration. 

• Self-regulatory bodies will be registered with the ministry and may register online games of such online gaming intermediaries who are its members and which meet certain criteria. Such bodies will also resolve complaints through a grievance redressal mechanism.

• Additional due diligence for companies by displaying a registration mark on all online games registered by a self-regulatory organisation (SRO) and informing its users regarding its policy related to withdrawal or refund of the deposit, manner of determination and distribution of winnings, fees and other charges payable and KYC procedure for user account registration.

• It has proposed the appointment of key managerial personnel or a senior employee of the gaming firm, who should be an Indian resident, as Chief Compliance Officer and the online gaming platform to have a physical contact address in India published on its website or mobile-based application.

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