Regulating Online Gaming In India – Challenges & Recent Developments

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12/20/2023

The online gaming industry in India has experienced significant growth in recent years, driven by factors such as the increasing availability of the internet and smartphones, a young and tech-savvy population, and the COVID-19 pandemic leading to a surge in online gaming. The majority of the market is dominated by mobile gaming, with popular genres including casual, puzzle, and strategy games. While the industry has seen a rise in professional gamers and e-sports tournaments, it still faces challenges such as a lack of clear regulations and a shortage of funding for Indian gaming startups. Despite these challenges, the industry is expected to continue to grow in the coming years, with more investment and government support. However, to fully realize its potential, the industry will need consistent and transparent regulations that are applicable across all states. Let’s have a look at the current legal regime for the online gaming industry.

Current Legal Regime

The online gaming industry in India currently operates in a legal grey area, as there is no separate legislation specifically for online gaming. This has led to a lack of clarity in interpreting laws, making it difficult for the courts to determine the status of online games in India. Online gaming platforms, gambling, and lotteries must comply with the techno-legal requirements under the Information Technology Act, 2000. These include protecting users’ personal information and providing a mechanism for resolving grievances. The current laws and limitations in place have an impact on both the gaming industry and the public. The need for clear and consistent legislation across the country has become increasingly important as online gaming has become a national domain.

Recent Update

The Indian government has recently taken steps to clarify and regulate the online gaming industry through the designation of the Ministry of Electronics and Information Technology (“MeitY”) as the primary government body responsible for overseeing the sector. This decision was announced through amendments to the Allocation of Business Rules and aims to provide a clear and consistent framework for all stakeholders in the industry. Additionally, the Department of Sports under the Ministry of Youth Affairs and Sports has been designated as the nodal Ministry for e-sports as part of multi-sport events. Furthermore, the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 have been implemented, placing specific obligations on intermediaries offering online games, such as due diligence, failure to adhere to these guidelines may result in intermediaries losing their exemption from liability for third-party information or data hosted on their platforms.

To bring more clarity, MeitY has proposed an amendment to bring online gaming companies under the jurisdiction of the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules of 2021. This amendment classifies online gaming platforms as intermediaries, similar to search engines and social media platforms, and requires them to register with a self-regulatory body (“SRO”) that will certify and monitor the games offered on their platform.

The SRO will also ensure that the games do not pose a threat to national sovereignty or safety and that players are properly verified and adhere to Know Your Customer norms. In addition, online gaming platforms will be required to establish a grievance redressal mechanism, have a physical address in India, and comply with any other regulations set by the SRO.

Legal Challenges

The online gaming industry in India faces several challenges, including a lack of clear regulations and a shortage of funding for Indian gaming startups. The ambiguity in the laws and the lack of separate legislation for online gaming make it difficult for the industry to fully develop and flourish. Additionally, the lack of consistent regulations across states can also create confusion and hindrance for the industry.

The lack of proper infrastructure for online gaming, including a lack of public charging stations, can also pose a challenge. The industry also faces challenges in terms of data protection and privacy, as they are responsible for keeping the personal information of users intact and complying with the techno-legal compliances under the Information Technology Act, 2000. Overall, these challenges can make it difficult for the industry to fully capitalize on its potential and for consumers to fully enjoy the benefits of online gaming. Adding to the uncertainty, the Law Commission of India has requested MeitY to delay its policy on online gaming until they can provide a comprehensive report on the subject.

The Road Ahead

The online gaming industry in India has the potential to become a major contributor to the country’s economy, with a massive projected growth rate. The industry is driven by a combination of factors including a large and young population, increasing internet and smartphone penetration, and a growing interest in gaming and esports. To fully realize its potential, the industry must address the challenges it currently faces such as a lack of clear regulations and a shortage of funding for Indian gaming startups. To overcome these challenges, the government must have regulations in place, focus on the development of local content and localization of games, and focus on building a strong e-sports ecosystem in India. Overall, the online gaming industry in India has enormous potential and with the right support and investment, it can become a major contributor to the country’s economy and culture.

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