The burgeoning online gaming industry in India is due for a regulatory makeover, with the Ministry of Electronics and IT (MeitY) proposing several significant changes. The Draft Rules for Online Gaming are seen as an amendment to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021. These changes aim to introduce stronger governance and monitoring mechanisms and safeguard the interests of players.
Establishment of Self-Regulatory Bodies
According to the proposed rules, online games will be required to register with a self-regulatory body before they can legally operate in India. Each self-regulatory body will consist of a five-member board of directors, with diverse expertise in fields such as online gaming, public policy, IT, psychology, and medicine. Multiple such bodies are likely, each of which will need to keep the Centre informed about their game registrations and provide reports detailing their registration criteria.
Increased Due Diligence Requirements for Online Gaming Firms
The draft rules also require online gaming firms to undertake stricter due diligence measures. These include Know Your Customer (KYC) procedures on par with standards set by the Reserve Bank of India, transparent protocols for money withdrawal and refund, and fair distribution of winnings.
Certification Requirements
Online gaming companies will need to secure a Random Number Generation Certificate under the new rules. This certificate indicates that the games offered by the company generate outcomes that are statistically random and unpredictable. Additionally, the companies will need to obtain a “no bot certificate” from a reputable certifying body.
Betting Restrictions
Betting on game outcomes will be prohibited under the new rules. This restriction seeks to maintain the integrity of the gaming platforms and dissuade unethical practices.
Compliance Officers Appointment
In-line with other digital platforms such as social media and e-commerce, online gaming companies will also have to designate a compliance officer to ensure adherence to the norms. They will also require a nodal officer to facilitate interaction with the government and assist law enforcement agencies, and a grievance officer to address user complaints.
Impetus of These Rules
The primary motivation behind these rules is to promote safer online gaming environments. Given that nearly 40 to 45% of gamers in India are women, the need for a secure gaming ecosystem becomes more critical. These rules are an encouraging step towards comprehensive regulation of the sector and are expected to diminish the state-wise regulatory fragmentation, a major hurdle for the gaming industry.
The Promising Future of Indian Online Gaming Industry
The Indian mobile gaming industry is projected to hit USD 5 billion by 2025. With a compound annual growth rate (CAGR) of 38% from 2017 to 2020, this industry’s growth far outpaces those of China (8%) and the US (10%). With continued growth expected, reaching a CAGR of 15% and revenue of Rs 153 billion by 2024, an effective regulatory framework for online gaming in India has never been more crucial.
