Online Gaming: What Does The New Law Say?

In its effort to ban wagering and other harmful practices on online gaming platforms, the Ministry of Electronics and Information Technology, on Thursday, notified its final rules for the online gaming sector. A draft regulation for the same was issued in January 2023.

The new regulations that emphasise self-regulation attempt to define online gaming and permit online gaming for real money. The regulation, however, requires the online gaming industry to prepare an adequate framework to define what’s permissible and not permissible where the game involves real money.

The rules also include detailed KYC procedures for checking the identities of players and ways to deal with addiction and other problems that can be caused by online gaming platforms.

Here are some of the key highlights of the new rule:

The new rule attempts to define an online game as ‘a game that is offered on the internet and is accessible through a computer resource or an intermediary'.

The rules define an online real money game as a game where the player makes a deposit, in cash or kind, with the expectation of winning. Winning, in this case, need not necessarily be in cash and might as well be in kind.

This, however, does not mean all online games that involve money are permissible. It requires the Self-Regulatory Bodies to differentiate between what is permissible and what is not.

To be permissible, the game, in addition to being compliant with the due diligence provisions of the code, must also conform with the framework published by the SRO. Such a framework must ensure that such games do not go against the sovereignty and integrity of the nation. It must have safeguards against harm, including psychological and self-harm.

It should also include measures to safeguard children, including mechanisms for parental control and other age-rating mechanisms. Measures to safeguard players from addiction, financial loss, and fraud would also determine the permissibility of an online game.

The rules call for the creation of a number of self-regulatory bodies that will be in charge of checking whether an online money game is permissible or not. A company registered under Section 8 of the Companies Act that’s representative of the gaming industry can apply to the ministry to get designated as an online gaming self-regulatory body.

The rules require the board of directors of the entity to not only have members with experience in the online gaming sector but also have members with experience in psychology, child rights, and public policy.

The body is primarily tasked with the verification of online money games and framing policies for the same. Additionally, it would be expected to keep a database of its members and address any of their grievances.

In addition to a social media intermediary and a significant social media intermediary, the new rules also recognise an online gaming intermediary. This, basically, refers to a platform that gives users access to one or more online games.

An online gaming intermediary shall not only be responsible for performing due diligence on games on its platform but would also be responsible for getting permission for an online real money game from the Self-Regulatory Body. It shall also display this verification mark prominently and inform its users regarding their policies on deposit and withdrawal.

The rules also require these platforms to undertake extensive KYC procedures for their users. The procedure adopted by the intermediary, which offers such real money games, must be in line with the one adopted by the Reserve Bank of India.

Additionally, the intermediaries are barred from offering any credit or financing to the users and are expected to provide sufficient security for the deposits made by the users.

These stringent provisions applicable to platforms offering real money games can be extended to other online games if the government feels that such a game is against the sovereignty and integrity of the nation, public order, or is capable of causing harm.