MeitY passes new IT Rules banning games involving betting

MeitY passes new IT Rules banning games involving betting

The compliances will come into force after three months

The Ministry of Electronics and Information Technology (MeitY) has introduced new Information Technology Rules, 2023, finally banning games that involve betting and wagering.

The rules also prescribe a framework of multiple self-regulatory organisations (SROs) comprising industry representatives, educationists, and others including child experts and psychology experts.

As per the rules, an online game is defined as a game available on the internet and is accessible by users through a computer device or an intermediary by another name for a gaming service provider.

The new rules define real money games as those that involve users making deposits in cash or kind with an expectation of earning winnings on the deposits.

The rules mandate the establishment of an SRO for the registration and regulation of online gaming platforms also referred to as ‘intermediaries’. These intermediaries are platforms that ‘offer one or more than one online game’.

The Minister of State for Information Technology Rajeev Chandrasekhar stated that multiple SROs would be set up having participation from stakeholders, including but not limited to the industry. He added the framework would allow all online gaming to be determined as permissible or not with the help of SROs. He said the rules aimed to make India’s internet, “Open and safe, trusted and accountable.”

The criteria for an online game being permissible or not would depend on whether there was any form of wagering involved. If it is so, the SRO will be within its rights to deem an online game impermissible.

The online gaming sector welcomed the new rules, terming the regulations turning into more investment opportunities.

Trivikraman Thampy, the co-founder and co-CEO of Games24x7 said, “The self-regulatory bodies certification process will ensure that games are free of bots, building consumer confidence in the industry’s fairness and transparency.”

Paavan Nanda, the co-founder of WinZO remarked, “The overall recognition of online games of skill by way of inclusion as the third form of intermediary after social media and content-related publishers/OTT players, is beneficial for Goods and Services Tax (GST) differentiation from gambling, providing the required stability of regulation, and facilitating a level-playing field for all games of skill.”

Dilsher Malhi, the founder and CEO of Zupee said, “This is a very significant development for the online gaming industry at large, enabling gaming companies to be more responsible and innovative at the same time.”

Sai Srinivas, the CEO and co-founder of MPL commented, "We anticipate that this will also help reduce regulatory fragmentation at the state level, create Nitish Mittersain, the founder and CEO of Nazara Technologies stated, “The rules notified today are landmark steps that will immensely help the gaming industry and provide a lot of clarity on the sector.”

Roland Landers, the CEO of the All-India Gaming Federation praised the government and said it was a decisive first step for comprehensive regulation of online gaming.

Rajan Navani, the CEO and founder of JetSynthesys remarked, “By setting up a framework of multiple self-regulatory organisations, comprising diverse stakeholders, a strong foundation has been laid to give clarity to developers, investors, and gamers on how this fast-growing industry can create opportunities.”

Importantly, the new rules are not limited to online gaming as they also tackle the issue of misinformation. A fact-checking agency would be established to check content related to the government. Intermediaries hosting red-flagged content would no more get Section 79 protection.

However, there have been certain concerns that the rules go beyond the scope of the parent legislation, the Information Technology Act, 2000, and the legislative powers of the state to govern such online games still remain.

Jay Sayta, the technology and gaming lawyer, was apprehensive, “It is not clear whether the rules framed under the powers to prescribe due diligence requirements for intermediaries, i.e., those providers not responsible for providing content, can be applied to online gaming platforms that actively decide and offer their own gaming content, in the manner that the central government is seeking to apply to them.”

He added that another major concern was, “The rules do not clearly demarcate games involving substantial degree of skill, which are legal and constitutional activities as separate from games of chance or gambling/betting activities.”

It was felt that the central government had failed to make any provision in the rules that give clarity on whether staking money on games classified as skill-based games, would be permitted.

Meanwhile, most of the compliances for online gaming intermediaries will not come into force immediately. They will be implemented in three months after three self-regulatory bodies have been approved by MeitY, or as and when the centre notifies.