New Online Gaming Laws in India – Banned Games

Introduction

The gaming industry has seen a massive surge in popularity over the past few years and has witnessed exponential growth, with millions of players indulging in various forms of gaming. The rise of esports and professional gaming in India has gained propulsion with organised competitions, leagues, and tournaments. Online gaming is attracting a diverse audience with the proliferation of smartphones and internet access. Furthermore, many Indian gamers are attaining international recognition and earning substantial incomes by opting for gaming as a viable career option, following their interest and passion. However, gaming in India also faces challenges such as regulatory issues, concerns about addiction and health, and associated social stigmas. Despite these challenges, gaming continues to thrive in India, providing millions of individuals with a platform for creative expression, social interaction, and economic opportunities. This blog attempts to understand the prevailing laws concerning e-gaming and analyze the new gaming laws and rules established in India under the auspice of its concerned authorities.

Prevailinggaming laws in India that apply to gaming platforms

Online gaming laws in India are governed by a combination of federal and state laws, including the Public Gambling Act of 1867, the Information Technology Act of 2000, and state-specific gambling and betting regulations. These laws prohibit or restrict certain forms of online gambling while allowing for skill-based games and fantasy sports, subject to certain conditions. Moreover, online gaming platforms may also be subject to Foreign Exchange Management Act (FEMA) regulations for foreign currency transactions and Goods and Services Tax (GST) for taxable services. It is essential for online gaming platforms operating in India to comply with these laws, if applicable, to avoid legal and financial risks. As betting and gambling are prohibited in India, there is usually a thin line between them and certain e-games. Therefore, non-compliance may lead to legal risks.The Supreme Court in the case of RMD Chamarbaugwala v Union of India AIR 1957 SC 628 observed that in games where a substantial degree of skills is involved, the game cannot be categorized as gambling. In addition, Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, was introduced under the Information Technology Act 2000, regulating online content, including online gaming platforms. It mandates that online gaming platforms must follow specific due diligence requirements, such as age verification of users, content moderation, and complaint redressal mechanisms. Recently, On April 6, 2023, India introduced a new legal regime for operators of online games by introducing amendments to these rules, which are elaborated hereunder:

New Online Gaming Laws ConcerningGaming Intermediaries' Regulations

The Ministry of Electronics and Information Technology (“MEITY”) put forward a novel co-regulatory regime for online gaming intermediaries (“OGI”) through proposed amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (“Intermediary Rules”). These amendments are to be referred to as ‘gaming amendments’.

New rules came after the draft regulations that were issued in January 2023. These rules aim to enforce greater due diligence to be undertaken by online gaming platforms and social media intermediaries concerning online games as well as misleading information. Key features of these new rules are mentioned as follows:

1. Definition of ‘online game’ and ‘online gaming intermediary’: The new rules define an ‘online game’ as “a game that is offered or available on the internet and is accessible to a user through an intermediary or any computer resources. An “online gaming intermediary” means an intermediary that offers one or more than one online game (on the internet)”.
2. Appointment of Self-regulatory organisations (SROs):In cognisance of the new rules, the government will appoint multiple self-regulatory organisations. The self-regulatory body that has been designed and built into the rules will be responsible for determining and certifying what is the permitted online gaming intermediary on the web. It will comprise industry representatives, educationists and other experts in their fields, such as child, IT, medicines and psychology experts.
3. Functions and responsibilities of these SROs: SROs will be duly responsible for declaring the permissibility of the online games. It will be on whether the game involves wagers and will act as scrutinising online real money games, stating that it shall not include wagering on any outcome.
4. Due diligence / KYC verification of online gamers: The IT ministry mandated KYC verification of online gamers on games involving real money. Therefore, online gaming companies must perform additional due diligence, such as user KYC, transparent withdrawal and refund processes, and a fair distribution of winnings.

For KYC, they will be required to follow the norms laid down for entities regulated by the Reserve Bank of India (RBI).

5. Content regulation / Facts checking of online games: Under these rules, MEITY will notify subordinate agencies to fact-check online gaming platforms regarding their content and authenticity and whether it contains any false, harmful or misleading information.
6. Random Number Generation Certificate: In the new rules, gaming companies will need to obtain a Random Number Generation Certificate, commonly used by websites hosting card games, to guarantee that the game outcomes are statistically random and unpredictable. Further, they must obtain a “no bot certificate” from a reputable certification organisation.
7. Banned games: New sets of amended rules will pass the permissibility of online games on a simple principle, whether it involves betting or wagering by any means. All other kinds of games will be permissible.

Conclusion

India's gaming industry has witnessed tremendous growth in recent years, driven by a combination of factors, including increasing disposable income, technological advancements, and changing lifestyles. The precise definition of real money and permissible games will help this industry's development legitimately by parallelly driving new career and economic opportunities. The announcement of new rules by the Ministry of Electronics and Information Technology for online real money games represents the government's best regulatory framework that ensures all necessary measures of safeguarding for users and the online audience at large. Further, referring to the case of State ofAndhra Pradesh vs K. Satyanarayana 1968 AIR 825held that the game of rummy is a game of skill as it requires a person to memorize the fall of cards. However, in its judgment, the Court indicated that if gambling or the gambling house is making a profit from the game of rummy, it could amount to an offence. The Hon’ble Supreme Court further observed that the three-card game, which goes under different names such as flush, brag, etc., is a game of pure chance.

*****

Disclaimer

This blog is written and published for informational and awareness purposes only. If your rights have been infringed and you want to get specific advice about the remedies available to you, connect with a lawyer or legal expert to address your concerns. This blog must not be treated as legal advice in any scenario.