The Indian government has released new regulations for online gaming that forbid any game that includes betting or wagering.
In addition, the regulations require the establishment of several self-regulatory organizations (SROs) to oversee the industry.
Current situation in India
These developments have taken place against the backdrop of a significant rise in India’s gaming industry, both in terms of app downloads and revenue.
The growth can be attributed to the pandemic-induced confinement of people to their homes in recent years.
However, it has also led to a disturbing trend of increased spending on mobile gaming.
According to a report by Lumikai, a gaming and interactive media venture fund, the revenue generated by India’s gaming sector rose from $2 billion in FY21 to $2.6 billion in FY22.
The report also predicts that the industry will grow at a compound annual rate of 27 percent and reach $8.6 billion by FY27.
Role of SROs
The responsibility of permitting real-money games to operate in India will rest with the SROs.
According to Rajeev Chandrasekhar, the Minister of State for IT, the SROs will be given the authority to decide what constitutes addiction and user harm.
The government will not be providing any prescriptive guidelines, as they anticipate that these regulations will evolve over time.
After conducting a public consultation in January 2023 and engaging with various stakeholders such as gaming companies, industry bodies, players, and lawyers, the MeitY has introduced new regulations that will have a significant impact on the burgeoning gaming industry in India.
The rules will pave the way for the establishment of several SROs that will include all stakeholders and play a crucial role in shaping the industry’s future.
Minister’s words
According to Chandrasekhar, the Minister of State for IT, the framework for online gaming in India will be based on the decision of multiple SROs regarding whether a game is permissible or not.
He also clarified that the new regulations do not cover the intricacies of differentiating between games of chance and skill.
Chandrasekhar further elaborated that the new regulations will not delve into the details of differentiating between games of chance and skill.
Instead, the regulations will focus on a fundamental principle that any online game involving betting or wagering, regardless of its core content, will be deemed non-permissible.
He emphasized that gaming companies would not need to seek the SRO’s approval unless money is involved in the game.
Hopeful outlook
The Union Minister highlighted that several startups have been flouting state laws and regulations, owing to the complex and vague legal framework that governs the sector.
This has led to confusion and ambiguity in interpreting the regulations, causing regulatory challenges for the gaming industry.
The minister expressed optimism that the new regulations will establish a stable, consistent, and predictable framework for startups operating in the online gaming industry.
He emphasized that the online gaming sector presents a significant opportunity for India’s digital economy and has the potential to generate billions of dollars in revenue.
The government plans to establish three SROs initially, with the possibility of more being notified in the future.
Rules to safeguard users against harm
In January 2023, MeitY put forth a proposal for a self-regulatory mechanism, compulsory player verification through KYC norms, and grievance redressal methods.
The Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 were created to protect users from skill-based games and to ensure these games comply with Indian laws.
These rules may be the initial move towards creating a central law to govern India’s online gaming industry.
Pro: Govt- Dream11
According to industry executives, the need for a unified regulation is vital to combat the issue of illegal offshore gaming operators as state laws cannot be enforced against foreign operators.
All India Gaming Federation (AIGF) CEO Roland Landers stated that “We believe that this is a significant initial move towards a comprehensive regulatory framework for online gaming that will enable the industry to compete globally, as envisioned by the Hon’ble Prime Minister.”
Harsh Jain, the co-founder and CEO of Dream Sports, the company that owns India’s largest fantasy sports platform Dream11, expressed his approval of the regulations, saying that they will enable the potential for India’s $20 billion online gaming industry to contribute significantly to the Honorable Prime Minister’s vision of a trillion-dollar digital economy.
MPL
Sai Srinivas, co-founder of Mobile Premier League (MPL), described the new rules as a “watershed moment for the industry” as they acknowledge online gaming intermediaries and differentiate them from gambling.
He further added that the standardized legal framework established by these regulations will enhance investor confidence.
Sai Srinivas, co-founder of Mobile Premier League (MPL), expressed his belief that the new regulations will not only create a more stable business environment but also help reduce regulatory fragmentation at the state level, as mentioned by the Minister.
Additionally, Srinivas expects that the rules will help weed out gambling platforms and boost investor confidence in the industry.
