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The Centre on Thursday notified new rules for online gaming with a provision of creating multiple self-regulatory bodies (SRBs) — for the $2.2-billion industry — to certify a ‘permissible’ real-money online game and prohibit wagering and betting on internet platforms.
All online real-money games and the online gaming intermediary that enable access to such online real-money games must display a demonstrable and visible verification mark, stating the game is verified by the SRB consistent with the new rules.
The final version of the rules has provided a three-month window for the body to complete the inquiry on whether a game should be permissible or not.
The SRB may initially rely upon the information furnished by the applicant for verification of the real-money game and declare such game as permissible for a period not exceeding three months. The new rules prescribe several obligations on online real-money gaming platforms, such as conducting a know-your-customer (KYC) procedure similar to the one followed by entities regulated by the Reserve Bank of India before accepting any cash deposits on the platform.
The platforms will need to appoint a chief compliance officer, a nodal contact person for coordination with law enforcement agencies, and a resident grievance officer.
“Essentially, the rules only deal with (excluding) real-money games that involve wagering. By this process of exclusion, every other game is permissible. The real-money games that don’t involve wagering, there are certain requirements of KYC before you can take money,” said Minister of State for Electronics and Information Technology Rajeev Chandrasekhar.
All companies offering real-money games must have a physical contact address in India published on their website or application (app).
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The rules define an online real-money game as an online game where a user deposits cash or kind with the expectation of earning winnings on that deposit. The gaming platforms will not be able to offer in-app financing by themselves through credit or other third-party services to play games offered by it.
The composition of an SRB includes experts from the online gaming industry, education, psychology, information and communications technology, and child rights organisations. It also must have a person from public policy or administration or law enforcement, to be nominated by the Ministry of Electronics and Information Technology (MeitY).
According to the rules, the SRBs will also be responsible to develop and publish a framework for verifying an online real-money game. The framework may include measures to ensure that such an online real-money game is not against the interests of the sovereignty and integrity of India, security of the state, friendly relations with foreign states, and public order.
It should also include safeguards against user harm, including self-harm and psychological harm, safeguards for children, including measures for parental or access control and classifying online games through age-rating mechanisms, based on the nature and type of content.
Additionally, it has to provide measures to safeguard users against the risk of gaming addiction, financial loss/fraud, including repeated warning messages at a higher frequency beyond a reasonable duration for a gaming session and provision to enable a user to exclude himself/herself upon user-defined limits being reached for time or money spent.
Online gaming platforms have largely welcomed the rules, calling it a landmark regulation.
“The uniform legal framework provided by these rules will boost investor confidence. We anticipate that this will also help reduce regulatory fragmentation at the state level as also mentioned by the minister, create a more stable business environment and weed out gambling platforms," said Sai Srinivas, co-founder and chief executive officer (CEO), Mobile Premier League — a gaming unicorn.
“As we transition to the self-regulatory model that will be recognized by MeitY, we look forward to working collaboratively with our industry peers and other stakeholders. We believe this effort will help create a sustainable and thriving gaming ecosystem in India,” he added.
“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/over-the-top players, is beneficial for goods and services tax differentiation from gambling, providing the required stability of regulation, and facilitating a level playing field for all games of skill," said Paavan Nanda, co-founder, WinZO.
“The rules notified are a landmark step that will immensely help the gaming industry and provide a lot of clarity on the sector. It is heartening to see that the ministry has considered and incorporated most of the feedback shared by Nazara and the gaming industry since the draft rules were first announced a few weeks ago,” said Nitish Mittersain, founder and CEO, Nazara Technologies.
