The Ministry of Electronics & Information Technology has proposed the draft amendments to the IT (Intermediary Guidelines & Digital Media Ethics Code) Rules 2021 pertaining to online gaming.

The government has allocated online gaming matters to MeitY with a view to enable effective consideration of issues arising herein. The central objective is to protect users against potential harms. The draft rules primarily propose amendments to the definition of online gaming, obligations to be exercised by the intermediaries and establishment of self-regulatory bodies. The guidelines have adhered to all Constitutional rights of Indian citizens and the government acts as guarantor of the rights, by promising a strong grievance redress mechanism.

The proposal defines “online gaming” as a game offered on the internet which may be accessed by the user via any computer resource if he deposits a consideration with the expectation of gaining winnings. It also clarifies the meaning of ‘internet’, ‘deposit’ and ‘winnings’. The proposed rules also empower the MeitY to include any game under the ambiance of online gaming. The Ministry had been designated as the nodal ministry for online gaming related concerns, earlier in December 2022.

Gaming intermediary

The draft proposal seeks to define an online gaming intermediary (OGI) as an intermediary offering one or more than one online game. The new definition increases the ambiance, thereby opening doors for further amendments, addendums and ambiguities as to the creation of a category to serve the purpose might be a hindrance in the technology market.

The stance is yet to be cleared whether play stores, which are the actual point of contact to download the online gaming software, would fall under which definition as their primary purpose is not met.

The draft outlines that self-regulatory organizations (SROs) are to register with MeitY. They shall work as mediators and will have the liberty to scrutinize the applicant’s track record in general and reputation in online games created earlier. The creators will henceforth be reviewed on multiple stages prior to approval.

The SRO shall be required to review whether the OGIs follow due diligence measures prior to granting membership. They shall ensure that the OGI has a good track record of responsible gaming, does not harm public interest or national security, conforms with Indian laws, and does not promote gambling/betting. However, the proposal maintains silence on the interpretation of game of skill and game of chance. It may be safe to presume that since no amendments have been proposed to the IT Act as of now, thus an unfolding interpretation in case of conflict is foreseen.

Furthermore, the OGI shall be strictly required to ensure that no minors enter into online contracts pursuant to the boom in their user base. The SROs shall also ensure that appropriate measures are undertaken to safeguard children from potential harms and dangers.

The draft places stringent liability upon the OGI to abide by the rules and regulations while performing its obligations in a reasonable manner so as to prevent its users from hosting, displaying, uploading, publishing, sharing or transmitting an online game that is in violation of Indian laws. However, the proposal overlooks the burden of the applications in an ever-booming sector like online gaming, requiring strict perusal and tedious scrutiny.

Moreover, draft rules seek to widen the scope of Rule 3 of IT rules by bringing OGI under its purview. This enables applicability of due diligence norms and grievance redressal mechanism. They shall display a clear and visible registration mark of the self-regulatory body, furnish a no-bot certificate and publish the random number generation certificate which is quite a unique step.

compliance officer

A chief compliance officer shall ensure the norms are complied with to enable users to register the service after verification. The first step to compliance shall then be time and again checked by a nodal person to coordinate with law enforcement agencies to ensure compliance with the orders and advised requisitions, and record the contact details for communication.

OGIs shall be required to inform the users and ensure that they are aware of the terms and conditions, refund policies, privacy policy, steps taken to protect user deposit, payable charges, determination and distribution of winnings and associated risks which will be iterated to the users annually.

OGI shall be required to follow the RBI KYC guidelines while verifying identity of an user upon registration. It may be pertinent to mention that the Ministry has also proposed that the OGI possess a physical address in India. Such addresses must be made available on the website and application. This also opens doors to criticism as KYC in the past has opened doors to harming consumer interests by putting individual privacy in jeopardy.

The draft provides for a noteworthy mechanism for receipt, processing and verification of claims and grievances. The grievance officer shall be required to act upon the user’s complaints or complaints about the users within 72 hours of its receipt.

The proposed amendments are a step towards safeguarding consumer interests and economic interests. However, the proposal might have overlooked the consequential increase in cost and time of compliance which reduces the profit margins and lucrativeness of undertaking online gaming business. The end goal is the growth of the digital ecosystem, striking a balance with rights and accountability from intermediaries along with encouraging healthy online gaming.

Shryashi is a legal professional and Dash is a Professor of Law. They are also members of the Cambridge University Press Academic Panel

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