Online Gaming Industry in India

Online Gaming Industry in India

News: Recently, the online gaming industry has taken a significant step toward self-regulation by voluntarily adopting a code of ethics.

Background:
• This initiative aims to establish a more stable and responsible environment within the industry.
• The Government of India has designated the Ministry of Electronics and Information Technology to oversee online gaming matters.

What are the voluntary initiatives as part of Code of ethics?
• The Internet and Mobile Association of India (IAMAI), E-Gaming Federation (EGF), and All India Gaming Federation (AIGF) have collaboratively adopted a voluntary code of ethics to self-regulate the online gaming industry.
• The code of ethics, although non-binding, reflects a commitment to fostering responsible practices within the gaming sector, addressing concerns related to transparency and user protection.
• It strives to safeguarding consumer interests, the code emphasizes empowering users with information to make informed decisions regarding their online gaming choices.
• The code emphasizes transparency by requiring companies to disclose criteria for determining winners, applicable fees, and ensuring that deposited funds are solely used for playing games on the platform.
• Online gaming companies are mandated to implement know-your-customer (KYC) procedures in compliance with relevant laws.

How is Gambling distinguished from Online Gaming as far as Indian laws are concerned?
In India, the distinction between gambling and online gaming is primarily based on the element of skill involved.
• Online Gaming: Under the Indian Constitution, states have the power to legislate on ‘betting and gambling’. However, “skill gaming” is excluded from the applicability of the gambling bans in most Indian states.
• The Supreme Court of India, in the case of RMD Chamarbaugwala & Anr v Union of India & Anr, recognized that offering games of skill is a protected activity under the Article 19 (1) (g) Constitution i.e., freedom to practice any profession, or to carry on any occupation, trade, or business.
• Gambling: Gambling typically involves betting or staking money on an event with an uncertain outcome, with the primary intent of winning additional money or material goods. The outcome is based either wholly on chance or on some combination of skill and chance. The Public Gambling Act, 1867 and other State regulated laws have been enacted to govern gaming and gambling in India. However, these laws deal with the physical gaming and operation of gaming/gambling houses, and no reliance has been placed on the concept of 'virtual and online gaming'

Code Alignment with Government regulations:
• As of now, India does not have dedicated online gaming and online gambling laws. The Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules of 2023 were notified for Regulation of Online Gaming in India. These rules define various terms related to online gaming and lay down the due diligence to be observed by an intermediary.
• Self-Regulatory Bodies: The Ministry of Electronics and Information Technology permits the establishment of self-regulatory bodies within the online gaming industry, emphasizing industry selfgovernance.
• Inter-Ministerial Task Force Recommendations: Proactively addressing the sector, the government’s recommendations from the inter-ministerial task force contribute to formulating rules for online gaming, emphasizing a balanced approach between industry growth and consumer protection.