Regulating India’s online gaming Industry

Regulating India’s online gaming Industry

Context: Here, we discuss about the necessity of having robust regulation in India’s online gaming industry particularly due to rise of risks associated in eroding societal value, market failures, national security and mental health.

What is online gaming? What are its types?
• Online gaming refers to video games/mobile games that are played over the internet through various devices. For example, multiplayer online battle arena (MOBA) games, first-person shooter (FPS) games, massively multiplayer online role-playing games (MMORPGs), and many others. It includes games such as FIFA, Call of duty, Fortnite etc.
• Types of online gaming includes e-sports (well-organized electronic sports which include professional players), Fantasy sports (Dream 11) and Casual games (these can be either skill-based (mental skill) or chance-based (based a random activity like a roll of a dice) online games.

Status of Online Gaming industry in India:
• High Internet Base: With a staggering 692 million Internet users, India has the world’s second-largest Internet user base. The average daily mobile app usage has raised a 32% increase since 2019.
• High Contribution in GDP: The online gaming industry in India is predominantly a home-grown start-up ecosystem growing at 27% CAGR. It is estimated that AI and online gaming can add up to $300 billion (bn) to India’s GDP by 2026-27.

What are the challenges associated with Online Gaming?
• Social and Psychological Challenges: Deficient self-regulation, negative mood, and affective disorders (e.g., anxiety and panic, distress, depression), psychosocial difficulties such as isolation, intense shyness, and consistent preference for online social interactions have been frequently associated with problematic online gaming.
• Addiction: Gambling addiction which can lead to financial problems and psychological problems.
• Cyberbullying and Harassment: It is possible as it involves communication with people across the world.
• Security Concerns: Money Laundering and National Security Concerns. Online gaming platforms are at risk of cyber-attacks and data breaches, which can result in compromised personal and financial information.
• Insufficient Regulation: No mechanism exists for individuals to differentiate between legitimate gaming platforms and illegal gambling/betting sites. The absence of a specialized regulatory authority and enforcement is lacking.
• Physical and health issues: Eye infections, back pain etc.
• Substantial losses to the Exchequer and Market Failure: The growth of illegal offshore gambling markets is identified as a major challenge, leading to potential harm to users and substantial losses in tax revenue.

What steps are taken by Government to address this issue?
The Ministry of Electronics and IT (MeitY) has released the Draft Rules for Online Gaming (recent amendment to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021).
• The online gaming companies ought to register with self-regulatory body. (SRO comprises of Economists, psychiatrist, industry stakeholders, company representatives)
• The online gaming must ensure additional due diligence by necessitating KYC registrations of users, ease in withdrawing money and refund.
• Online gaming companies will not be allowed to engage in betting on the outcome of games.
• Such companies need to appoint a compliance officer, nodal officer and grievance officer.

What steps have been taken by other governments?
• Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Bill, 2022: It prohibits all forms of online gambling and allows for the regulation of online games that are not considered gambling.
• The U.K. has a centralized government regulator, which publishes quarterly the effects of regulation in the online gaming sector. The strict enforcement, coupled with targeted efforts aimed at harm reduction during 2018-22, has led to a decline in both disordered gaming and medium-to-low risk gaming behavior.

Conclusion
• Recently, a lobby group of Online gaming platforms voluntarily signed a code of ethics to promote integrity, fairness, transparency and accountability in online gaming sector which is a step in the right direction.
• The code of ethics will enable consumers to make informed choices about online games by disclosing every minute details, create a “healthy environment” for online games in India by spreading consumer awareness about the risks involved in gaming and establish transparency on the platform fee charged.