Scope for improvement

The government’s decision to put the online gaming industry under centralised regulation is a step in the right direction but has a significant scope for improvement. The Ministry of Electronics and Information and Technology (MeitY) has proposed amendments to the Information Technology (Intermediary Liability and Digital Media Ethics Code) Rules, 2021, through a draft proposal. The draft aims to establish a self-regulatory mechanism for the gaming industry as of now. Very recently, Lumikai, a gaming and interactive media fund, reported that India became the largest consumer of mobile games in FY 2022 in terms of total downloads, exceeding the United States market by three times and Chinese market by two and a half times. In 2022, India’s gaming market stood at an astounding USD 2.6 billion and is projected to grow at a CAGR of 27 per cent to touch USD 8.6 billion by 2027. India, in the past couple of years, has witnessed a dramatic increase in the number of gaming unicorns. The sheer size of this industry and its rapid growth indeed call for self-regulation in the least. The proposed amendments seek to bring in greater transparency and accountability in the system. In the first place, the draft defines online game as “a game that is offered on the internet and is accessible by a user through a computer resource if he makes a deposit with the expectation of earning winnings.” In a way, it blurs the distinction between ‘game of skill’ and ‘game of chance’, and treats both under a unified connotation. Secondly, it calls for the establishment of a self-regulatory body which will be entrusted with the task of verifying and registering a certain set of game-publishing platforms. Thirdly, the proposed framework proposes the collection of know-your-customer (KYC) information from users in a systematic manner. If an analogy were to be drawn, the self-regulatory mechanism already failed to serve its purpose in terms of regulating the social media platforms. Simply put, there is little guarantee that self-regulation will be successful in regulating online gaming platforms. A scope for evolution needs to be maintained in the framework that could allow stricter regulation in the future. Next, by skipping to mention the distinction between ‘game of skill’ and ‘game of chance’, the draft has left open a grey area for the states. States like Tamil Nadu are known to be at loggerheads with online gaming platforms. Certain attempts to ban online gaming have met with legal challenges by the gaming industry which argues that they offer games of skill rather than those purely dependent on chance. The Centre would do well to ensure that these ambiguities are done away with. More preferably, states can be empowered to draw the line by themselves — whether they want to place additional restrictions (including bans) or not. As far as collection of KYC information is concerned, tangible provisions, and not just assurances, should be put in place to ensure that collected information is not misused for undue purposes. On a positive side, the framework puts greater liability on operators by mandating them to disclose before gamers the policy related to withdrawal or refund of deposits, distribution of winnings and the fee charged from them. Furthermore, to hold gaming platforms accountable, the framework urges them to appoint a chief compliance officer and a grievance redressal officer, in addition to a nodal contact person who would coordinate on behalf of the platform. It may be noted here that most of the credible gaming platforms already follow, in some form or the other, many of the protocols proposed by the draft amendment. However, the proposed amendments will consolidate the process and bring more platforms within the fold. It is very important to point out here that the draft leaves out those platforms which don’t have physical presence in India; they can neither be registered with a self-regulatory body nor be a part of grievance redressal mechanism. More comprehensiveness is needed in the proposed amendment to make sure it doesn’t disincentivize investors from entering the booming market while at the same time safeguarding the interests of gaming audiences.