The Centre on Monday released draft rules for online gaming that proposed a self-regulatory mechanism, mandatory verification of players, and physical Indian addresses for online gaming companies.
The draft rules, which prepared based on a government-appointed panel to suggests regulate online gambling and betting, also prescribed additional due diligence for companies by displaying a registration mark on all online games registered by a self-regulatory body.
Gaming companies have to inform its users regarding its policy related to withdrawal or refund of the deposit, manner of determination and distribution of winnings, fees and other charges payable and KYC procedure for user account registration, says the draft.
Giving details about draft rules, Minister of State for Electronics and IT Rajeev Chandrasekhar said online gaming companies will not be allowed to engage in betting on the outcome of games.
The minister said that all permissible online gaming will need to be registered with a self-regulatory organisation that will be accountable to the online gaming rules.
The Ministry of Electronics and IT has invited public comments on the draft rule by January 17. The new rules are expected to ready by next month, the Minister said.
The objective of the new rules is to grow the online gaming sector and encourage innovation, he added.
Self-regulatory bodies will be registered with the Ministry of Electronics and IT (MeitY) and may register online games of such online gaming intermediaries who are its members and which meet certain criteria. Such bodies will also resolve complaints through a grievance redressal mechanism, he said.
Online gaming companies will be covered under the new IT rules that were issued in 2021 for social media platforms.
The online gaming platforms are expected to comply with the laws of the land, including any such law that relates to gambling or betting or the age at which an individual is competent to enter into a contract.
The rules regulate betting. It is basically a prohibition of wagering on any game. The self regulatory organisation will determine whether it is a permitted game or not. The online games that offer winnings, any game that allows wagering on the outcome is effectively a no-go area. If you bet on the outcome of a game it is prohibited under 3(b) 10 of the IT rules, the Minister said.
Kids under the age of 18 will need parental consent for playing these games, he said.
MeitY has invited comments by January 17.
What the industry thinks
The step is expected to attract more investment in the growing gaming sector.
“A self regulating framework with clear asks from industry on KYC, local domicile of companies, nature of games that can be published, with a focus on games with financial outcomes for users, will drive user adoption for responsible fantasy sport operators and curb the menace of illegal, offshore betting,” commended Yash Srivastava, Managing Director (APAC) of the gaming platform - Coda Payments
“While there has already been a steady inflow of investments within the gaming sector to the tune of USD 1.6 billion, we expect the presence of a uniform central regulatory framework to boost investments manifoldly,” said Roland Landers, CEO, All India Gaming Federation.
“The regulation on getting registered, getting a no bot verification is similar to what we see in the finance and insurance space, where companies need to get a license before running the business. This enhances the trust and credibility of the platforms and also it helps in cleaning up the gaming ecosystem,” said Manish Maryada, CEO and Co-founder, Fello, a game-based savings account.