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Gaming industry seek a more nuanced regulatory system

What has also been a worry for the industry players is the knee-jerk blanket bans by states
Last Updated : 11 January 2023, 16:59 IST

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The draft rules for online gaming in India tabled by the Union Ministry of Electronics and IT (MeitY) in the first week of January has largely been welcomed by the different stakeholders, despite some reservations about its seemingly blanket application.

The proposed rules include formation of a self-regulatory body or bodies (SRBs), mandatory know-your-customer (KYC) norms for verification and a grievance redressal mechanism. The proposal is subject to public consultation till January 17.

At a discussion on “The Policy Dialogue: Regulating Online Gaming” organised at Delhi by The Quantum Hub (TQH) and the All India Gaming Federation (AIGF), on Wednesday, various stakeholders raised concerns ranging from the financial risk involved to increasing law enforcement requests.

"There is one major issue that nobody talks about - how clearly does everyone understand the difference in gaming formats? There’s lots of different kinds of things to keep in mind when discussing the rules with this in mind," said Zerah G. Gulati, eSports Players Welfare Association. Flagging lack of clarity in the proposal, she said, a blanket law is not conducive for the wide variety of game formats in the industry and more clarity is needed in terms of regulation.

Panelists highlighted that having a SRB framework was good and it was a long-standing ask, as it gets the power back into the industry’s hands. However, there is a need for a threshold for registrations and compliance, panelists suggested.

Adding that the framework would evolve, Rutuja Pol of Ikigai Law pointed out that subjectivity would exist, but added “Governments while amending laws can take a look at how SRBs are regulating the space.” There was agreement across the panel that it would enable the industry to weed out the bad actors.

On the question of having multiple SRBs to give out certifications, “There is a possibility of more than one SRB coming up. Each would have its own methodology in place” said Shahana Chatterji, Partner at the law firm - Shardul Amarchand Mangaldas & Co.

“Having multiple SRBs mitigates risk of domination by players to some extent” said Salone Sehgal, Founding General Partner, Lumikai Ltd, gaming & interactive entertainment venture fund. Having a threshold in terms of size and number of players posted to approach SRB for certification would reduce compliance burden, she added.

The panel also addressed concerns associated with the accountability of SRBs. “Cartelisation is a real issue and is likely to happen in the short term. In the longer term, we are likely to see a more institutionalised framework where there will be borrowing from best practices and a standardisation of methodologies followed, " Chatterji observed.

Pointing out that there were two types of investors - ones who invested in the gaming market while waiting for regulations to catch up and the others who resisted from investing until a clear regulatory framework was put in place, “This is a positive move, to provide a system for the industry to exist” added Sehgal.

What has also been a worry for the industry players is the knee-jerk blanket bans by states. Smooth exit processes and policies about movement of capital, especially foreign capital, for investors were also flagged as part of the deliberations. “The first recommendation has to be that central and state policies need to be aligned. Why should the company not be allowed to operate pan-India?” questioned Sehgal.

On one hand, the new measures will crack down on offshore betting and gambling companies operating in the country and on the other hand, they will address the cybersecurity and safety concerns of gamers. Gulati stressed on the need for grievance redressal from the perspective of gamers and particularly for those under 18. "Games can cause so much spending & long-term behavioural changes, which becomes an issue when catering to under 18 (age group), who may not know the difference between bad and good,” she said.

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Published 11 January 2023, 16:59 IST

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