Govt to appoint multiple SROs for online gaming, notified rules won’t permit gambling

The Ministry of Electronics and Information Technology (MeitY) on Thursday notified the final online gaming rules.

Under the new rules, multiple self-regulatory organisations (SROs) will determine whether an online game is permitted to operate in India on the basis of whether games offer betting or wagering. There will be multiple SROs, and these SROs will have participation from all the stakeholders including but not limited to the industry.

The new rules also put a ban on betting and wagering. Online games involved in wagering or betting will fall foul of new online gaming rules, Minister of State for IT Rajeev Chandrasekhar said.

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“These rules don’t deal with all the sophistication into what is game of chance or game of skill,” Union Minister of State for Electronics and IT Rajeev Chandrasekhar said in a press briefing on April 6.

“You don’t have to go to SRO if you are only a gaming company, but only when there is money involved in the game,” he said. Permissibility will be determined with the simple principle of whether wagering is involved and if wagering is involved, the SRO will be in a position to say that those online games are not permissible, he added.

The SROs, as per the rules, should also include an educationist, an expert in the field of psychology or mental health, an individual who is or has been a member or officer of an organisation dealing with the protection of child rights etc.

These rules come after MeitY, in January, released draft online gaming rules that proposed a self-regulatory mechanism, mandatory verification of players through Know-Your-Customer (KYC) norms, physical Indian addresses for online gaming companies and grievance redressal methods. This was done after discussions with stakeholders, including gaming companies, industry bodies, players, and lawyers, and later opened for public consultation.

“The Government has maintained a very open and transparent approach throughout this process and heard various stakeholders across the online gaming ecosystem, since May 2022,” said Roland Landers, Chief Executive Officer, All India Gaming Federation.

The Indian gaming industry has been growing at 28-30 per cent CAGR and is projected to grow from $2.8 billion in 2022 to $5 billion market by 2025. The number of gamers in the country is expected to swell from 420 million in 2022 to 450 million in 2023 and hit 500 million by 2025.

Skill-based real money gaming, which accounts for more than half of the industry’s revenue, however, has been targeted by several state governments, including Tamil Nadu, Andhra Pradesh, Telangana, Kerala, and Karnataka. Over the years many of these bans were challenged in state courts by skill gaming startups and industry associations, and the suspensions were overturned. In July 2021, the Supreme Court upheld fantasy sports as a skill-based game.

“The release of the new online gaming rules is a watershed moment for the industry, as it recognises online gaming intermediaries and distinguishes them from gambling,” said Sai Srinivas, CEO and Co-Founder, MPL, an online gaming platform. “The uniform legal framework provided by these rules will boost investor confidence,” he added.

“MeitY would have to ensure that the SROs that are getting registered with it are not proposing vastly different or contradictory regulatory frameworks to their members,” Nitish Mittersain, Founder and CEO, Nazara Technologies suggested.