New Online Gaming Rules

Introduction

New regulations have been introduced by the Ministry of Electronics and IT (MeitY), with the intention of shielding players of online video games from potentially dangerous content as well as addiction. The online gaming industry has adopted a model of self-regulation in which self-regulatory organisations (SROs) will be responsible for approving the games that are allowed to function in the country in compliance with the rules. These brand-new regulations for online gaming rules are an addition to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2023. The new rules come after the draft regulations that were issued in January 2023.

Under the new regulations, what are the goals and parameters of an online game?

The purpose of these guidelines is to ensure greater due diligence by social networking and online gaming media middlemen in a healthy regard for virtual worlds and online gaming or intentionally deceptive details concerning the subject of Concerning the government.

According to the official definition provided by the Indian government under the new rules, an online game is "a game that is offered on the Internet and is accessible by a user through a computer resource or an intermediary."

On the other hand, the new rules are going to make it illegal for online games to entail betting and wagering of any kind. Legality will be decided by applying the straightforward criterion of whether or not wagering is involved.  Reporters were told by Rajeev Chandrasekhar, Minister of State for Electronics and Information Technology, that "permissible online games are those games, real money or otherwise, that do not involve wagering, user harm in its content, and do not create any addictive consequences for children." We are only regulating games where real money can be won or lost. After a period of exclusion, "all other types of games will be permitted".

What are these new rules?

These are the key takeaways from the new regulations:

1. A number of SROs comprised of industry experts will be established by the government. Each game's eligibility will be determined by these SROS.
2. No service or company may distribute, make public, or otherwise make available any online game that has words or images that are damaging or otherwise forbidden. Players' identities must be checked before they can play online.
3. It will be illegal to promote or use any form of gambling in an online game.
4. SROs will ensure that games have parental controls, regular warning messages, and age-rating systems in place to reduce the risk of addiction and mental harm.
5. Players can stop playing when they've had enough, regardless of whether that's in terms of time or money.

In addition to the foregoing, Rajeev Chandrasekhar emphasised that playing games for real money is permitted, but that betting on the outcome of a game is not. He went on to say that any SRO that allows such games is doing so illegally. This was in answer to a query concerning the availability of gambling applications where users can win money based on the results of the Indian Premier League.

What is the purpose of these new regulations?

The SROs have been instructed by the Ministry of Electronics and IT (Meity) to indicate a framework for certifying an online real-money game on their websites and/or mobile apps. This structure will be implemented to ensure:

1. Stop online users from inflicting physical and mental harm on themselves.
2. Use a system of age restrictions and/or parental controls to protect kids from exposure to violent or otherwise hazardous content in video games played online.
3. Warning players regularly and allowing them to self-exclude when user-defined boundaries for time or money spent can help reduce the danger of gaming addiction, financial loss, and financial fraud.
4. Make sure that India's interests are not compromised by online gambling sites that accept real money players.

What is an SRO?

If a game played online includes betting or wagering of any kind, the Self-Regulatory Organizations that oversee such activities will decide whether or not the game can be played. In the beginning, the government will only notify three SROs, but they may add more in the future.

Members of the SROS will include an expert in the field of information and communication technology; an educator; a mental health professional; a current or former member of an organisation concerned with the protection of children's rights; a public policy expert; a law enforcement professional; and a public finance professional. The SROS will be registered under Section 8 of the Companies Act. These SROs will be appointed by the government under the new guidelines.

The SROS will be in charge of determining whether or not certain online games are legal to play depending on whether or not players can place bets. If the SRO is satisfied that "the online real money game does not involve wagering on any outcome," then it has the authority to declare that online real money games can be played legally.

Know-your-customer (KYC) checks for digital gamers

The IT ministry has not only notified the SRO but also a necessary Know Your Customer verification for online gamers of games involving real money.

Online games will now undergo fact-checking

As part of the new regulations, MEITY will alert agencies when the material on government operations is found to be inaccurate or misleading.

Centre v. State
For years, internet gaming corporations have participated in the ongoing discussion of whether or not their games involve skill or chance.

The Supreme Court has ruled multiple times that fantasy sports apps were games of skill rather than chance. The Supreme Court affirmed the Punjab and Haryana High Court in [Varun Gumber v. U.T., Chandigarh, CWP No. 7559 of 2017], Bombay High Court [Gurdeep Singh Sachar v. Union of India, Criminal P.I.L. No. 16 of 2019] and Rajasthan High Court's 2021[Chandresh Sankhla v. State of Rajasthan, D.B.C.W.P. No. 6653 of 2019] ruling that fantasy sports are games of skill rather than chance.

Meanwhile, experts agree that games should be labelled as such if the outcome is mostly decided by characteristics that are based on skill. Games, where the results are determined solely by random chance, are known as "games of chance." It has also been established that card games like Rummy and Poker are games of skill.

Furthermore, gaming and betting are still only legal in some states. This means that each state continues to enjoy the freedom to decide whether or not they wish to legalize gaming and lotteries.

The federal government has established a transparent harbour for games of skill, shielding them from the state's push and pull as long as they are licenced. Without certification, the safe harbour does not apply, and the states and courts are free to apply their standards.

Also, the new rules require language clarity, the need for a clear definition of wagering.

If the state governments find that a certain platform allows gambling, despite the lack of definition, it can still be outlawed.

Recent Tamil Nadu’s Law on Online Gambling:  State v. Centre

Most online gaming businesses are concerned about the possibility of state governments drafting competing legislation that could go against norms specified under the Centre's rules. While gambling is a state subject, there has been a constant tussle between the Centre and State in the concerned matter.

In October of last year, legislators in the Indian state of Tamil Nadu approved the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Ordinance, 2022. The governor, RN Ravi, sent the ordinance back for review at the beginning of March. After being reintroduced into the assembly and revised, the Bill was once again forwarded to Raj Bhavan. A few days back, Just one working day after the Centre published new laws for online gaming, the Tamil Nadu administration gained clearance for a Bill outlawing online gambling from the state's Governor.

All forms of wagering or playing games of chance via the internet for money or other stakes are outlawed by this bill. It defines online games of chance as those where both chance and skill are involved, but chance predominates; games are presented as games of chance; the element of chance can only be eliminated by superlative skill; or games involve cards, dice, or wheels which work on random event generators. This definition can be much broader than just Rummy and Poker.

Further, it creates the Tamil Nadu Online Gaming Authority and gives it the authority to oversee the industry. Any company doing business in Tamil Nadu must adhere to the state's rigorous regulations regarding the distribution of illegal games, or face penalties. Games of chance in the state will be identified by the proposed gaming authority, which will then make recommendations to add them to the Schedule of prohibited games.

Conclusion

It's important to distinguish between games of chance and games of skill when discussing online gaming; the former is regarded as an illegal form of gambling, while the latter are respectable forms of entertainment. Fantasy sports are a game of skill since they involve the creation of imaginary teams and the accumulation of points based on the actual performances of real athletes.

Gamers' activities are not considered betting because they are not placing a wager on a specific game or event. Startups will be able to provide solutions for gamers in light of the newly announced guidance.