Vikram Jeet Singh
Draft Amendment to the Intermediaries Rules 2021 - Regulation of online gaming
(Vikram Jeet Singh & Prashant Daga)
On January 02, 2023, the (Indian) Ministry of Electronics and Information Technology (“MEITY”) released a draft amendment to the Information Technology (Intermediaries Guidelines and Digital Media Ethics Code), Rules, 2021 (“2021 IT Rules”). This draft introduces the concept of an online gaming intermediary and prescribes related due-diligences relating to offering and/or advertising online games; it also provides for undertaking due-diligences as per the 2021 IT Rules, and allows an intermediary to seek the safe harbor protection i.e., immunity from liability arising due to third party content.
The draft amendment can be viewed here, and a copy of the 2021 IT Rules updated with the draft amendment can be viewed here.
The regulation of online gaming has been a highly contested issue in India. As per the Indian constitution, the power to formulate laws to prohibit gambling is accorded to both, central and state governments. As such, gambling regulations are scattered across the central legislation and various state-specific enactments; the central law and majority Indian states exclude games of skill from the purview of the prohibition on gambling. In its foreword to these regulations, MEITY noted that it felt the need to ensure online gaming platforms offer games in conformity with Indian law and safeguard users against potential harm.
Here are key changes proposed by the draft amendment to the 2021 IT Rules:
1. Defining Online gaming intermediaries: The draft amendment sets out a definition of online games i.e., a game that is offered on the Internet and accessed by a user by making deposits ((viz., ‘cash’ or in-kind) with the expectations of early for winnings (i.e., cash or in-kind prizes distributed to a user of an online game based on their performance of the user). Accordingly, any intermediary that offers one or more RMG online games are classified as an online gaming intermediary.
2. Additional due diligences:
Internet intermediaries: Adding on to the existing due diligences, all Internet intermediaries will be required to ensure they do not host any online game which is not in conformity with Indian law, including laws relating to gambling and competent age to contract. This denotes that any game offered and/or publicized by an intermediary’s platform should be a ‘game of skill’ (owing to the classification of games of chance played for stakes as gambling under various laws) and such game should only be accessible by persons aged above eighteen (viz., age of ‘majority’ under Indian laws).
Advertising: Prior to hosting or publishing or advertising any online game, an intermediary will be required to determine from the online gaming intermediary if the online game is registered with a self-regulatory body (refer to point ‘c’ below) and display the details of such registration on its platform (viz., intermediary’s website or mobile application).
Online gaming intermediaries: New due diligences have been specified for online gaming intermediaries. These include (inter alia) informing users of the negative consequences of the online gaming and measures taken for protecting their deposits, follow know-your-customer norms for user verification as per Reserve Bank of India norms, implement grievance redressal mechanism, overseas online gaming intermediaries to verify Indian users via their Indian mobile numbers, etc. Notably, alike the compliances for significant social media intermediaries, online gaming intermediaries will also be required to:
Appoint a resident ‘chief compliance officer’ to ensure compliance with the 2021 IT Rules, who shall be liable for any non-compliance with the due diligences or in relation to any relevant third-party information or data or communication links made available via the intermediary’s platform.
Appoint a resident ‘grievance officer’.
Appoint a nodal contact person for round the clock co-ordination with law enforcement agencies and officers.
3. Self-regulatory bodies: Not for profit companies and/or societies may be set up with online gaming intermediaries as its members; this body shall have to be registered with MEITY. Such bodies will be responsible for reviewing and registering online games offered by its members, subject to certain prescribed factors. Games approved by the self-regulatory body may be offered with visible mark signifying its registration.
4. Online games without deposits: If a game offered online without any deposits is considered to pose a threat to India’s sovereignty / security / public order or has the “potential of causing addiction”, MEITY may notify such game to be treated akin to an online game per the 2021 IT Rules, require such game to be registered with a self-regulatory body, and comply with related due diligences.
What this means:
The proposed amendment adds on to the compliances for intermediaries and may invariably require implementation of a prior review mechanism of each online game that is advertised / offered via the intermediary. Separately, each gaming platform may have to alter their existing operating procedures to incorporate the registration mechanism and observe additional due diligences.
The draft amendment is open for comments from stakeholders up to January 17, 2022; these can be submitted to https://innovateindia.mygov.in/online-gaming-rules/.