Never bet against regulation in online gaming

By Ashima Obhan and Akanksha Dua, Obhan & Associates

The online gaming industry, particularly real money gaming, has grown significantly. At the same time, the industry has experienced uncertainty and disruption, leading to an increased need for regulation and guidelines. The Ministry of Electronics and Information Technology (MeitY) has therefore introduced the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2023 (2023 rules), governing online real money games as from 6 April 2023.

Ashima Obhan
Ashima Obhan
Senior Partner
Obhan & Associates

The 2023 rules have introduced co-regulation between the MeitY and registered self-regulatory bodies (RSRB). RSRBs will verify that online real money games are permissible online real money games. (PORMG). The MeitY may appoint as many RSRBs as it considers necessary for this purpose.

The 2023 rules allow only permissible online games to be hosted and offered to users. An online real money game is an online game in which a user makes a deposit in cash or kind with the expectation of earning winnings.

A permissible online game means a PORMG or any other online game that is not an online real money game. RSRBs may, after giving the applicant the opportunity to be heard and for reasons communicated in writing, suspend the verification of an online real money game for not complying with the 2023 rules.

Once an application is made by an online gaming intermediary (OGI), the RSRBs verify online real money games as PORMG after being satisfied such games do not, among other matters, involve wagering on any outcome; are in compliance with provisions relating to contract age competency; do not attack the sovereignty, integrity, security of India and public order; protect users against harm, addiction and financial loss, and safeguard children.

Akanksha Dua
Principal Associate
Obhan & Associates

The RSRBs have discretion to allow the release of online real money games for a period of three months based on the initial information supplied by applicants, pending a more detailed inquiry. Once the inquiry is finished, the online real money game may be declared to be a PORMG or rejected, with the applicant being informed in writing.

The 2023 rules regulate OGIs in relation to online games. Every OGI must be a member of a registered RSRB and exercise due diligence. This includes publishing its terms of use, privacy policies and other user agreements on its platform. Any change to such terms has to be relayed to users within 24 hours. An OGI should ensure that users are warned not to use the platform to upload any information that, while an online game, is not a permissible online game; is an advertisement, including a surrogate, promotes an online game that is not a permissible online game or violates any law. Information about cyber security incidents must be provided by OGIs within 24 hours and they are required to appoint and make public the details of a grievance officer, who must reside in India.

OGIs must comply with the due diligence requirements for significant social media intermediaries, including the publication of the platform’s physical address in India; the publication of periodic compliance reports on complaints received from users and the actions taken; the display of verification marks provided by the RSRB; the verification of users at the start of an account based relationship before the acceptance of deposits, in line with the Reserve Bank of India-prescribed KYC guidelines, and the appointment of a chief compliance officer and a contact person, both resident in India.

Each OGI and RSRB has to appoint a grievance officer, whose details must be published together with those of the grievance redressal mechanism. Any person aggrieved with the OGI may file a complaint with its grievance officer. Any applicant OGI aggrieved by the decision of the RSRB in respect of verification and revocation may also complain to the RSRB’s grievance officer. If a complainant is not satisfied with the resolution reached by such grievance officers or if the complaint is not resolved within the prescribed timelines, they may appeal to the grievance appellate committees set up under the IT Rules.

The 2023 rules are a positive step towards the regulation of online gaming, protecting the interests of players and gaming companies alike. As online gaming continues to grow in popularity, it is important for all stakeholders to work together to create a safe and transparent gaming environment.

Ashima Obhan is a senior partner, Akanksha Dua is a principal associate at Obhan & Associates

Obhan & Associates

Obhan & Associates

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