Government proposes self regulation for e-gaming companies

In draft rules released on Monday, it has also made verification of players through Know Your Customer (KYC) norms mandatory.

Gaming companies will also be required to have a physical presence in India.

The draft rules are part of proposed amendments to the Intermediary Guidelines and Digital Media Ethics Code, or the Information Technology (IT) Rules of 2021.

The IT ministry has invited comments on the draft till January 17.

Gaming firms that do not comply with the new rules will lose their safe harbour and can be prosecuted, said Minister of State for Electronics and IT, Rajeev Chandrasekhar.

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The ministry hopes to unveil the final rules by the end of February, he added.
“Before hosting or publishing or advertising an online game for a consideration,” all gaming companies will have to ensure that such a game is registered with and approved by a self-regulatory organisation (SRO).

The gaming intermediary will also have to display the credentials of the SRO that registered and approved the game, through its website and mobile app.

Such SROs will have to be registered with the IT ministry.

SROs will be empowered to resolve complaints from users through a grievance redressal mechanism, according to the draft rules.

Chandrasekhar said the government will interact with all stakeholders during the public consultation process.

“One (of them) is the gamers themselves. We want the gaming ecosystem to be safe for women gamers. Then we will meet the gaming startups, the larger gaming companies and investors. Then the third category is, of course, the think tanks and policy groups,” he said.

Gaming intermediaries will also have to observe reasonable due diligence, including “reasonable efforts to cause its users not to host, display, upload, publish, transmit or share an online game not in conformity with Indian law, including any law on gambling or betting,” the government has proposed.

Gaming companies should inform the user of any risk of financial loss and addiction caused due to the game. They will also have to specify policies related to withdrawal or refund of deposits made by a user with the expectation of earning winnings.

“The online gaming intermediary shall enable users who register for their services from India, or use their services in India, to voluntarily verify their accounts by using any appropriate mechanism, including the active Indian mobile number of such users,” according to the draft rules.

Games that allow any form of wagering or betting on the outcome of an event will not be allowed.

Just as social media intermediaries are required to do under the IT Rules, gaming companies will also need to appoint a grievance officer, a chief compliance officer and a nodal contact person who can coordinate with law enforcement agencies.

The
gaming industry welcomed the IT ministry’s proposal for an SRO.

It said the proposed rules would “ensure the safety of players and responsible gaming”.

The recommendations of the draft gaming framework will “boost the legitimate domestic online gaming industry, ensuring greater transparency, consumer protection and investor confidence,” said Trivikraman Thampy, co-founder and co-CEO of Games24x7.

Nitish Mittersain, the joint managing director and chief executive of Nazara Technologies, said several recommendations in the draft will ensure the safety of players and responsible gaming.

“In addition, it lays down a process by which the industry will self-regulate itself under the guidance of the IT ministry,” he added.