Regulations on Online Gaming – Draft Amendments to the IT Rules, 2021

In order to safeguard the users of online games against potential harm, draft amendments to the IT (Intermediary Guidelines & Digital Media Ethics Code) Rules, 2021 (“Draft Rules“) pertaining to online gaming were released on January 02, 2023 by Ministry of Electronics and Information Technology (“MeitY“) for public consultations.

The Draft Rules define online game as “a game that is offered on the Internet and is accessible by a user through a computer resource if he makes a deposit with the expectation of earning winnings“. The Draft Rules also define “online gaming intermediary” (“OGI“) as “an intermediary that offers one or more than one online game“.

The Draft Rules provide that an OGI must adhere to the rules when performing its obligations, including making reasonable efforts to prevent its users from hosting, displaying, uploading, publishing, transmitting, or sharing an online game that is in violation of Indian law, including any law pertaining to gambling or betting.

Proposed Obligations of Online Gaming Intermediaries

In addition to the current regulations, which forbid any content that promotes or connects to gambling or money laundering, an OGI is required to make sure that no game that permits “gambling or betting” is allowed on the platform. An OGI must also make sure that no contracts are entered into online by anyone under the age of 18.

An OGI is required to undertake the following obligations:

  • Display a clear and visible registration mark on all online games registered by the self-regulating body;
  • Publish on its website as well as the mobile based application, a random number generation certificate and a no bot certificate from a reputed certifying body for each online game offered;
  • Make users aware, through its rules and regulations, privacy policy, terms of service, and user agreements, of all the games offered, the risk of financial loss and addiction associated with the online game, the KYC procedure to be followed at registration, the steps taken to protect a user’s deposit, and how its winnings are determined and distributed;
  • Establish a method so that all users who register from India or use its services can voluntarily verify their accounts and receive a public seal indicating such verification. Users should be allowed to complete this verification with an active Indian mobile number. The data shared for such verification should not be used for any other purpose unless expressly permitted by the user;
  • Follow the RBI KYC guidelines when confirming a user’s identification upon registration;
  • Appoint a resident grievance officer, chief compliance officer, and a nodal contact person having the same duties as their corresponding counterparts for social media intermediaries;
  • Possess a physical address in India that is made available on its website and mobile app;
  • Create a grievance redressal mechanism so the user may monitor the progress of their complaint. The OGI must, to the degree practicable, explain why certain steps were taken or not taken in response to the complaint; and
  • Within 24 hours, provide information to a legally authorised government agency for law enforcement purposes. These directions are required to be followed within 72 hours by all other intermediaries.

Self-Regulatory Body

The Draft Rules provide that the MeitY may register self-regulatory body considering the following factors:

  • Number of OGI who are its members;
  • Track record in promoting responsible online gaming;
  • General repute, absence of conflict of interest and the relevance and suitability of the individuals comprising its board of directors or governing body;
  • Presence of specified persons in the board of directors or governing body;
  • Provisions in its articles of association or bye-laws to ensure that it is functioning independently and at arm’s length from its member OGI; and
  • Capacity, in terms of deployment of technology, expertise and other relevant resources, for evolving the desired framework, testing and verifying conformity of online games with the same, and continuously updating and further evolving such framework, testing and verification protocols.

The self-regulatory body will consider the following criteria for granting membership to OGI:

  • Adherence to the due diligence and additional due diligence required under the Draft Rules;
  • Track record in offering online games responsibly;
  • Online game offered by OGI does not contain anything not in the interest of sovereignty and integrity of India, defence of India, security of the State, friendly relations with foreign States or public order, or incites the commission of any cognizable offence; and
  • Online game offered by OGI is in conformity with laws for the time being in force in India, including law relating to gambling or betting or the age at which an individual is competent to enter into a contract.

Every registered self-regulatory body is required to develop a framework to secure the interests of users, undertake testing and verification to establish conformity of online games with the framework, continuously update and further evolve such framework, testing and verification protocols, and is also required to prominently publish the same on its website as well as mobile based application.

The framework which is to be developed by a self-regulatory body should also include contents of an online game registered or to be registered; appropriate measures to be undertaken to safeguard children;

measures to safeguard users against the risk of gaming addiction and financial loss, including repeated warning messages at higher frequency beyond a reasonable duration for a gaming session, provision to enable a user to exclude himself upon user-defined limits for time and money spent; and measures to safeguard against the risk of financial frauds.

Every registered self-regulatory body should also establish a mechanism for time-bound resolution of complaints of users that have not been resolved by the grievance redressal mechanism of its member OGI.

The Draft Rules also give MeitY the power to include any game as an online game under the Draft Rules.

Feedback on the Draft Rules can be submitted on the website of MyGov (https://innovateindia.mygov.in/onlinegaming-rules/) by January 17, 2023.