IT ministry calls for self-regulation, grievance redressal in online gaming

The IT ministry has proposed a self-regulatory mechanism, grievance redressal mechanism, and mandatory verification of players and physical Indian addresses for online gaming companies in India, in the draft online gaming rules. The draft was released for public consultation on Monday.

The self-regulatory body will have a Board of Directors with five members from fields like online gaming, public policy, IT, psychology, medicine, or any other field. The body will have to make sure that the registered games do not have anything “which is 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 relating to the aforesaid”.

Also, the game must be in conformity with the laws of the land including regulations related to gambling and betting. The draft rules also prescribed additional due diligence for companies by displaying a registration mark on all online games registered by the self-regulatory body.

The body will then provide membership to an intermediary, which will observe the due diligence required under the rules, “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 intermediary shall, before hosting or publishing or advertising an online game for a consideration, ascertain from the online gaming intermediary and verify from the concerned self-regulatory body…whether such online game has been registered with such body, and shall display on its website, mobile-based application or both, the fact of such registration,” the rules said.

The intermediary will also be responsible to show all the online games offered by the online gaming intermediary, along with the policy related to withdrawal or refund of the deposit made with the expectation of earning winnings, the manner of determination and distribution of such winnings, and the fees and other charges payable by the user for each such online game.

“Like an IT intermediary, the online gaming intermediary will be required to undertake certain additional due diligence, KYC of the users, transparent withdrawal/refund of money, distribution of winnings, fee, and also registration with the ministry, including appointment of grievance and nodal officers, and formal redressal mechanisms,” said Nakul Batra, associate partner at DSK Legal.

The online gaming intermediary shall prominently publish on its website, mobile-based application or both, a random number generation certificate and a no-bot certificate from a reputed certifying body for each online game offered by it, along with relevant details of the same.

They will also appoint a Grievance Officer who will be its employee and a resident of India. Also, a Chief Compliance Officer will be appointed for management. CCO will coordinate with the law enforcement agencies in India.

“While these amendments, reflect the government’s overall intent to bring the online gaming industry under regulations, the narrowing down of the definition of online games to those involving deposits along with other focal points proposed to target games involving financial implications of users, prize money earnings, indicate that the government seeks to particularly cater to such online games in which users’ financial implications are likely to come into play,” said Kritika Seth, founding partner at Victoriam Legalis – Advocates & Solicitors.

The draft amendments are aimed at addressing the said need while enabling the growth of the online gaming industry in a responsible manner, according to the ministry.

The public comments on the draft rule can be shared by January 17.

“While such requirements are undoubtedly the need of the hour for the sector to thrive in the right manner and to manage the traffic on these platforms, the quantum of compliance may become a speed breaker to the gaming industry,” Batra added.

The industry, however, welcomed the draft.

“We believe this is a great first step for comprehensive regulation for online gaming and will hopefully reduce the state-wise regulatory fragmentation that was a big challenge for the industry. These rules will go a long way in ensuring consumer interest while helping the industry grow responsibly and transparently. These rules will also be a start in curbing the menace of anti-national and illegal offshore gambling platforms,” said Roland Landers, CEO of All India Gaming Federation.