Centre Notifies Rules For Online Gaming, Allows Multiple SROs

After months of consultations, the Ministry of Electronics and Information Technology (MeitY) on Thursday (April 6) notified the rules for online gaming.

The rules define an online game as a game that is offered on the internet and is accessible by a user through a computer resource or an intermediary. The rules have also laid out the definition of real money gaming as games where a user makes a deposit in cash or kind with the expectation of earning winnings on that deposit.

Online real money games will have to follow KYC procedures, and inform users of changes to user agreement, terms, and privacy policy within 24 of hours of the change coming into effect. They also cannot offer financing on its own or through a third-party for users to play games on their platform.

Speaking on the rules, Minister of State for Electronics and Information Technology Rajeev Chandrasekhar said, “These rules don’t deal with all the nuances and the sophistication of games of chance games or skill. We bypass that and basically lay out a basic principle that the moment an online gaming passes into involving betting and wagering, regardless of the core content of the game, then it falls afoul of these rules.”

Under the institutional framework, all online games would be determined as permissible or not by a self-regulatory organisation (SRO). Moreover, there will be multiple SROs.

“In the innovation ecosystem, online gaming represents a huge opportunity for Indian startups… We have seen over the last several months, many startups crying foul of state regulations,” the minister said.

He added that it is often confusing for startups to have to deal with ambiguous legal frameworks. “We hope that these rules will create a much more stable, consistent, predictable framework for all those startups that are interested in the online gaming ecosystem,” he said.

Commenting on the new rules, Trivikraman Thampy, cofounder and co-CEO of Games24x7, said, “The clarity in the definition of online gaming, including specific permissible online real money games will ensure there is a clear distinction of online gaming platforms from betting and gambling, which will not be permitted. The allowance for multiple self-regulatory bodies will enable the industry to be adequately represented according to the varying nature and operational models of online games.”

Sai Srinivas, CEO and cofounder of MPL, said that the uniform legal framework provided by these rules will boost investor confidence, while he also lauded the distinction between online gaming and gambling.

“These rules will go a long way in promoting consumer interest while helping the industry grow responsibly and transparently and will also help in curbing the menace of anti-national and illegal offshore gambling sites, which have been proliferating in the last few years,” Roland Landers, CEO of All India Gaming Federation, said.

MeitY published draft online gaming rules, as draft amendments to the IT Rules, 2021, in January after the Centre appointed it as the nodal ministry to oversee the online gaming industry.

Last week, the minister said that the draft rules are ready after ‘extensive consultation’. He said when it comes to legislation for emerging sectors, the government’s approach is based on harm, legality and illegality.