Betting and gambling are state subjects and could face challenges while implementing centre’s recently unveiled online gaming rules, rue gaming startups
Set up SROs in the next three months or we will initiate steps to establish such self-regulatory bodies, the Centre to gaming platforms
New rules are self-explanatory and clearly define what is allowed and what is not but will issue any clarification accordingly if need be, said MeitY officials
Days after the Union government introduced new amendments covering the online gaming space, homegrown startups have knocked on the doors of the Ministry of Electronics and Information Technology (MeitY) seeking more clarity on the legislative overlap between the Centre and states’ rights on the matter.
At a meeting with the Minister of State (MoS) for Information Technology Rajeev Chandrasekhar, top executives of gaming startups reportedly flagged concerns over ‘prosecution or probes’ by state governments while adhering to norms unveiled by central authorities.
Noting that gambling, betting and wagering were state subjects under the Constitution and had wide definitions, the gaming executives said that states had the power to ban gaming platforms within their jurisdiction under local laws.
Sources told the Economic Times that the companies reportedly urged the Ministry to release frequently asked questions (FAQs) to clear the air around the matter.
“We now have guidelines for online gaming. However, in all probability, different states can still interpret gambling and wagering as per their respective definitions of the Act,” said Rajan Navani, the CEO of JetSynthesys, an online gaming intermediary.
The meeting was attended by representatives of gaming companies such as Nazara Technologies, Dream11, WinZo Games, and Mobile Premier League (MPL), among others. Members of industry bodies such as the Federation of Indian Fantasy Sports, E-gaming Federation and All India Gaming Federation were also present at the meeting.
According to sources, the platforms also urged the Centre to spell more clarity on the new know-your-customer (KYC) mandates unveiled under the recent IT Rules amendments. The new rules specify that all online real-money gaming intermediaries have to conduct an e-KYC of users for all monetary transactions.
People familiar with the development noted that the companies were previously assured that the e-KYC process would only be required to be undertaken when the user starts transacting in real money. Amid confusion over when this process would kick in, the industry players have sought more clarity on the matter.
Debate Over SROs
The meeting also saw hectic deliberations on the topic of self-regulatory organisations (SROs). MoS Chandrasekhar is also said to have directed the gaming companies to submit proposals to establish SROs to oversee the burgeoning space.
On the framework of SROs, the MoS told the participants to suggest steps on how the conduct of such self-regulatory bodies ought to be and to ensure that these organisations are industry-dominated.
Chandrasekhar also told the gaming companies that the SROs should be up and running in the next three months. The government also warned the players that it would step in and initiate the process itself if the body is not functioning in the set timeframe.
As per sources present at the meeting, the centre is expected to kick off the process with three SROs and could then add more depending on the workload and demands of the industry. However, these self-regulatory bodies will have to adhere to norms issued by the ministry or face the risk of de-registration if they fail to do so.
In response to this, the industry players sought more clarifications on the structure and functioning of SROs. Flagging issues with multiple such SROs, one participant raised concerns over forum shopping by online gaming companies and asked whether the government was looking to have multiple self-regulatory bodies for different formats such as card games, fantasy sports and casual gaming.
Amid the brouhaha, senior MeitY officials are said to have claimed that the new rules were ‘self-explanatory’ and clearly defined what was allowed and what was not. Assuaging the players, the ministry officials said that they had heard the industry’s concerns and would issue any clarification accordingly if deemed fit.
“The only things that are not permissible are real-money games where the person is betting on a third-party outcome. We were asked to talk to the states and explain our stand. They (MeitY officials) told us that they would step in if there were gaps and if states sought more clarification and assurance on the subject,” a source was quoted as saying.
Meanwhile, the IT Ministry also intends to crack the whip on certain fantasy games, going forward. A source said that some of these platforms may find it ‘difficult to operate in times to come.’ Additionally, the central authorities are purportedly taking measured steps on the matter. The Ministry is reportedly looking at concerns around certain elements of wagering involved in many of these gaming platforms.
Meanwhile, officials are likely expected to wait for SROs to take a call on the matter before moving ahead on such issues
This comes days after MeitY notified a slew of rules for online gaming. The new rules laid out the definition of online games as well as real money gaming. Besides, the new rules mandated the setting up of SROs and even underscored processes such as eKYC for online real money games. Under the new rules, gaming platforms have to inform users of changes to the agreement, terms and privacy policy within 24 hours of the proposed changes coming into effect.
The move is aimed at putting the Indian gaming space in order, which has become a regulatory quagmire. While states have the right to make laws related to betting and wagering, the new amendments are the Centre’s attempts to set a broad framework for gaming companies to comply with.
Despite the challenges, the Indian gaming industry continues to grow. According to a report, the number of gamers in the country soared to 507 Mn at the end of March 2022, with the total gaming market expected to surge to a market size of $8.6 Bn by FY27.
