Gaming Startups Write To MeitY Opposing IAMAI’s View On Draft Gaming Regulation

The online gaming industry seems to be in a fresh brawl with some of the big gaming startups’ dissenting opinions on the Internet and Mobile Association of India’s (IAMAI) view on draft online gaming rules.

Earlier, IAMAI said that the draft gaming rules were ‘right on intent but poor on scoping’.

Dream Sports, the parent company of Dream11, Mobile Premier League (MPL), Zupee and Games24x7, have written to the Ministry of Electronics and Information Technology (MeitY) that its statement is not aligned to their views, ET reported.

The above mentioned startups also claimed in the note that they weren’t consulted before the statement was issued. These gaming startups have raised ‘a strong objection’ with IAMAI over its comments.

“While we are members of the IAMAI Gaming Committee, we would like to clarify that we do not agree with the primary assertion made in the release. We have made certain recommendations for your consideration through our specialised gaming industry bodies and look forward to engaging in consultation with you on the same,” the note said as quoted in the report.

It is to be noted that Dream11, MPL, Games24x7 are three of the four gaming unicorns in India. On the other hand, Delhi NCR-based online gaming startup Zupee also reached a valuation of $600 Mn after it closed its Series B round last year.

“We also believe that measures introduced to curb the menace of offshore illegal gambling apps and websites is a very welcome step and will go a long way in providing a safe and trusted internet to our gaming users,” the gaming firms said in a note.

In its note last week, IAMAI said that certain provisions of the draft also seem to imply that service providers or partners that advertise, publish or host online games will have to comply with the rules by verifying each game with the self-regulatory body (SRB) on an ongoing basis making it impractical.

“Intermediaries must not be obligated to ascertain and verify the registration of online games,” IAMAI said.

While this self-verification clause would impact other IAMAI members including Meta, Amazon, Google, this issue may have played a role in the latest statement of the association.

In December, the Centre appointed MeitY as the nodal ministry to oversee the online gaming industry. Later, the ministry published draft online gaming rules proposing a self-regulatory mechanism for companies in the sector.

As per the draft amendments, online gaming intermediaries will have to ensure due diligence while discharging their duties, including reasonable efforts to ensure users do not host, display, upload, publish, transmit or share an online game that does not conform to local laws, including any law on gambling or betting.

Along with MeitY working on the regulation of online gaming, the government is working on its taxation issues. In the 2023-24 Union Budget, Finance Minister Nirmala Sitharaman proposed removing the minimum threshold of INR 10,000 for game wins to charge TDS.

In her speech, the finance minister said that the government will issue more clarity on the taxation regime for online gaming.

In the meantime, the number of gamers in the country grew 12% to 507 Mn by March 2022 (24% were paying users) from 450 Mn in March 2021, according to a report by gaming and interactive media-focused VC fund Lumikai.

However, the funding raised by online gaming startups declined 80% year-on-year in 2022. Indian gaming startups raised just $349 Mn last year as against $1.74 Bn in 2021, as per Inc42 data.

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