Govt Examining Need For Centralised Regulatory Framework For Online Gaming Industry

The Centre is reportedly examining the need for centralised regulations for the gaming industry, which is currently burdened by different laws in different states across the country.

The initial discussions for a framework on centralised regulations for the gaming industry have already started, ET reported.

Proposals for setting up a separate regulatory body and mandating registration for online gaming startups are also being explored as part of the discussions which are in early stages. Moreover, the policymakers are also looking at introducing know-your-customer (KYC) verification for players to protect minors.

The Ministry of Electronics and Information Technology, Ministry of Home Affairs and Ministry of Finance are examining the pros and cons of the issue. Besides, the ministries are also analysing the concerns around money laundering or tax evasion by gaming firms, the report said.

The officials from the above mentioned ministries are scheduled to meet this week to discuss these issues.

Recently, the Income Tax Department issued show cause notices to seven online gaming firms and about three dozen high-value players active on those gaming platforms for alleged tax evasion.

Last month, the Enforcement Directorate also seized Bitcoins worth INR 12.83 Cr in connection with a money laundering probe into gaming app E-nuggets.

It must be noted that an inter-ministerial committee set up by the Centre also pushed for a centralised regulatory framework for the gaming sector. The panel was of the view that state-level regulations may not be sufficient to deal with complexities in the sector, and the difference in regulations across states could lead to confusion.

Last week, Tamil Nadu Governor RN Ravi approved the ordinance, passed by the state cabinet last month, to ban online gaming with stakes in the state.

Over the last couple of years, a number of states such as Telangana, Andhra Pradesh, Karnataka, and Kerala have issued several notifications banning online gaming. Many of these notifications were challenged in the respective high courts and some of them were struck down by the courts.

At a time when the gaming industry has started catching investors’ attention as well as more users, these unexpected bans can hurt the business and fundraising, industry experts told Inc42 earlier.

As per a FICCI-EY report, the online gaming industry generated a revenue of nearly $1.3 Bn in 2021. The sector has minted three unicorns till date. While Dream11 turned unicorn in 2019, MPL and Games 24×7 also joined the coveted club in 2021 and 2022, respectively. Meanwhile, gaming company Nazara Technologies got listed on the stock exchanges last year.