Govt May Go With Forming Multiple SROs For Online Gaming Industry

While the proposal of the self regulatory organisation (SRO) has taken up the centre stage in draft online gaming rules, the government may agree to the idea of having multiple SROs.

However, the government is likely to set up stringent rules and regulations for the legal responsibilities of SROs. The rules will include do’s and don’ts for the SROs, as well as other norms for who can form an SRO, ET reported.

According to a government official quoted in the report, the government will not allow any unreliable body to form SROs. Hence, they will put appropriate mechanisms in place for who can form an SRO, their roles and responsibilities, and what legal backing they have for certifying games. Having credibility and accountability to the government, as well as the public, will be expected from SROs.

If there are multiple SROs, industry bodies have highlighted the need to ensure that if a game is denied certification by one SRO no other SRO would do so in regards to having a common code of conduct across the industry.

“That certainly is one possibility. We do not want forum-shopping of certification by gaming companies because there are many smaller and bigger players in the market,” a source said as quoted in the report.

By the end of January, the final rules are expected to be notified.

Recently, Minister of State (MoS) for Electronics and Information Technology (MeitY) Rajeev Chandrasekhar said that the self-regulatory organisations proposed under the draft rules have to be steered away from the dominance of major players.

The MoS held a meeting with top executives and founders of gaming companies on the recently-published draft rules for the industry as the government has started extensive consultation on the draft.

In December 2022, the Centre appointed MeitY as the nodal ministry to oversee the online gaming industry. Earlier this month, MeitY published the draft online gaming rules as draft amendments to the IT Rules, 2021, under which it proposed a self-regulatory mechanism for the industry.

“Self-regulatory bodies will be registered with the ministry and may register online games of such online gaming intermediaries who are its members and which meet certain criteria. Such bodies will also resolve complaints through a grievance redressal mechanism,” the ministry said,

Due to regulatory instability and funding winter caused by an economic downturn, online gaming startups saw a sharp 80% year-on-year decline in funding raised in 2022. Indian gaming startups raised just $349 Mn last year as against $1.74 Bn in 2021, as per Inc42 data.

The Indian gaming startup ecosystem has produced unicorns such as Dream11, MPL, and Games24X7. Meanwhile, 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.