Inter-Ministerial Panel Seeks Central Law To Regulate Online Gaming Space

As online gaming picks up pace across the country, a high-level inter-ministerial panel has begun work on regulating the burgeoning space. 

According to a report seen by the Hindustan Times, the inter-ministerial task force is currently debating whether gaming aggregators fall under the ambit of intermediaries or publishers. 

The panel comprises members from all major ministries, including the Home Ministry, department of legal affairs, Ministry of Information and Broadcasting (MIB), and department of consumer affairs, among others.

In its recommendations, the panel has backed a new central legislation that would regulate the entire online gaming landscape, with powers ranging from issuing licences to blocking entities that violate local norms and guidelines. 

At the centre of the debate appears to be Section 79 of the IT Act, under which intermediaries are not liable for any third-party information or data hosted by them. 

These provisions provide safe harbour from prosecution for the startups acting only as intermediaries, as against the publishers themselves.

Amidst all the clutter, the panel is yet to take a call on whether Section 79 could be used to regulate online gaming platforms that simultaneously act as both intermediaries and publishers of gaming content.

“It was deliberated at the task force as to whether the section 79(2)(c) of the IT Act, providing for rule-making power to prescribe due diligence to be observed by the intermediaries to claim safe harbour under section 79(1) against third party content, can be used for regulating online gaming platforms while acting as publishers,” the report notes. 

The contention appears to be the distinction between game developers and game networks. While developers are responsible for producing the game, networks provide a platform for these games to debut and become available. 

Earlier, the developers would develop the game and the networks would host them. Of late, multiple gameplays and new formats allow developers to be plugged into the system, controlling the game development process. On the other hand, networks like Xbox and PlayStation are kept in loop about the burgeoning ecosystem. 

This distinction has become a major headache for Ministries looking to tackle the issue. If classified as an intermediary, the move would enable intermediaries to wash their hands off any third-party content or penalties by citing their role only as mere intermediaries. 

The task force was taking cognisance of this approach’s limitations and determining ways to bring the entire landscape under its ambit. 

Arguments Galore, Ministries Debate

The ministry of home affairs has sought a central law, essentially the proposed Digital India Act, as a long-term measure to regulate the arena. However, as an interim solution, it has proposed branding online gaming aggregators as ‘intermediary’, adding that a suitable ministry could be empowered to administer the content and regulate the industry. 

On the other hand, the ministry of information and broadcasting (MIB) has tagged online gaming portals as publishers, noting that the platforms play a significant role in determining the information offered to users. 

Accordingly, the MIB has backed central legislation, adding that the framing of rules under the IT Act may not serve the desired purpose.

Even the Piyush Goyal-led DPIIT has sided with the task force on its recommendations. 

A representative from the department of consumer affairs noted that the overall regulation of the online gaming sphere was outside the scope of the consumer protection Act. However, the official added that the Act could be used to tame unfair trade practices and misleading ads in the domain. 

Pointing to the magnitude of the online gaming industry in India, the report stated that the country was home to 275 gaming companies at the end of 2020, up from just 25 in 2010. It also noted that the sector currently employs around 15,000 skilled developers. 

This comes barely a month after the government recommended introducing new laws and creating a regulatory body to oversee the online gaming space. 

While the space has been growing by leaps and bounds, vague and opaque laws continue to be a hurdle. Apart from that, confusion over games of chance and skill and verbose local laws have played a spoilsport for the industry. 

Despite that, the Indian online gaming industry has minted unicorns such as Dream11, MPL and Games 24X7. On the other hand, Nazara Technologies made its debut on the stock exchanges last year.

The number of online gamers in the country stood at around 390 Mn last year, generating a revenue of nearly $1.3 Bn in 2021.