Law Commission Urges MeitY To Put Online Gaming Rules On Hold

Even as the Ministry of Electronics and Information and Technology (MeitY) has started the consultation process on draft online gaming rules, the Law Commission has reportedly urged the ministry to put the rules on hold until it comes out with a “comprehensive” report on the matter.

The Commission has decided to conduct an in-depth study and analysis of the draft rules to produce the report, Business Standard reported.

“We urge you to kindly put on hold any proposal to finalise any draft laws in this regard while we are seized of the matter. You are also requested to hold a meeting and have a consultation with us regarding the same,” Justice Ritu Raj Awasthi, chairman of the Commission, said in a letter to MeitY.

The government constituted the 22nd Law Commission in November 2022. It is a non-statutory body which researches and advises the government on legislative matters and reforms.

According to the report, the Commission is examining financial losses and addiction to online gaming among youngsters. Besides, it has also taken note of fraudulent malpractices in online gaming and is deliberating on the legal aspects for the sector.

While MeitY is unlikely to put a hold on the process of framing the rules, it has invited the Commission to submit its inputs. “Any stakeholder can give their feedback on the policy as consultations are already open. There is no question of stopping the process, but suggestions are welcome,” an official from the ministry was quoted as saying in the report.

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.

“With the user base of online games growing in India, need has been felt to ensure that such games be offered in conformity with Indian laws and that the users of such games be safeguarded against potential harm,” MeitY said.

During a meeting with the top executives and founders of gaming companies, Minister of State (MoS) for Electronics and Information Technology Rajeev Chandrasekhar said that the self-regulatory organisations proposed under the draft rules have to be steered away from the dominance of major players. He also said that he expects the rules to be notified by January 31.

Earlier, MeitY also held discussions with other stakeholders including parents, students, and educationists.

The sharp growth in the online gaming ecosystem in the country over the last few years has also led to production of unicorns like Dream11, MPL, and Games24X7. 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.

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.

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