On April 6th, 2023, a new regulations for Online Gaming was ben introduced under section 87 of the Information Technology Act, 2000 ( hereinafter referred to as the “IT Act”) by Ministry of Electronics and Information Technology ( hereinafter referred to as the “MeITY”) via amendment of The Informational Technology, 2021 (Intermediary Guidelines and Digital Media Ethics Code) (hereinafter referred to as the “Online Gaming Regulations” ), which has significant impact on Online Gaming in India. This Gaming Regulations is a welcome step to clarify uncertainties and to reign certain activities such as betting and gambling which have plagued the online gaming sector. The online gaming sector is in its nascent stage in India and to curve its growth on innovative track, there are few additional checks and balances have been imposed via Online Gaming Regulations which includes but not limited to the introduction of Self-Regulatory Body (hereinafter referred to as the “SRB”) to ensure compliance under Online Gaming Regulations and to keep the Online Gaming companies under checks and balances.
In this article we have analyzed the impact of Online
Gaming Regulations on the gaming companies and the sector itself.
Before moving further, few important definitions are listed out below for a better understanding:
a. (a) Online Game: - means a game that is offered on the Internet
and is accessible by a user through a computer resource or intermediary.
b. (b) Online Gaming Intermediary: - means any intermediary that enable the users of its computer resources to access one or more online games.
c. (c) Online Real Money Game: - means on an online game where a user makes a deposit in cash or kind with the expectation of earning winnings on that deposit.
d. (d) Permissible Online Game: - means a permissible online
real money game or any other online game that is not an online real money game.
e. (e) Permissible Online Real Money Game: - means an online
real money game verified by an online gaming self-regulatory body.
The most significant and welcome change in Online Gaming Industry though the Online Gaming Regulations is introduction of Self-Regulatory Bodies or SRBs.
Self-Regulatory Bodies / SRBs: - To be approved by MeITY for verification and permission of the online real money games who shall be incorporated as Section 8 company under the Companies Act, 2013. Prior to grant permission, SRB need to satisfy itself that such online real money game does not involve wagering on any outcome.
The obligations to the Online gaming Companies shall not come into force until the expiry period of 3 months from the date on which at least three online gaming SRBs have been designated by MeITY.
Online Gaming Intermediaries: - They need to carry out their obligations under Online Gaming Regulations with diligence while discharging its duties.
Any permissible online real money game shall display a demonstrable and visible mark of verification of such online game by SRBs.
An online gaming intermediary shall account for the following
a. The rules and regulations for the said online game, privacy policy, terms of services and user agreement along with policy related to withdrawal or refund of the deposit made with the expectation of earning winnings, the manner of determination and distribution of such winnings, and the fees and other charges payable by the user;
b. To verify the KYC of user for identification of such user before accepting any deposit in cash or kind from any user for permissible online real money game;
c. The measures taken for protection of deposit made a user for such online game;
d. Shall not itself finance by way of credit or enable financing to be offered by third party for the purpose of playing permissible online real money game by users;
e. To publish and maintain on its website, mobile based application or both, at all times, an updated list of all permissible online real money games verified by SRBs along with details of such online games including the details of applicant, the dates and period of validity of the verification, the reasons of such verification and the details of the suspension or revocation, if any. Viewpoint: - The Online Gaming regulations is a welcome step to bring clarity and having one single regulation instead of having several state regulations over online game. In coming days, the compliances w.r.t. online gaming intermediaries are expected to have more clarity w.r.t. KYC of users, approval of permissible online real money games, and clarification over kind as deposit in online real money game etc. This article is for information purpose only and should not be taken as legal advice. To know further details, clarification, assistance or any advice on Online Gaming regulations, its compliance, refund or acceptance of cash from the users, settlement of grievances with the users over money or any legal issues on online/fantasy games, you may connect with us at admin@equicorplegal.com / 08448824659 and visit www.equicorplegal.com .