Draft Rules for Online Gaming | 03 Jan 2023

Why in News?

Recently, the Ministry of Electronics and IT (MeitY) has released the Draft Rules for Online Gaming.

• The proposed rules have been introduced as an amendment to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021.

What are the Draft Rules?

• Self Regulatory Body:
  • Online games will have to register with a self-regulatory body, and only games cleared by the body will be allowed to legally operate in India.
    • The self-regulatory body will have a board of directors with five members from diverse fields, including online gaming, public policy, IT, psychology and medicine.
  • There could be more than one self-regulatory body and all of them will have to inform the Centre about the games they have registered along with a report detailing the criteria for registering.
• Due Diligence:
  • Online gaming firms will be required to undertake additional due diligence, including KYC of users, transparent withdrawal and refund of money, and a fair distribution of winnings.
  • For KYC, they will have to follow norms laid down for entities regulated by the Reserve Bank of India (RBI).
• Random Number Generation Certificate:
  • Gaming companies will also have to secure a Random Number Generation Certificate, which is typically used by platforms that offer card games to ensure that game outputs are statistically random and unpredictable.
  • They will also have to get a “no bot certificate” from a reputed certifying body.
• Restrictions on Betting:
  • Online gaming companies will not be allowed to engage in betting on the outcome of games.
• Compliance:
  • Similar to social media and e-commerce companies, online gaming platforms will also have to appoint a compliance officer who will ensure that the platform is following norms, a nodal officer who will act as a liaison official with the government and assist law enforcement agencies, and a grievance officer who will resolve user complaints.

What is the Need for the Rules?

• Around 40 to 45 % of the gamers in India are women, and therefore it was all the more important to keep the gaming ecosystem safe.
• It is believed to be a great first step for comprehensive regulation for online gaming and will reduce the state-wise regulatory fragmentation that was a big challenge for the industry.
• The revenue of the Indian mobile gaming industry is expected to reach USD 5 billion in 2025.
• The industry grew at a compound annual growth rate (CAGR) of 38% in India between 2017-2020, as opposed to 8 % in China and 10% in the US.
• It is expected to grow at a CAGR of 15 % to reach Rs 153 billion in revenue by 2024, as per a report by VC firm Sequoia and management consulting company BCG.

Source: IE