Delink the good, bad and ugly of online gaming for apt regulation

News: Recently, a parliamentarian urged the government to come up with a comprehensive framework to regulate online gaming. 

The need to regulate online gaming industry is clear as India is home to over 275 gaming companies, more than 15,000 game developers, and around 300 million gamers. 

But the issues of illegal betting and gambling should not be mixed up with online gaming. They need to be delinked from each other.

How illegal betting and gambling is carried out in India?

Offshore gambling websites: Most of the betting in India is done on cricket matches, through websites like Betaway, Bet365 and DafaBet. These websites are headquartered in tax havens like Malta, Cyprus and Gibraltar but are accessible to Indian users.

Third party wallets: In India, third-party wallets like Skrill and Neteller are used to funnel money into gambling sites. Users deposit money from their bank accounts into these prepaid wallets, which can be used to make payments anonymously.

What is the game of skill versus chance debate?

Various High courts have legitimized gaming formats like fantasy sports etc as online games of skill.

Rulings like Varun Gumber vs Chandigarh (Punjab & Haryana High Court), Gurdeep Singh Sachar vs Union of India (Bombay High Court) and Avinash Mehrotra vs Rajasthan (Supreme Court) – have found fantasy sports of a predominant format to be games of skill.

In the Junglee Games case, the Madras High Court ruled that games like Poker and Rummy are games of skill.

How can the Govt address the issue?

Firstly, the centre can take steps to block sites under Section 69A of the Information Technology (IT) Act. Stringent measures are also required to prevent illegal services being advertised or promoted through direct or surrogate means online. 

– Rule 3(1)(b) of the IT Rules, 2021 prohibits intermediaries from posting or hosting content that encourages gambling or money laundering. But rules to penalize such advertisements need to be extended to the entire online ecosystem.

Second, since the blocking of illegal websites lies in the Centre’s jurisdiction, states may follow the Maharashtra Police’s model to deal with digital piracy.

States can undertake a similar exercise against illegal betting websites, with support from the gaming industry.

Moreover, consumer interest groups should be brought in into anti-gambling efforts, to spread awareness and provide forums to report illegal platforms.

Finally, the Centre should formulate an overarching regulatory framework for online games of skill. India must move beyond skill-versus-chance debates to keep up with the global gaming industry.

Advanced jurisdictions have mostly taken a hands-off approach towards skill-based games.

The UK exempts skill games from licensing requirements that apply to games of chance.

Likewise, the US’s Unlawful Internet Gambling Enforcement Act carves out a safe harbour for fantasy sports.

What is the way forward?

A legal codification of judicial rulings, along with a nuanced classification of different types of online games, could enable targeted and risk-based rule-making.

Such a framework will offer clarity and separate skill-based games from gambling.

Online games represent the best of both Digital India and Make in India, they need a proper legislation for Industry to function smoothly. 

Source: This post is based on the article “Delink the good, bad and ugly of online gaming for apt regulation” published in Livemint on 20^th Dec 2021.