Online gaming and its regulations in India – Explained, pointwise

Introduction

Online gaming has flourished during the pandemic due to lockdowns. The average time spent on online gaming has gone up almost 65% from pre-Covid levels. More than 43 crore people have spent time on virtual gaming.

The online gaming industry in India is home to over 275 gaming companies, more than 15,000 game developers, and around 300 million gamers. Recently, a Member of Parliament urged the government to come up with a comprehensive framework to regulate online gaming.

About online games in India

According to the All India Gaming Federation, India’s online gaming industry is expected to be worth ₹15,500 crores by 2023.

A 2019 survey by the U.S.-based Limelight Networks found that India had the second-largest number of gamers after South Korea. In India, while time spent online is still not as high as in other countries, the survey found that almost a quarter of adult Indian gamers had missed work while playing games.

What are the types of online gaming?

The types of online gaming include e-sports (well organised electronic sports which include professional players),  fantasy sports (choosing real life sports players and win points based on players’ performance) and skill based (mental skill) and chance based (based on random activity like roll of a dice) online games.

What is the present legal framework with respect to online gaming in India?

Presently, online gaming falls in a regulatory grey area and there is no comprehensive legislation with respect to its legality.

Games based on skills are allowed in most parts of the country, while games of chance are categorised under gambling, treated as immoral and prohibited in most parts of the country. As betting and gambling is a state subject, different states have their own legislation.

– Every state except Goa, Sikkim, and the UT of Daman prohibits any sort of gambling, betting or wagering on games of chance.

– Assam, Andhra Pradesh, Nagaland, Odisha, Tamil Nadu and Telangana have placed restrictions on games of skill as well.

But, recently, The Kerala High Court accepted the stance of Industry that games of skill should not trigger bans on gambling.

Debate on the game of skill versus chance in Online gaming

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.

Why did India need to regulate online gaming?

Various health issues associated with online gaming

Gaming addiction: Numerous people are developing an addiction for online gaming. This is destroying lives and devastating families. Compulsive gaming by children is affecting their performance in schools and impacting their social lives & relationships with family members.

The Union Government has issued an advisory to parents and teachers on the threats posed by online gaming, observing that the closure of schools due to the lockdown has caused an increase in children using cell phones and the internet.

Impact on health: Gaming addictions cause physical, social and emotional damage, impairing sleep, appetites, careers and social lives. The addiction can also cause insomnia,  cause near-sightedness, withdrawal from social contacts, academic failure, and extreme anger and irritability.

For instance, Online games like PUBG and the Blue Whale Challenge were banned after incidents of violence and suicide.

For these reasons only, the World Health Organization categorised gaming disorder as a mental health condition in 2018.

Other reasons to regulate online gaming

Economic benefits: 1. The online gaming industry is expected to generate revenues in excess of Rs 29,000 crore in 2025 with over 65.7 crore users. It is estimated that more than 15,000 direct and indirect jobs will be created, 2. The GST and Income Tax generated from this industry will add to the Government’s revenue, 3. Potential to attract significant global investments; e.g.,current investments in gaming companies like Dream11 are good indicators.

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.

Threat to Data privacy: Inadvertent sharing of personal information can lead to cases of cheating, privacy violations, abuse, and bullying.

Betting and gambling: Online games based on the traditional ludo, arguably the most popular online game in India, have run into controversy, and allegations of betting and gambling.

What can be done by the government to regulate online gaming?

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 from being advertised or promoted through direct or surrogate means online. 

Second, A Gaming Authority at the central level should be created. It could be made responsible for the online gaming industry, monitoring its operations, preventing societal issues, suitably classifying games of skill or chance, overseeing consumer protection, and combatting illegality and crime.

Third, 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.

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

Fifth, 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.

Sixth, India can follow a hands-off approach like advanced jurisdictions. 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.

Last, the government can regulate the online gaming hours for Children. For instance, recently, China limited gamers under 18 years to just three hours of online games per week. The limit is also during specified times. China made the industry responsible for enforcing the restriction.

What can be done by gaming platforms to regulate online gaming?

The online gaming platforms can 1. Strengthen the KYC norms, 2. Implement an age-rating mechanism wherein minors are allowed to proceed only with the consent of their parents — OTP verification on Aadhaar could resolve this, 3. No in-game purchases to be allowed without adult consent and wherever possible, the in-game chat option should be disabled 4. Gaming companies should proactively educate users about potential risks and how to identify likely situations of cheating and abuse. 5. Anonymity of participants should be removed and a robust grievance handling mechanism needs to be built, 6. Encourage various forms of self-regulation should also be encouraged for the industry.

More and more youngsters are getting hooked to online games. In light of this, the Online gaming industry needs to be regulated in India. Moreover, regulation of online gaming will not only open up economic opportunities but also address its social costs.

Source: Indian Express