TMT LawsProposed Amendment In IT Rules: A Step Towards Safer Gaming Space in India

January 27, 20230


There are multiple interpretations of the term ‘Online Gaming’. Due to the internet connectivity any kind of game can be prepared and made available to the public at large.

Online games are usually purchased or accessed online and require internet access for the primary game-play experience or monetization. All types of games can be played online in single-player, multiplayer, and massively multiplayer game modes.

Online colleges and work-from-home opportunities arose as a result of the limitations and lockdown imposed by COVID-19, and the popularity of digital payments and the growth of online gaming also contributed to this trend. Growth in the gaming sector led to more investments to keep up with demand. The potential  profitability led the tech companies to invest in this sector.

The gaming sector got an impetus boost during the pandemic; hence, now people are willing to purchase and avail the gaming services. Studies show that over 24 million more Indians are joining the market for payment-linked gaming. With a Compound Annual Growth Rate (hereinafter referred to as “CAGR”) of 28–30%, it is predicted that the Indian gaming market will grow from $2.8 billion in 2022 to $5 billion in 2025. Accordingly, there will be 420 million gamers in the country in 2022, 450 million in 2023, and 500 million by 2025.

The World Economic Forum (hereinafter referred to as “WEF”) claims that mobile devices are the main force behind the growth of the gaming sector in India.  The use of smartphones has prompted growth in the gaming industry. The majority of games are played on mobile devices. The availability of faster smartphones with enhanced gaming capabilities, as well as affordable internet, has also fuelled the market.

Legal Framework regulating ‘Gaming’

Gaming and gambling are not covered by a single law in India, although both terms are used interchangeably for legal purposes. The Constitution of India, 1949 (hereinafter referred to as “Indian Constitution”) gives each state the authority to enact its own gambling regulations.  This implies that there are numerous state-specific variations.  For instance, Telangana, Tamil Nadu, and Andhra Pradesh, have outlawed online gaming.  Bridge, poker, and rummy are excluded from the definition of gambling in West Bengal.  A government notification in Kerala exempts rummy from gambling if no side-betting is involved.

The Public Gambling Act, 1867 (hereinafter referred to as the “Old Act”), a pre-independence law that was not designed to address contemporary forms of gaming, continues to serve as the basis for gambling laws in many states.  For instance, this law allows for the playing of games in an actual room or enclosure known as a “common gaming house.”

There are variations in treatment even among states that recognize online gaming.  While Telangana and Andhra Pradesh have outright banned online games played for money or stakes, Tamil Nadu continues to allow skill-based (but not other) games.

The Hon’ble Madras High Court  in the case of Raman Nair and others v. State, [(1968) 2 MLJ 217],  held that playing games is not inherently wrong but is only punishable when done in a public setting for profit-making purposes or in a common gaming establishment..

The Madurai Bench of the Madras High Court recently adopted an intriguing stance in the case of D. Siluvai Venance v. State, [Crl.OP.(MD)No.6568 of 2020] , where the Court emphasized the need to have a proper regulatory framework to regulate online games in India that are luring unemployed youth to gamble and lose all their money. This Madras High Court ruling is the most recent instance that has established a critical framework for identifying the behaviour and tendencies that will be classified as gambling in a public setting.

Analyzing the recent Amendment proposed by the Ministry of Electronics and Information Technology

An increasing number of people are becoming addicted to online gaming.  Kids’ compulsive gaming is affecting their academic performance as well as their social lives and relationships with family members.

Following violent and suicidal incidents, online games such as PUBG and the Blue Whale Challenge were restricted. It is also claimed that this addiction is causing nearsightedness in young people. The unintentional sharing of personal information can lead to fraud, invasions of privacy, abuse, and bullying, among other things. Ludo, arguably the most well-known online game in India, has generated debate and accusations of betting and gambling  As a result of which certain regulations have been submitted as an amendment to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, (hereinafter referred to as “IT Rules”) with the goal of protecting users from potential harm from skill-based games.

The The Ministry of Electronics and Information Technology (hereinafter referred to as “MEITY”) -released Draft Amendments to the IT (Intermediary Guidelines and Digital Media Ethics Code) Rules 2021(hereinafter referred to as “Draft Amendments”) call for a prohibition on betting and wagering on online games. According to the draft rules, an online game is one that “is offered on the internet and is accessible by a user through a computer resource if he makes a deposit with the expectation of earning winnings”.

The self-regulatory body will have five members, who will come from various backgrounds, including public policy, IT, psychology, online gaming, medicine, and online gaming. It must make sure that the registered games do not contain anything that is detrimental to India’s sovereignty and integrity, defense, security, friendly relations with other states, or public order, or that encourages the commission of any crimes that are punishable by law.

As per section 3(1) of the Draft Amendment, online gaming platforms, like social media and e-commerce companies, will be required to appoint a compliance officer to ensure that the platform adheres to norms, a nodal officer to act as a liaison official with the government and assist law enforcement agencies, and a grievance officer to resolve user complaints.

Under section 3(1) clause (ma) is inserted wherein  a the online game betting and online game advertisements are prohibited. The self-regulatory body that has been created and incorporated into the Rules will be responsible for identifying and certifying the authorized online gaming intermediary on the internet. As per the principles laid under the Rule, wagering on the outcome of a game will not be allowed. All online gaming companies will have to register with the self-regulatory body.

Moreover, under Section 6A the Ministry can declare any game which is made available through internet, as an online game if the game may create a risk of harm to the sovereignty and integrity and security of India or on account of causing addiction or other harm to the children.

Due diligence & KYC norms as per section 4A

Online gaming intermediaries are expected to perform additional due diligence, hence it has been mandatory for the intermediaries to display a demonstrable and visible mark of registration on all online games registered by the self-regulatory body,.

Platforms must make sure that all of their regulations, privacy policy, terms of service and user agreements”—including “policy related to withdrawal or refund of the deposit made with the expectation of earning winnings—are clearly visible on their websites. They must also include information about the risk of financial losses.

The regulations also call for the creation of a self-regulatory body for the resolution of complaints and the imposition of know-your-customer (hereinafter referred to as “KYC”) requirements for players and online gaming intermediaries. Online gaming companies will be required to carry out additional due diligence, similar to an intermediary, such as user KYC, transparent money withdrawal and refund, and a fair distribution of winnings. For KYC, they will need to adhere to the rules established for entities under Reserve Bank of India (hereinafter referred to as “RBI”) Regulation.

In order to guarantee that game outcomes are statistically random and unpredictable, platforms that offer card games typically use random number generation certificates. Gaming companies will also need to obtain these certificates. Additionally, they must obtain a “no bot certificate” from a reputable certifying organization.

Similar to social media intermediaries, online gaming intermediaries will also require a chief compliance officer and a nodal contact person for 24 hour coordination with law enforcement agencies and officers.


India needs a robust regulatory policy to regulate the online gaming market The laws relating to online gaming were unclear and scattered under various statutes, but now with the amendment which has been proposed by MEITY it can be expected that the online gaming industry will now be regulated.  However, it is still in its initial stage. Now, we just have to see whether the proposed regulations will be welcomed or not.

Additionally, gaming companies are required to work with the government to promote responsible gaming by instructing players and establishing best practices, such as performing KYC checks, user authentication, etc., to stop illegal activities and financial dealings on their platforms.

– Team AMLEGALS assisted by Mr. Lakshya Kothari (Intern)

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