Government amends rules to place online gaming under MeitY

President Droupadi Murmu signed a notice to amend the Allocation of Business (AOB) rules for placing online gaming under the Ministry of Electronic and Information Technology (MeitY).

Until now, there was no specific entry into the rules of online games, while the Ministry of Finance was mainly engaged in matters related to taxation. In May of this year, the center formed a working group comprising various ministries to look into the rules and regulations related to this sector.

Customize business rules

The AOB rules specify which ministry or department will be responsible for drafting the law, implementing the law after enactment, framing the rules and formulating the policy for the subject listed against its name. These rules are modified from time to time.

And therefore 377 ^y The amendment has been notified stating that matters relating to online gaming will be placed under the heading of the “Ministry of Electronics and Information Technology”. It also made another entry under the supervision of the Ministry of Youth and Sports Affairs to define e-sports as part of multiple sporting events.

Commenting on the development, Joy Bhattachargya, Managing Director, Federation of Indian Fantasy Sports (FIFS) said: “The appointment of MeitY as the central regulatory body will provide clarity and certainty to investors, the industry and consumers.”

He added, “The decision is in line with the government’s initiative to drive the growth of the AVGC sector and make India a global hub for online gaming.”

Defining a nodal ministry for online gaming and esports is a fair move by the government to centralize the rights of gaming companies and gamers, says Shivani Jha, a gaming and technology lawyer. In the past, a user playing a game in Delhi might have been labeled a criminal in a state like Karnataka during an official ban. “One can only look to the rules and see how the country and the center will work together to come up with a regulatory mechanism that protects online players from arbitrary criminalization and bans,” she said.

Four major issues

Although no explanation was given for MeitY’s online game allocation, the move appears to be intended to address four major organizational issues.

First, there is no central authority/nodal ministry that stakeholders can contact to address issues yet.

Second, there are no clear guidelines for defining what counts as a game of skill or chance.

Third, there are no specific legal provisions to prohibit foreign betting sites that promote money laundering activities.

Fourth, many consumer protection issues remain unaddressed such as child safety, financial losses, grievance compensation, and KYC.

The specific entry in the AOB Rules is also intended to address the need for a unified regulatory framework at the central level. This is important because the Internet is borderless and it is difficult to block apps or websites at the state level.

The center also considers the ban on online gaming activities by countries to be ineffective.

Similarly, a unified approach to addressing issues like ads, responsible gaming practices and KYC is also needed as it affects users across India.

Legal issues

Government officials said that online gaming has presented several legal issues.

The current legal provisions relating to online gaming are primarily based on entry 34 in the State List of the Constitution dealing with “betting and gambling”.

However, most of the countries have pre-internet era laws which did not envisage playing games online.

Also, different countries have different regulatory approaches to online gaming. For example, Meghalaya, Sikkim and Nagaland have implemented a licensing mechanism for online gaming and gambling/betting activities. However, states like Telangana, Andhra Pradesh, and Odisha have banned both online gaming and online gambling/betting.

Interministerial Working Group

In May of this year, MeitY initiated ministerial consultations with the aim of considering issues related to online games in their entirety.

Accordingly, an Inter-Ministerial Task Force (IMTF) was formed consisting of CEO NITI Aayog and Secretaries of the Ministries/Departments of Home Affairs, Sports, Media, Broadcasting, Revenue, Industry Promotion, Internal Trade, Legal Affairs, Electronics, Information Technology and Consumer Affairs.

The IMTF held a number of consultations/meetings, including with industry stakeholders and state governments and presented its report. However, it has not been announced yet.