The government should have a central law to regulate the online gaming sector, and the first step towards this front is treating these apps as intermediaries, Union Minister of Electronics and Information Technology Ashwini Vaishnaw said in the Lok Sabha on February 8.
“We as responsible lawmakers should come with a central act, which basically has been drafted in consultation with everybody and that act should be effectively regulating the online games and online gambling,” he said.
“Already 19 states and Union territories have passed their own laws. Seventeen states have actually amended the Public Gambling Act, 1867, and introduced the online gambling elements within the act,” the minister said.
The government had designated the Ministry of Electronics and Information Technology (MeitY) as the nodal ministry for all online gaming related matters in December 2022.
Subsequently, on January 2, 2023, MeitY proposed a self-regulatory mechanism, mandatory verification of players through Know-Your-Customer (KYC) norms and grievance redressal methods as draft amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, with the aim to safeguard users against potential harm from online games and ensure that these games conform with Indian regulations.
The ministry sought public comments on these rules till January 25. In the past month, it also held public consultations with a range of stakeholders, including gaming companies, industry associations, lawyers and gamers among others.
These draft regulations come at a time when the country’s gaming sector has seen unprecedented growth in terms of app downloads and revenue generation as a result of pandemic-induced home confinement in recent years that led to Indian consumers becoming more comfortable spending money on mobile games.
Revenue in the country's gaming sector increased from $2 billion in FY-2021 to $2.6 billion in FY21-22 and is expected to expand at a compound annual growth rate of 27 percent to $8.6 billion in FY26-27, according to a report by Lumikai — gaming and interactive media venture fund.
However, skill-based real money gaming, which accounts for more than half of the industry's revenue, has come under fire from several state governments, including Tamil Nadu, Andhra Pradesh, Telangana, Kerala and Karnataka. These states have banned or tried to ban skill-based real money gaming as gambling is a state subject.
Many of these bans were later challenged in the state courts by skill-gaming startups and industry associations, and the suspensions were overturned. In July 2021, the Supreme Court upheld fantasy sports as a skill-based game.
Industry executives had previously told Moneycontrol that a central regulation is crucial to fight the menace of illegal offshore gaming operators since a state law cannot be enforced against a foreign operator.
In January 2022, Union Minister of State for Electronics and IT Rajeev Chandrasekhar had told that the draft rules prohibit games that allow any form of betting or wagering on the outcome.