The Indian government has put forth a proposal to regulate online real money gaming platforms under the IT (Intermediary Guidelines and Digital Media Ethics Code) Rules of 2021, which already govern social media platforms. This move may negatively impact foreign betting companies, but could potentially benefit Indian fantasy sports and other gaming businesses, according to experts.
On Monday, the Ministry of Electronics and IT (MeitY), which was designated as the governing body for online gaming on December 23rd, released a draft for public consultation. The ministry stated that the final amendment to the IT rules, following consultation with the industry, will be announced in April.
The consultation paper defines “online game” as “a game that is offered on the Internet and can be accessed by a user through a computer if they make a deposit with the expectation of earning winnings”. It only allows for the operation of “games of skill” in India, which, according to various court rulings in the country, include games like rummy and the Dream11 model of online fantasy sports.
The government has also suggested the creation of a self-regulatory organization (SRO) and self-regulatory framework, as well as mandatory KYC verification of players and the appointment of compliance and nodal officers. In addition, gaming firms will be required to have a physical address in India and will be subject to additional due diligence measures, including the publication of measures taken to protect user deposits and the notification of users about the “risks of financial loss and addiction associated with online games”.
In order to advertise on social media platforms like Google or Facebook, online games must display a registration mark issued by SROs, which must be registered with the Ministry of Electronics and IT and ensure that their members are complying with IT rules. Social media companies, in turn, are required to verify registration and consult with SROs before accepting advertising.
By following the guidelines outlined in the IT Rules, gaming firms will receive safe harbor protections as defined in Section 79 of the IT Act. These rules offer intermediaries protection from prosecution for the misuse of their platforms by third parties. Currently, the IT Rules cover social media and significant social media intermediaries, and the draft proposal aims to add online gaming intermediaries to this list.
Minister of state for electronics and IT, Rajeev Chandrasekhar said, “The rules are simple—we would like the online gaming ecosystem to expand & grow and be an important catalyst to India’s $1 trillion digital economy goal by FY26. We also envision a bigger role for startups in the online gaming industry.”
