In May 2022, the Government of India set up an inter-ministerial task force on online gaming, comprising of multiple ministries and the NITI Aayog, to analyse various aspects of online gaming and devise a framework for the regulation for the sector.
In recent years, the online gaming industry, despite its rapid growth, has been contending with regulatory challenges from state governments which have often conflated the online games of skill with games of chance and gambling.
A number of these state governments have consequently sought to prohibit online games of skill within their respective territories. While many of these legal prohibitions have been struck down in high courts, this has resulted in regional fragmentation for the gaming industry, and massive loss of investor confidence.
The recommendation of the inter-ministerial task force on online gaming included the creation of a new central legislation for regulating the sector.
This proposal was expected to address fragmentation in law across states, and create a mechanism for distinguishing online games of skill from betting and gambling. The proposal was also expected to provide greater clarity and regulatory stability to the online gaming industry, giving the sector a considerable boost.
Additionally, the recommendations of the task force were expected to curb the proliferation of illegal gambling platforms within the country. Other recommendations of the task force, as reported by the media, included setting up grievance redressal mechanisms and measures for adequate user protection.
However, a recent Reuters report has suggested that the Central Government may not be comfortable implementing any method for differentiating games of skill from games of chance, due to a lack of legal clarity.
There has been no clarity as to how the Central Government will tackle the issue of state-wise fragmentation of regulation and the menace offshore gambling websites without differentiating between games of skill and chance, and according to platforms any regulation which does not solve that issue will be ineffective in the growth of the industry.
Welcoming the regulation by the Central Government, Roland Landers, CEO, All India Gaming Federation states that, “As the apex industry body for online gaming, we welcome an effective and progressive central regulatory framework. We have been engaging with the Inter-Ministerial task force, and have submitted detailed representations for standards including consumer protection, age gating, fair play, etc. to be adopted for all online games of skill.
“All India Gaming Federation under its Charter already requires its over 100 members to institute various due diligence and consumer protection measures. However, today we have more than 1,000 gaming companies in India, and so, having a central framework will ensure that the industry as a whole adopts strong consumer protection and grievance redressal measures.”
In recent times, the industry has been faced with a situation where state governments have conflated skill-based gaming with the gambling industry, and have sought to prohibit it, causing fragmentation in the sector. This has happened despite 60 years of jurisprudence from the Supreme Court and multiple high courts on games of skill.
“We are hopeful that centralised regulation will solve this issue of state fragmentation and unconstitutional state bans. Such clarity will improve investor confidence and further allow the industry to grow at an even faster pace,” he added.
The draft rules under the current Information Technology Act are expected to be released for publication in the coming month and subsequently it is assumed that government will start work on a comprehensive stand-alone law for online gaming.
Online gaming is currently a USD 2.5 billion industry today, and companies and investors are waiting with bated breath for the regulations, since that will decide the future trajectory of this industry, and will shape whether India can compete with China and US at the global stage in online gaming.