On 6th April, 2023 the Ministry of Electronics and Information Technology (“MeitY”) has notified the amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 as Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2023 ("IT Rules”). This amendment to the IT Rules intends to regulate online gaming and such online gaming intermediaries.
The updated definition for online games and online gaming intermediary states, “a game that is offered on the Internet and is accessible by a user through a computer resource or an intermediary”. An online gaming intermediary is “any intermediary that enables the users of its computer resource to access one or more online games”. Additionally, new online gaming genres are introduced:
- · Permissible online game- An online real money game or any other online game that isn’t an online real money game.
- · Permissible online real money game- Online real money games verified by an online gaming self-regulatory body. Self-regulatory body (“SRB”) shall be as per Rule 4A of the amendment [Rule 2(1)( qc)] of the IT Rules shall mean “a body notified as SRB who shall be responsible for verifying an online real money game as a permissible online real money game”.
- · Online real money game- A game where "a user makes a deposit in cash or kind with the expectation of winnings on that deposit" is referred to as an online real money game. Winnings shall mean any monetary or in-kind rewards given or planned to be given to online game players in accordance with their performance and the game's regulations.
KYC Verification As Per RBI Norms
Online gaming intermediaries should identify such users and confirm their identities before receiving deposits in cash or kind from any user for an online real-money game. The same processes used for entities under the control of the Reserve Bank of India to confirm and authenticate a customer's identity at the start of an account-based relationship shall apply here too.
Functioning Of SRBs
The rules permit SRB to self-regulate online gaming. These SRBs oversee confirming and verifying online real money games as a permissible online real money game.
Further, the concern would be who can serve as an SRB, and how many SRBs can exist: The MeitY has the authority to designate as many SRBs for online gaming as it deems necessary. Presently there are 3 SRBs appointed by the Ministry. The following entities are eligible to submit an application to the Ministry to become SRBs:
- Must be a Section 8 (non-profit) company (companies with a charitable and non-profit object);
- Its members are representative of the gaming industry;
- Its members have been offering and promoting online games in a responsible manner;
- Its Board of Directors consists of reputable individuals who do not have any conflict of interest and possess the necessary knowledge and experience. The Board should include members from various fields such as education, psychology, child rights, public policy, information, and communications technology, etc;
- The SRB’s memorandum of association (MoA) and articles of association (AoA) should contain provisions relating to its functions, information about grievance redressal mechanism, the criteria for acceptance of members, and safeguards that the body functions “in a manner free from conflict of interest and at arm’s length from its members.” Additionally, some parts of MoA and AoA can only be amended with prior approval of the MeitY;
- The SRB should have “sufficient capacity, including financial capacity, to perform its functions as an online gaming self-regulatory body under these rules.”
Verification Process And Approvals For Real Money Games
Any SRB member may submit a request for authorization of an online real money game. After considering various below-mentioned factors, the SRB may determine that this game is acceptable for online real money play.
- The online real money game does not involve wagering on any outcome; and
- The online gaming intermediary and such online game follows the due diligence requirements under Rule 3 and 4 of the IT Rules;
- The game and intermediary follow all “the provisions of any law relating to the age at which an individual is competent to enter into a contract”;
- The game and the intermediary follow the framework made by SRB.
For a maximum of 3 months, the SRB may initially rely on the data supplied by the online gaming intermediary and designate the game to be a permitted real-money online game. The SRB is required to do its thorough investigation and decide regarding the game's legality. If not, the applicant needs to inform in writing why the game doesn’t adhere to the rules.
Revocation of game approval
If an SRB determines that a game is in violation of these regulations, it may suspend or revoke its verification after giving the application member a chance to be heard.
Framework for game verification
An SRB must publish its framework for game verification, which must contain the following:
- Any such game should not be against the interests of India's sovereignty and integrity, state security, good ties with other countries, and public order.
- There should be "safeguards against user harm, including self-harm and psychological harm”.
- Measures "to safeguard children, including parental or access control and classifying online games through age-rating mechanism, based on the nature and type of content" should be taken.
- "Measures to safeguard users against the risk of gaming addiction, financial loss, and financial fraud, including repeated warning messages at higher frequency beyond a reasonable duration for a gaming session, and provision to enable a user to exclude himself upon user-defined limits being reached for time or money spent," according to the guidelines.
List of SRBs members
SRB is required to publish and maintain updated list of all of its members, including any previous ones, together with their names, dates of membership acceptance, corporate or business-related identity numbers, and other information, as well as information regarding any suspension or revocation of membership.
Grievance redressal framework must be published
Publication of the grievance redressal framework is required. SRBs are required to post the grievance redressal framework and the contact information for the grievance officer on their website or mobile application. Within 24 hours, the complaint must be acknowledged, and within 15 days, it must be resolved.
What next can we expect?
Under the upcoming Digital India Act, which will replace the Information and Technology Act of 2000, different sorts of platforms may be governed by distinct and detailed laws. One of the nine platform types that the IT Ministry identified for separate regulation at a legislation consultation last month as gaming platforms. However, another concern that is raised is, whether gaming platforms/ companies will receive safe harbour protections under these Digital India Act rules remains to be seen. As stated by Mr. Rajeev Chandrasekhar, MoS for Electronics and IT- “If there is a need for safe harbour, who should be entitled to it? The whole logic of safe harbour is that platforms have absolutely no power or control over the content that some other consumer creates on the platform. But, in this day and age, is that really necessary? Is that safe harbour required?” This can be observed more wisely with the practical implication of such laws.