The Indian gaming industry has observed extensive growth in the recent years. However, the number of concerns related to the impact online gaming has on children and other vulnerable members of society has grown too.
The Government of India, in April 2023, made an amendment to the Indian Information Technology Rules, 2021 (‘IT Rules’) to deal with these concerns. This amendment brought all the players in the online gaming industry within the scope of the IT Rules. The amendment has placed certain safeguards that shall help protect individuals from illegal gambling and betting websites.
Issues & Concerns of the Online Gaming Industry in India
Although some skill-based games are legal in India, online games related to betting and gambling are banned under numerous state laws. Even so, there has been a drastic rise in economic concerns in the online gaming industry, some of which are:
- Presenting inapt violent material without any reliable measures in place.
- Advertisements of foreign betting and gambling websites targeting users in India.
- Lack of a method, e.g., KYC denotes the absence of any protection for users’ money and safeguard against money laundering concerns.
- Addiction related issues in children and adults, leading to financial losses.
The amendment made to the IT Rules by the Ministry of Electronics and IT (MeitY) aims to help tackle such issues by introducing various checks and balances. The new rules shall protect Indian online gaming users from illegal gambling websites.
The amendment has introduced new definitions for several terms under the IT Rules.
- Online Gaming Intermediary: Under Rule 2(qb) of the IT Rules, online gaming intermediary has been defined as ‘an intermediary that allows anyone who uses its computer resources to access one or more online games.’
- Online Game: Any game that is offered on the Internet and is accessible by users through a computer resource or intermediary.
- Online Real Money Game: Any online game where users make deposits in cash or kind with the expectation of earning money.
‘Harm to Users’ & its Extent
Results that are not favorable for users due to excessive online gaming are known as ‘harm to users’. It describes the effects that are negative and compromise the online users’ physical, mental, emotional, or financial health. As such, the aim behind tackling issues related to ‘harm to users’ is safeguarding individuals from various risks and dangers associated with online gaming.
- At times, when individuals are heavily reliant on online games for social interaction, they may become detached from real-life interactions. This can eventually lead to the individual feeling alienated and lonely.
- Online gaming platforms often organize competitive environments to allow users to compete with others, which can result in pressurizing them to always perform and be successful in such competitions. This can lead to individuals evaluating their self-worth based entirely on their gaming achievements.
- There is a potential for users coming across unethical and illegal websites, tricks and unapproved third-party platforms. This falls under ‘harm to users’ as well because it can lead to financial losses, financial fraud and compromise your personal and account details.
Due Diligence Essentials for Online Gaming Intermediaries
Following are the due diligence essentials for online gaming intermediaries provided under the IT Rules:
- They must prominently publish their rules and regulations, privacy policy and user agreements for accessing or using their computer resources on their website. This must be done by such entities to make sure everyone is aware of and complies with these aspects when accessing or using their computer resources.
- They must make significant efforts towards ensuring that users of their computer resources do not host, display, upload, modify, publish, transmit, store, update, or share details of anyone else other than themselves.
- They must regularly, and at least once a year, inform users of their platform that they have the right to terminate access or usage rights if anyone does not comply with the rules and regulations of the platform or remove any information that does not comply with the company’s standards. If any information is removed by the intermediary due to non-compliance, it shall be stored in records for 180 days for investigative purposes.
- With respect to ‘prominently publishing’ terms of use and privacy policy, intermediaries are required to publish them distinctly on the website’s homepage or on the homescreen of mobile-based applications, or both. They may choose to distinctly publish them on a webpage or an app screen that can easily be accessed from the homepage or home screen.
- If they facilitate online real money transactions for gaming purposes, they must state the details related to the entity’s policy related to withdrawals and refunds, KYC processes, steps taken to safeguard user deposits, and the process to verify online real money games.
- They must perform age-verification and make sure to verify each user’s identity before granting access to their computer resources.
- They must have an infrastructure to maintain user records and all of their transactions on the platform. This includes their gaming history and deposits.
Accountability and Compliances
Intermediaries must appoint certain entities to make sure they comply and are accountable with respect to online gaming rules.
Grievance Officer
The Grievance Officer shall be liable to acknowledge any complaint related to violation of rules within 24-hours and resolve the issues within a specified period of 15 days from the day of receiving the complaint.
Details of the Grievance Officer, such as their name, contact details and the process to file a complaint, must be prominently published on their website, mobile application or both.
In case of a complaint related to some content, which, in the first instance, appears to invade the complainant’s privacy is filed, the intermediary must take necessary action to disable the access to such content or remove it entirely.
They must also set up an adequate system to receive such complaints; this will also allow complainants to follow up on the status of each complaint by obtaining a unique ticket number for each complaint from the platform.
Chief Compliance Officer
The Chief Compliance Officer is the individual responsible for making sure everything on the website is conducted in compliance with the IT Act and the regulations defined therein. In case the intermediary fails to adhere to the Act and relevant rules while performing their due diligence, the chief compliance officer shall be held responsible.
Nodal Contact Person
The Nodal Contact Person is responsible for coordination and ensuring compliance with the orders of law enforcement agencies.
| Note: All of the above-mentioned officers must be residents of India. |
Grievance Appellate Committee
Anyone who is unsatisfied with any decision taken by the Grievance Officer or if their grievance has not been resolved within the prescribed period may choose to appeal before the Grievance Appellate Committee. The IT Rules mandate that any appeal to the Grievance Appellate Committee must be made within 30 days of receiving the communication regarding the Grievance Appellate Committee’s decision and that the decision taken by the Grievance Appellate Committee must be complied by the relevant intermediary. Furthermore, the relevant intermediary must publish a written report on its website as well.
Conclusion
The Online Gaming rules introduced by the Government of India aim to create a robust and efficient regulatory system for online games involving real money. Alongside emphasizing user protection, the rules also make it evident that intermediaries must make significant efforts with regard to their platform as they shall be held accountable in case of non-compliance.
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