India wants its $2 billion online gaming industry to grow in a self-regulated way.

New draft rules ban betting or gambling on the outcomes of online games, iGaming Consultant Jaydeep Chakravartty explains.

The Ministry of Electronics and IT has issued a notice saying online gaming companies must register with a self-regulatory authority to prevent such practice.

The draft rules contain a provision for a self-regulatory framework and player verification.

“Self-regulatory bodies will be registered with the Ministry and may register online games of such online gaming intermediaries who are its members, and which meet certain criteria.”

“Such bodies will also resolve complaints through a grievance redressal mechanism,” the notice said.

Online gaming platforms are expected to comply with national laws.

“The draft amendments are aimed at addressing this need while enabling the growth of the online gaming industry in a responsible manner,” the ministry said.

Requirements

Online gaming intermediaries are expected to follow the rules’ due diligence requirements.

This includes “reasonable efforts to cause its users not to host, display, upload, publish, transmit or share an online game that is not in line with Indian law, including any law on gambling or betting.”

Online gaming companies should place a registration mark on all online games licensed by a self-regulatory body.

They must also inform users about their withdrawal or refund policies, the method of distributing winnings, fees and other costs, and the KYC procedure for user account registration.

“Self-regulatory bodies will be registered with the Ministry and may register online games of such online gaming intermediaries who are its members and which meet certain criteria.”

“Such bodies will also resolve complaints through a grievance redressal mechanism,” the notice said.

Self-regulation draft to be finalised by February

The public can send comments on the draft rules by 17th February.

Online gaming intermediaries will be permitted, but not if they go into betting.

“Our intent is to restrict intermediaries from advertising without permission,” federal minister Rajeev Chandrashekhar said.

The rules for online gaming are expected to be finalised by early February, he added.

The regulations are intended to promote the prudent expansion of the online gaming industry.

The government’s role is to ensure the safe and trusted functioning of the internet where online gaming intermediaries do not allow wagering on the outcome of games, Chandrashekhar said.

The federal government will impose a 28% Goods and Services Tax (GST) on the total amount. This as opposed to the current 18% on the online gaming industry’s Gross Gaming Revenue (GGR).

The 28% is a service charge fee to facilitate players’ participation in the game.

E-sports and main line sports have recently received recognition from the government.

Chandrasekhar had told Parliament that, with more Indians coming online, the potential of them being exposed to online gaming platforms with harmful information has also increased.

Industry to reach $5 billion by 2025

This is a strong signal that the government wants to encourage the $2 billion online gaming industry to grow in a regulated and orderly fashion.

The industry is expected to reach $5 billion in 2025.

The self-regulatory authority would provide a reliable and timely grievance redressal process.

It will also register online gaming intermediaries and promote responsible gaming through age verification.

There will also be a strict KYC process, and precautions against addiction and financial distress.

The move will support responsible gaming while assisting the government in promoting a regulated and sustainable business.

The regulations will go a long way toward ensuring the consumer’s interest and promoting the industry’s responsible and open growth.

Transparent and strict self-regulations will also help minimise the threat posed by anti-national and illegal offshore gambling platforms.

The draft regulations were welcomed by Roland Landers, CEO of the All India Gaming Federation.

“We are grateful to the government for acknowledging the long-standing need of the gamers and the online gaming industry.”

“We believe this is a great first step for comprehensive regulation for online gaming,” he said.