regulating online gaming: Ministers group likely to discuss e-gaming on December 15

While the GoM has conducted “a couple of informal meetings” so far, the first official meeting is likely to set the tone for the process of regulating online gaming, with a specific focus on how to effectively tax the sector and avoid “any illegal gambling or betting, especially from off-shore players”, said one of the persons, who did not wish to be identified.

“Certain government officials felt that the gaming rules, introduced by MeitY (ministry of electronics and information technology) lacked the legal teeth to ensure enforcement, especially in cases where the gaming companies operate from outside India,” said an official.

ET had reported on November 1 that the government was considering the establishment of a GoM to develop and oversee a comprehensive regulatory framework for the online gaming industry.

The proposed GoM was expected to include home minister Amit Shah, finance minister Nirmala Sitharaman, electronics and IT minister Ashwini Vaishnaw and information and broadcasting minister Anurag Thakur.

In the meetings of the GoM conducted so far, the issue of money laundering by certain gaming companies has also been raised, said another official.

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“The illegalities uncovered so far in the Mahadev betting app will not be an isolated case. Some of the ministries participating in the GoM raised this issue and wanted it to be one of the focal points of what gaming rules should be able to enforce in future,” the official said.In April, the government amended the Information Technology (IT) Rules of 2021 to include new regulations on gaming. These regulations, while banning gambling and betting outright, also proposed the idea of a self-regulatory body (SRB) which would decide on whether a game was permissible in India.

The self-regulatory body, the government had then said in the regulations, would have to be composed of independent experts from various fields without any influence from gaming companies.

Experts, however, said the central government had “overstepped its jurisdiction” with online gaming and that the matter was ‘problematic’ from the beginning.

“Since gambling and betting, including online gaming, is a state subject, the rules could not have usurped the powers of state legislations,” technology and gaming lawyer Jay Sayta told ET.

“Additionally, the outsourcing of regulatory powers to govern the industry to private self-regulatory bodies (SRBs) funded by the industry itself had also raised concerns in several quarters.”

The formation of a GoM which can reassess the regulatory structure for online games as well as determine their legal future is a welcome step, he said.

“Ideally, the GoM should also take inputs from all states and union territories and recommend that Parliament pass a strong law on the subject after consensus of all stakeholders, including state governments,” said Sayta.

The All India Gaming Federation, Esports Players Welfare Association and All India Gaming Regulator Foundation, as well as a consortium of the E-Gaming Federation and the Federation of Indian Fantasy Sports have already submitted draft proposals on an SRB, which is yet to be set up.

“What is needed now is for the government to set a framework like they did for the code of ethics for OTT platforms. They should do the same thing for online gaming. The SRBs should only implement the framework developed by MeitY,” said another lawyer, who works with gaming companies.

While the GoM has conducted “a couple of informal meetings” so far, the first official meeting is likely to set the tone for the process of regulating online gaming, with a specific focus on how to effectively tax the sector and avoid “any illegal gambling or betting, especially from off-shore players”, said one of the persons, who did not wish to be identified.

“Certain government officials felt that the gaming rules, introduced by MeitY (ministry of electronics and information technology) lacked the legal teeth to ensure enforcement, especially in cases where the gaming companies operate from outside India,” said an official.

ET had reported on November 1 that the government was considering the establishment of a GoM to develop and oversee a comprehensive regulatory framework for the online gaming industry.

The proposed GoM was expected to include home minister Amit Shah, finance minister Nirmala Sitharaman, electronics and IT minister Ashwini Vaishnaw and information and broadcasting minister Anurag Thakur.

In the meetings of the GoM conducted so far, the issue of money laundering by certain gaming companies has also been raised, said another official.

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“The illegalities uncovered so far in the Mahadev betting app will not be an isolated case. Some of the ministries participating in the GoM raised this issue and wanted it to be one of the focal points of what gaming rules should be able to enforce in future,” the official said.In April, the government amended the Information Technology (IT) Rules of 2021 to include new regulations on gaming. These regulations, while banning gambling and betting outright, also proposed the idea of a self-regulatory body (SRB) which would decide on whether a game was permissible in India.

The self-regulatory body, the government had then said in the regulations, would have to be composed of independent experts from various fields without any influence from gaming companies.

Experts, however, said the central government had “overstepped its jurisdiction” with online gaming and that the matter was ‘problematic’ from the beginning.

“Since gambling and betting, including online gaming, is a state subject, the rules could not have usurped the powers of state legislations,” technology and gaming lawyer Jay Sayta told ET.

“Additionally, the outsourcing of regulatory powers to govern the industry to private self-regulatory bodies (SRBs) funded by the industry itself had also raised concerns in several quarters.”

The formation of a GoM which can reassess the regulatory structure for online games as well as determine their legal future is a welcome step, he said.

“Ideally, the GoM should also take inputs from all states and union territories and recommend that Parliament pass a strong law on the subject after consensus of all stakeholders, including state governments,” said Sayta.

The All India Gaming Federation, Esports Players Welfare Association and All India Gaming Regulator Foundation, as well as a consortium of the E-Gaming Federation and the Federation of Indian Fantasy Sports have already submitted draft proposals on an SRB, which is yet to be set up.

“What is needed now is for the government to set a framework like they did for the code of ethics for OTT platforms. They should do the same thing for online gaming. The SRBs should only implement the framework developed by MeitY,” said another lawyer, who works with gaming companies.