India wants its $2 billion online gaming industry to grow in a self-regulated manner.
iGaming consultant Jaydeep Chakravartty explained that the new draft regulations aim to prohibit betting or gambling on the outcomes of online games.
The Ministry of Electronics and Information Technology has issued a notification stating that online gaming companies must register with a self-regulatory body to prevent related violations.
The draft regulations include provisions for a self-regulatory framework and player verification.
“The self-regulatory bodies will be registered with the ministry and these online gaming intermediaries may register their members and their online games if they meet certain criteria,” the notice said.
“These institutions will also address complaints through a grievance mechanism.”
The country's major online gaming platforms are expected to comply with national laws.
The Ministry of Electronics and Information Technology said: “This draft amendment is intended to meet this need while promoting the growth of the online gaming industry in a responsible manner.
Regulatory requirements
Online gaming intermediaries should follow the due diligence requirements in the regulations.
This includes "making reasonable efforts to prevent its users from hosting, displaying, uploading, publishing, transmitting or sharing online games that are not compliant with the laws of India, including any laws relating to gambling and wagering".
Online gaming companies should place a registration logo on all online games licensed by the self-regulatory body.
They must also inform users of their withdrawal or refund policies, methods of allocating profits, handling fees and other charges, as well as KYC procedures for user account registration.
“The self-regulatory bodies will be registered with the ministry and these online gaming intermediaries may register their members and their online games if they meet certain criteria,” the notice said.
These bodies will also address player complaints through a grievance mechanism.”
Self-regulatory draft to be finalized by February
The public can comment on the draft rules until February 17.
In the future, online gaming intermediaries will be allowed to be established, but only if they do not actually engage in gambling.
Union Minister Rajeev Chandrashekhar said: "The idea is to restrict intermediaries from engaging in unauthorized advertising practices."
He also said that the rules for online gaming are expected to be finalized in early February.
The regulations are designed to facilitate the prudent expansion of the online gaming industry.
Chandrashekhar said the government's role was to ensure the safe and trustworthy functioning of the internet, while online gaming intermediaries were not allowed to place bets on game outcomes.
The federal government will impose a Goods and Services Tax (GST) of 28% on the total amount. This corresponds to 18% of the current gross revenue (GGR) of the online gaming industry.
This 28% is a service fee charged to facilitate players' participation in gaming activities.
E-sports and popular sports have recently received recognition from the government.
Chandrasekhar had told Parliament that as more Indians take to the Internet, their likelihood of being exposed to online gaming platforms with harmful information increases.
The total industry size will reach US$5 billion in 2025
This is a strong signal that the government wants to encourage the $2 billion online gaming industry to develop in an orderly manner under regulation.
The industry is expected to reach $5 billion by 2025.
The self-regulatory body will provide a reliable and timely grievance redressal process.
Also register as an online gaming intermediary and ensure responsible gaming behavior through age verification.
Additionally, strict KYC procedures will be implemented, as well as prevention measures against addiction and financial difficulties.
This move will support responsible gaming practices while assisting governments in promoting regulated and sustainable businesses.
This regulation will go some way towards ensuring consumer interests and promoting responsible and open growth in the industry.
Transparency and strict self-regulation will also help minimize the threat posed by anti-state and illegal overseas gambling platforms.
Roland Landers, chief executive of the All India Gaming Federation, said he was happy to see the draft regulations come to fruition.
He said: “We thank the government for recognising the long-term needs of players and the online gaming industry.
