The Indian government has chosen to regulate online games involving real money, including skill and chance games. This action reportedly followed the Prime Minister’s office’s (PMO) decision to reject a plan to govern games of skill while excluding games of chance exclusively. So considering the online gaming business, India had a year-over-year increase in revenue creation from 2021 to 2022 of 31.9%. 

Huge names like Mobile Premier League and Dream11, are supported by investment and venture capital firms Sequoia Capital and Tiger Capital, along with games of skill like Rummy and Poker, which should be attributed for a sizable portion of this income production (which are promoted as online games).

The eagerly awaited laws are expected to impact India’s gaming industry significantly. Research predicts that the mobile gaming market will be valued at $7 billion by 2025 and will primarily be dominated by games involving real money. In the past few years, Indian companies Dream11 & Mobile Premier League, very popular for fantasy cricket, have received large funding from Tiger Global and Sequoia Capital.

A suggestion called for excluding games based on chance and exclusively regulating skill-based games. However, a member from the office of Prime Minister Narendra Modi reportedly disregarded this suggestion.

“Real Money” gaming in India

It goes without saying that the gaming industry’s growth trajectory astounded everyone. It has been discovered that real-money gaming growth has slowed slightly since the pandemic. The payments ecosystem, however, has profited. Many new users are willing to pay and commit. The ecology of digital payments undoubtedly aided the industry.

Additionally, the epidemic has resulted in enormous growth, particularly among users currently on the fence and people who had never played real money games before. But there were difficulties along the way. To address that and maintain the interest of current users, gaming industries had to develop creative solutions. Rummy, in particular, had tremendous popularity and continues expanding quickly year after year.

A Self Regulation for gaming Companies

In a potential change to IT laws, the government proposes self-regulatory organizations for international gaming businesses operating in India, but it will not permit betting. The proposed online gaming guidelines released on January 2, 2022, included steps to protect consumers from the risk of addictive behaviours and financial loss and user authentication.

Rajeev Chandrasekhar, Minister of State for Electronics & IT, stated that self-regulatory organizations would provide the filters and tests necessary to determine what gaming is acceptable, whether it be a game of chance, a game of skill, or anything else, during a briefing on the proposed guidelines.

The gist as per the guidelines is that the intermediary should acquire from the online gaming intermediaries and verify from the appropriate self-regulatory agency before hosting, publishing, or promoting any online game for consideration. In addition, the proposed amendments provide that a gaming intermediary must adhere to the rules when performing its obligations, including making efforts to stop its users from displaying, hosting, publishing, uploading, sharing, or transmitting an online game that violates Indian law, including any law on betting or gambling.

New Rules to be applicable soon

According to the Minister, a self-regulatory organization responsible for enforcing the internet gaming laws would require registration of all online legal gaming. Public opinions on the proposed regulation are being sought by the Ministry of Electronics and IT by January 17, 2022. The Minister stated that the revised regulations should be available by next month. He continued the new regulations to expand the online gaming industry and promote innovation.

Self-regulatory organizations will be established with the Ministry of Electronics and IT (MeitY), which will have the authority to register the online games offered by its member online gaming intermediaries that satisfy specific requirements. According to him, these organizations would also settle grievances through a complaint management process.

The new IT regulations for social networking sites that were announced in 2021 will apply to online gaming enterprises. The legal requirements of the country, including any laws governing gambling, betting, and the legal age at which a person may engage in a contract, must be complied with by online gaming platforms.

Essentially, it forbids gambling on any game. The self-regulatory organization decides whether a game is allowed or not. Online games that give prizes and any game that permits bets on the result are practically off-limits. According to the Minister, it is against IT regulations 3(b)10 to wager on a game’s outcome. According to him, youngsters below 18 years of age will require parental permission to play these games.

Why there is a need to regulate online games?

The latest restrictions were put into action in response to growing concerns about the popularity of these games, especially among the younger generation, as it had resulted in financial losses, addiction, and even some suicides were reported. As per one of the insiders within the government, the administration is concerned about potential addictions because of such platforms. From its report in August, the group advised that additional regulations should also include “de-addiction measures” such as recurring warnings and advisories as well as fixed deposit and withdrawal caps.

The debate – ‘Game of Skill’ vs ‘Game of Chance’

In August, the government established a committee to create rules and regulations involving the gaming sector. A body to decide whether a game depends on chance or skill was suggested by this new panel. In addition, the group advocated that games based on skills be subject to government laws and regulations that called for necessary registration, KYC requirements, and a grievance resolution process.

Gambling, which includes games of chance, is prohibited in India in very few union territories and states. Thus this is a crucial distinction to make. Games of chance could have been subject to state government regulation if the government had opted to regulate online games of skill solely. But because this isn’t the case, the government will now control both skill-based and chance-based games.

The secret minutes of the meeting, show that a member of Prime Minister Narendra Modi’s cabinet rejected this difference and advocated for increased supervision of all games on October 26, 2022. The official stated in the minutes as saying that because there was no clear legal framework and contradictory court decisions, it was hard to differentiate between both games which required skill versus those that demanded chance, and also that online gaming could well be allowed to treat like one activity with absolutely no distinction.

Conclusion

The most practical type of regulation for skill-based and chance-based games may differ. Even though both types of online gaming fall under that umbrella, they are very different from one another. Additionally, given the tremendous rate at which the Indian online business is expanding, an inadequate structure might provide some challenges for the sector. The digital revolution that is rapidly changing our society has given rise to new entertainment options for individuals. As our nation reconsiders the future of real-money online gaming, we hope that better judgment will triumph in the coming days.