The ministry of electronics and IT (MeitY) has fast-tracked the draft regulations for the online gaming industry, the highlight of which is that the industry will have a self-regulatory mechanism—something that failed in the case of social media platforms. MeitY appears to have made up its mind to ban online games which are based on betting and gambling. Before the draft regulations came, online games were broadly categorised as games of skill and chance. MeitY has avoided such categorisation and simply kept out betting and gambling. A key reason for keeping them out could be that they are state subject, and there would be limitations if the central government legislates in this area.
The basic idea behind regulation is to protect consumers from financial frauds, apart from putting in place an orderly mechanism in which the industry operates. However, as experience has shown, banning something which is popular does not solve the problem; instead, it creates the need for more policing. The banning of some 250 Chinese apps during 2020 and several other illegal apps and channels show that the exercise is not fully effective as the banned channels surface through proxy servers providing access to consumers. The other problem is with the clause that only those online gaming firms can be registered by the self-regulatory body which have physical presence in the country, and appoint a set of grievance and legal compliance officers. Confining the Internet to physical boundaries is not a practical step and won’t be effective. This would mean that any international gaming platform which chooses not to set up an India office would be treated as illegal. Enforcing such regulations would pose a challenge. The draft also prohibits advertising by gaming firms that are not registered. This may pose a problem for international sites like Google whose clientele is not restricted by such limitations. Implementation of this clause would mean that Google would not be able show ads in India of gaming sites that are not registered in the country.
The government’s idea behind mandating MeitY to look into the regulation of online gaming industry seems to be based on its expertise and experience in regulating intermediaries—social media platforms—and administering the information technology laws. However, ideally gaming platforms are more like publishers than intermediaries like Twitter or Meta. The reasoning behind treating them as intermediaries seems to be simple: The gaming firms registered in India would get legal immunity under the safe harbour provisions just as intermediaries get. The purpose behind treating these platforms as intermediaries even though they technically do not qualify as such is to avoid regulatory overlap between MeitY and the information and broadcasting ministry. However, this may not work as the ones that are out of the purview of registration will continue to be monitored by multiple agencies and laws.
On certain crucial aspects, the draft is silent. What happens in cases where a consumer is not satisfied with the grievance redressal of the gaming firm concerned? In the case of social media platforms, the government has talked about creating a grievance appellate body, but no such provision has been mentioned here. Similarly, how would disputes between a gaming platform and SRO be adjudicated? If the answer in both the cases is first the government and then courts, then the SROs would have a limited role and the government would end up driving the regulations on a case by case basis.