India has a diverse economy with many thriving industries taking advantage of its 720 million internet users - the second largest globally. What makes India a hotbed for emerging industries to flourish here? The answer is simple: a burgeoning ecosystem that fosters innovation, a fairly skilled talent pool, a large and scalable market for the products and services that it creates, and most importantly, the right policy framework that allows these industries to thrive.
Online gaming is one such industry that relies on this ecosystem and has seen strong growth over the past couple of years. Today, the industry has grown beyond just casual games to a much broader and deeper range of applications: real money games, fantasy games, multiplayer online battle arenas, real-time strategy games, survival games, puzzles and arcade, simulation games, and more. With a rapidly expanding digital infrastructure supported by low bandwidth costs, and a very large domestic market, India has the right ingredients to become the global gaming hub.
The missing piece, however, is the policy matrix. One of the main reasons for an industry to thrive and attract investments and talent is consistent and safe policies. In the last two to three years, there have been many questions and uncertainties about the regulatory atmosphere in the industry.
What is a “game of skill”? What is a “game of chance”? What is a “real money game”? What is “wagering” in a game? Is online gaming equivalent to “gambling”? Who determines what is a permitted game and what games are not permitted?
The government’s notification on April 6, 2023, setting out a comprehensive framework for the online gaming ecosystem, fills all these gaps and provides much-needed relief to the industry. These rules, which are expected to shape the future of the nascent but growing sector in the country, come after MeitY held a public consultation in January 2023, as well as discussions with stakeholders, including gaming companies, industry associations, players, and lawyers, among others, in recent months. The rules, which address the dual challenge of encouraging online gaming while protecting citizens from illegal online betting and wagering, will serve as a catalyst for expanding innovation.
A self-regulatory organisation (SRO) driven approach, as guided by MeitY’s Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2023, will help introduce a whitelisting approach that safeguards users from games that enable wagering, or the illegal offshore operators that are running fraudulent services in the country. Visible certification on the legitimate gaming platforms, by the SRO, will lead to responsible gaming behavior by users as they will be more aware of the nature of the platforms they are on. By definition and spirit, an SRO serves as a link between the regulator and market participants through a less formal body.
The rules are clear and unambiguous. SROs decide whether a real-money game is permitted to operate in India or not. Once an online game, irrespective of its core content, enters the realm of betting and wagering, it is by definition considered to be in violation of these rules, so there is a clear distinction between gaming and gambling as interpreted by the SROs.
The online gaming rules will set the stage for a friendlier and more stable regulatory and taxation environment for the gaming sector in India. A rule-based system is essential for a nascent industry to thrive and prosper. In this case, the identification and certification mark is a significantly positive step as it will enable app stores, social media companies and consumers to verify legitimate players before they choose to engage.
Online gaming is a multi-billion dollar opportunity for Indian start-ups and an important part of the Hon’ble Prime Minister’s vision of the IndiaTechade and USD 1 Trillion Digital Economy. The rules will enable India to seize this opportunity.
(Sanjeev Sharma is an Advocate with Supreme Court of India)
