In India’s thriving digital economy which is poised to attain a one trillion-dollar status in this decade, online gaming segment has emerged as one of its major building block. While India is world’s largest populated nation with a young median age, the popularity of this sector has been propelled by widespread smartphone penetration now reaching a billion, countrywide digital public infrastructure (India stack), low rates of data and effective payment gateways.
The online gaming sector in India has attracted substantial global investor interest, with investments worth ₹22,931 crore pouring in between FY20 and FY24 from both domestic and global sources. However, the recent introduction of new regulations has brought about some challenges and uncertainties. This calls for the need for self-regulation and to learn from best global experiences.
The need for gaming regulation in India arises from the rapid growth and increasing popularity of the online gaming in India, driven with global trends, smartphone penetration, a burgeoning youth population, and gaming genres in tune with local factors. The online gaming segment has witnessed significant growth, reaching ₹16,428 crore in FY23, and is expected to contribute to large FDI inflows, exports employment and revenue. Additionally, the segment aligns with key government initiatives such as Digital India, Start-up India, and Atmanirbhar Bharat, highlighting its role in national development.
Code of Ethics and India Gaming Convention
In the recently concluded India Gaming Convention organized by Internet and Mobile Association of India (IAMAI), the gaming federations signed a voluntary Code of Ethics for self-regulation. The signatories included IAMAI, E-Gaming Federation and All India Gaming Federation. The Code mandates online gaming companies to do KYC of users; suggests to specify manner of determination of winners; suggests to display platform fee charges on their website; and ensures that deposits for online gaming services are utilised only for playing games.
Union IT MoS Rajeev Chandrasekhar in his message for the Convention mentioned that Government of India considers online gaming as an important part of our $1 Trillion Digital Economy Goal.
International Perspective
Since the process of online gaming regulation is underway, it is important to look at regulatory aspects of online gaming in other jurisdictions. In Australia, all real money games fall under the purview of regulations, and game operators providing these games require a license from the state regulatory body.
In Denmark, game operators must obtain licenses from the Danish Gambling Authority, and there is a distinction between games of skill and games of chance. Malta's primary legislation for real money games is the Gaming Act, supplemented by other supporting legislations.
South Korea largely prohibits online gambling for residents, with a few exceptions such as government-run Sports Toto and Lotto. In the United Kingdom, all game operators providing real money games require a license from the Gambling Commission, and there is no distinction between games of skill and games of chance.
These countries have established regulatory frameworks to govern online gaming, addressing aspects such as licensing, distinction between games of skill and chance, and prohibition of certain types of gambling. These practices provide valuable insights for the continuous evaluation and improvement of India's online gaming rules.
User Protection
In various countries, online gaming regulations have implemented measures to protect users. For instance, responsible gaming measures are a common feature, including self-exclusion schemes, strict age verification processes to prevent minors from gambling, and the implementation of safe gambling tools. Additionally, regulations often prohibit misleading and unfair promotional activities, require clear risk disclaimers in advertisements, and promote responsible play.
During the IAMAI event, several global experts spoke about experiences in their countries, like sports icons who could influence impressionable young minds not to be roped in for advertisements, measures for player protection, anti-money laundering and transparency. Some countries also incorporate user-defined alerts and timeouts, allowing users to set alert limits and self-exclude themselves from the platform for a specified period.
Furthermore, there are stringent penalties for non-compliance, robust age verification processes, and measures to educate and sensitize users about the associated risks and implications. These measures collectively aim to safeguard user safety, prevent addiction-related concerns, and minimize financial losses incurred due to such addiction.
Additionally, the regulations emphasize the importance of user empowerment, providing easy access to responsible gambling resources and tracking financial transactions to restrict money laundering and gambling addiction. These measures reflect the commitment of various countries to ensure a safe, trusted, and accountable online gaming environment for users.
Way Forward
In the report by EY released at the IAMAI Convention, valuable suggestions for Indian gaming regulatory architecture were provided. They include establishment of a fair and objective game verification framework to differentiate between permissible online real money games and platforms offering betting and gambling services.
It is the need of the hour to notify Self-Regulatory Bodies (SRBs) to facilitate the distribution of authorized games across states and educate users about lawful gaming environments. It is also important to maintain a central database of permissible game formats, prohibition of advertising from illegitimate operators, and the implementation of measures such as age verification, self-exclusion, and restrictions on inappropriate advertisements to enhance compliance for responsible gaming and user safety.
Furthermore, there is a need for a collaborative co-regulatory governance approach and the continual assessment of the effectiveness and robustness of regulatory provisions. Altogether, it is time that a regulatory architecture is provided soon so that industry can proceed along the guardrails.
