Country needs a strict federal law for online gaming: IT Minister Vaishnaw

The Centre intends to draft a strict law to “effectively regulate” online gaming and gambling platforms amid rising cases of addiction and financial loss, Union IT Minister Ashwini Vaishnaw informed the Lok Sabha on Wednesday. This can be done after having a consensus among states, he further said.

The minister said regulating gambling and betting was a complex issue and the recently released draft policy under the IT (Intermediary Guidelines and Digital Media Ethics Code) Rules was only the first step in this direction. He was responding to concerns raised by multiple members of the House on the impact of online games on youth.

“We should have a central law and the regulation has to be very strict because society is impacted by addiction to online games, especially by online gambling,” he said.

According to the seventh schedule of the Constitution, regulation of betting and gambling is a subject of the state list. So far, 19 states and Union Territories have passed separate laws on the matter. On the other hand, 17 states have modified the Public Gambling Act, of 1867, the British-era law that differentiates between games of “mere skill” and chance.

“Unfortunately, the boundaries of states don’t have any meaning in the digital world. It is a complex issue. Different courts have come up with different interpretations of whether a particular game is a game of skill or a game of chance. All over the world, people are grappling with what is the right way of regulating this. In this situation, the government has taken the right first step by treating online gaming apps and websites as intermediaries and bringing them under the first step of regulation,” Vaishnaw said.

The central government in May 2022 set up an inter-ministerial taskforce to work on regulations for the online gaming industry and to identify a nodal ministry to look after the sector. The minister said the taskforce has also recommended new legislation at the Centre.

The Ministry of Electronics and Information Technology (MeitY) in January released draft amendments to the IT (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, in relation to online gaming. The draft rules propose a self-regulatory body to certify what is permitted as an “online game” in India. They also prescribe a registration mark on all online games registered by the SRO (self-regulatory body).

Currently estimated at $2.2 billion, India's online real-money gaming market is poised to reach a value of $7 billion by FY26, according to a report by Lumikai and Redseer. The market’s current compound annual growth rate (CAGR) is about 27 per cent, making it the fastest-growing segment in the $24-billion media & entertainment space.

The industry came under scrutiny after the proliferation of games like cards, casinos, and fantasy sports among the youth led to addiction and financial losses, with some reported cases of suicide. The Tamil Nadu government proposed a Bill to outlaw online gambling and regulate online games in October 2022. DMK MP T Sumathy Thamizhachi Thangapandian asked whether other states should bring new legislation on the matter until there is a common law at the national level.

“I would request for a consensus cutting across political parties about the way to regulate this entire sector. Once there is a consensus among states, my personal opinion is that there should be a central act,” Vaishnaw said.