MeitY rulebook in the works for online gaming self-regulatory organisations

The draft rules released earlier this month proposed the formation of self-regulatory organizations

The Ministry of Electronics and Information Technology (MeitY) may introduce a list of dos and don’ts for online gaming self-regulatory organisations (SROs) to act as ‘guardrails’.
 

The ministry on Tuesday conducted the second round of closed-door consultations on the draft amendments to the IT (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, in relation to online gaming. Representatives of all major industry bodies, gaming companies, policy advocacy groups and legal experts deliberated on the provisions of the policy. The deadline for submitting feedback on the draft has been extended by a week to January 25.
 

The draft rules on online gaming had earlier this month proposed the formation of SROs to certify what is permitted as ‘online game’ in India. All gaming intermediaries are required to register themselves with an SRO and display a registration mark. The bodies will also handle all types of disputes in the sector.
 

When stakeholders raised concerns about the risk of capture of these SROs by dominant companies, a senior government official invited feedback to present ‘’the ideal guardrails’’ on the functioning of these organisations. He added that there may be mandatory disclosure requirements for the SROs.
 

The ministry also clarified that SROs will not necessarily be formed by the existing gaming federations or industry bodies. Any organisation which fulfils the criteria provided under the rules can act as an SRO.
 

As per the rules, the gaming companies need to do a mandatory verification of players by completing a know-your-customer procedure, appoint officers to ensure compliance with the rules, redress user grievances and have a nodal contact person for 24x7 coordination with law enforcement agencies.
 

A representative of an industry body said the requirement of appointing three different officers may put a cost burden on small gaming startups. But an official clarified that there’s no rule that says one person can’t act as both chief compliance officer and nodal officer.
 

The gaming companies suggested that the rules should be amended to have a graded approach while implementing know-your-customer procedures.
 

There’s also an industry suggestion that intermediaries should be allowed to do self-certification instead of pre-registration for all games.
 

The industry stakeholders also pointed out possible jurisdictional overlap between gambling laws in different states after the enactment of the rules. States such as Sikkim, Meghalaya, and Nagaland have legalised certain gambling activities. On the other hand, the government of Tamil Nadu recently passed a law to ban online gambling in the state. The Kerala government last year imposed a ban on online rummy for stakes. The ban was later lifted by the Kerala High Court.
 

The stakeholders proposed to have geofencing – a virtual geographic boundary – to avoid such overlapping between laws. According to ministry officials, this will not be feasible and the rules will be implemented uniformly for online gaming platforms across the country. 
 

“There will be no platform offering wagering or betting on the outcome of the game. If there is a game of chance that involves no betting, feel free to do it,” the MeitY official said.

Conflict of interest

Gaming firms’ demand

• Self-certification instead of registration from SROs
• Threshold for compliance to safeguard small start-ups
• A graded approach for KYC of players
• Geofencing to avoid overlapping laws in states

Govt says...

• SROs not necessarily the existing gaming federations
• One person may act as compliance officer and nodal officer
• RBI requires KYC for those accepting digital payments
• Geofencing not feasible, rules to be uniform across the country