GoM to Meet on December 15 Over Regulation of Online Gaming, Betting Industry
In a first-ever official gathering, the Group of Ministers (GoM) is set to convene on December 15 to discuss the regulation of the online gaming industry. One of the key issues to address during the meeting will be developing an effective tax policy for online gaming to minimize illegal gambling and betting, particularly from offshore operators.
Previously, the ministry of electronics and information technology (MeitY) had introduced gaming rules which, according to some government officials, lacked sufficient legal enforcement, especially for cases involving gaming companies operating outside India.
During earlier unofficial meetings, the GoM also explored the issue of money laundering in the online gaming industry. An official stated, “The illegalities uncovered so far in the Mahadev betting app will not be an isolated case… Some of the ministries participating in the GoM raised this issue and wanted it to be one of the focal points of what gaming rules should be able to enforce in future.”
Key attendees at the scheduled meeting include Home Minister Amit Shah, Finance Minister Nirmala Sitharaman, MoS Electronics and IT Ashwini Vaishnaw, and Media and Broadcasting Minister Anurag Thakur.
The new gaming regulations were introduced in the Information Technology (IT) Rules of 2021 amendments. The idea of setting up self-regulatory bodies (SRB) for the online gaming industry was proposed in the same amendment. These SRBs, independent and composed of experts, would be responsible for regulating online gaming and determining acceptable and non-acceptable activities in the sector.
Several organizations, including the All India Gaming Federation (AIGF), eGamers and Players Welfare Association (EPWA), E-gaming Federation (EGF), and FIFS, have applied to form SRBs. However, the recent hike in GST has significantly impacted the online gaming industry. While the government deems the increase fair, stakeholders and experts argue that it might be excessive.
Tech and gaming lawyer Jay Sayta expressed concerns regarding the governmental regulatory powers over online gaming. He stated, “Since gambling and betting, including online gaming, is a state subject, the rules could not have usurped the powers of state legislations.” Sayta also noted that the outsourcing of regulatory authority to industry-funded private self-regulatory bodies raised concerns in some quarters.
History of Online Gaming
The roots of online gaming can be traced back to the early days of computer networking in the 1970s, with the advent of multiplayer games on mainframe computers and early computer networks. The release of the ARPANET in 1969 allowed researchers and academics to connect computers across different sites and led to the development of text-based games such as Multi-User Dungeon (MUD) in 1978. Over time, as computer technology advanced, online gaming began to spread beyond academic institutions and became more widely accessible to the public with the introduction of the internet.
In the 1990s, the rise of personal computers and the World Wide Web led to a significant growth in online gaming, with popular titles such as Ultima Online (1997) and EverQuest (1999) paving the way for Massively Multiplayer Online (MMO) games. The 2000s saw the growth of online gaming on console platforms with the launch of services like Xbox Live and PlayStation Network, as well as the rise of social games on platforms such as Facebook.
The Rise of Esports and Streaming
The popularity of online gaming has also contributed to the rise of esports, which has become a billion-dollar industry with competitive gaming events attracting millions of spectators worldwide. The advent of streaming platforms, such as Twitch and YouTube Gaming, has given esports a platform to reach a larger audience, providing revenue for players, teams, and organizers alike.
Challenges Faced by Game Developers
Creating and maintaining online platforms comes with a range of challenges for game developers, including managing server infrastructure, ensuring secure connections, and combatting cheating and hacking. Additionally, developers face the ongoing task of providing new content and updates to keep players engaged, as well as dealing with issues of online toxicity and harassment that can negatively impact the gaming community.
Legal Aspects and Impacts on the Online Gaming Industry
The legality of online gaming varies worldwide, with different countries and regions adopting different approaches to regulation. In some cases, the legal distinction between “games of skill” and “games of chance” plays a crucial role in determining the legality of online gaming activities, as seen in India, where games of skill are considered legal but games of chance are not.
In many countries, online gaming is regulated by existing gambling laws, while others have introduced specific legislation to address the unique challenges of the industry. The European Union, for example, has adopted a range of directives related to consumer protection, electronic commerce, and data protection that impact online gaming. Similarly, the United States has a patchwork of federal and state laws that regulate different aspects of online gaming, such as the Unlawful Internet Gambling Enforcement Act (2006) which prohibits financial transactions related to online gambling.
Case Study: India
As mentioned in the context, online gaming in India is governed by the Public Gambling Act 1867 and the Information Technology Act 2000. The differentiation between games of skill and games of chance has led to a complex legal landscape, with some states allowing online skill games while others prohibit all forms of online gaming.
To address the growing concerns surrounding online gaming, in April 2023, India’s Ministry of Electronics and IT introduced new regulations aimed at protecting users from gaming addiction and harmful content. These regulations, included in the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 Amendment, established a central authority to govern the gaming industry, introduced a three
Historical background and legality online gaming
Legislation affecting online gaming in different states
Bombay Prevention of Gambling Act, 1887
Punjab Public Gambling Act, 1867
Madhya Pradesh Public Gambling Act,1867
Tamil Nadu City Police Gaming Rules, 1949
The West Bengal Gambling and Prize Competitions Act, 1957
The West Bengal Gambling Rules, 1958
Uttar Pradesh Public Gambling Act, 1961
The Meghalaya Prevention of Gambling Act, 1970
The J. & K. Public Gambling Act, 1977
Goa, Daman and Diu Public Gambling Act, 1976
The Pondicherry Gaming Act, 1965
The Rajasthan Public Gambling Ordinance, 1949
Assam’s government passed legislation, the Assam Game and Betting Act 1970, which failed to distinguish between the game of skill and the game of chance.